"High Achievement always takes place in the framework of high expectation." - Charles Kettering

Thursday, November 14, 2013

My Remarks to the Board last night were overdue.

After a long few months of looking at district budget data interspersed with an even longer few months of discovering that the district vision of excellence is all talk and no walk for my kids and their friends, I made the following remarks to the school board last night. I hope they listened and took to heart to establish a budget process that accurately reflects expenses in the district.

Board Meeting Remarks November 13, 2013
Today I come before the board to address my concern about the loss of excellence at EHS and tie it in with conflicting budget data.  I was told by EHS teachers at the recent parent-teacher conferences that prerequisites at the high school have been relaxed and outright removed for certain classes at the high school “because we don’t have anywhere else to put students. We’ve cut staff and increased class size to the point that they either go where they aren’t prepared or into a study hall.” How are teachers supposed to teach a class while bringing a student lacking prerequisite content up to speed? I’m a strong proponent of differentiated instruction in the classroom, but only when students have had prior instruction or experience that will maximize their chance for success. The removal of prerequisites sets both students and teachers up for failure and certainly does not prepare kids for college and career. It simply creates frustration on both sides and further disenfranchises those students who already believe they cannot succeed in school. I do not believe that setting children and teachers up for failure aligns with the district vision of excellence.

Two simultaneous events are taking place to make this even more burdensome for teachers. Tonight you vote on the Senior graduation project requirement for students beginning with the class of 2015. The 37 High School teachers identified as such on the school web site will then have to advise those 139 students as Mr. Everson noted each student would have a teacher advisor. This adds advisory responsibilities for four student projects to most instructors, if equally distributed. Furthermore, at this juncture, when evaluation processes are being created that hold teachers accountable for a student’s success or failure, it promises to become a serious issue in terms of human resources.

I understand that the combination of dire economic indicators and the Walker administration has placed unprecedented pressure on public school funding since 2007. I would like to demonstrate to the board that the ECSD has perhaps not suffered quite as much financially as its miserly approach would lead one to believe. I reviewed the data comparing planned spending vs. actual spending for the district since 2007. These data are available in each annual meeting packet and the “budget 101” retreats with the board every January.  

Before I go any further, I want to emphasize that what I’m highlighting here is not meant to be criticism but a critical observation from an eagle’s eye view. After review of the data, I have to question the continued decimation of the district staff. I’ve provided copies for all the board members of recent planned deficit/surplus vs. actual deficit/surplus results for the years 2007-2013 with projections for 2014 included on the spreadsheet but not on the graph.  I would like to point out that the district tax levy approved by the board every year is based on the planned spending, not the actual spending. The data show that, on average, the district has under-spent the budget by nearly $200,000 each year for the last six years. This amount goes directly into the fund balance. The cumulative sum that has been added to that fund balance in the intervening years exceeds a million dollars.  That is over a million dollars of levied tax dollars that have not supported the education of our children, but rather gone directly into the district’s “rainy day fund.”  Examination of the accompanying graph suggests that the trend for this fund balance deposit is on the increase.  I recognize the existence of a policy goal for fund balance of 15% by 2020. If the average under-spending of the budget continues this year, the fund balance will be 15.6% on June 30, 2014, meeting its goal a full six years early.  In the same time frame the district has been growing its bank account, it has lost the equivalent of 12 teachers, many of whom retired and took with them amazing skills. It’s very hard for me to reconcile this state of affairs. The teachers at the high school pulling double duty are likely of the same mind and I’m pretty certain that the teachers who were laid off in that time frame have an even more difficult time embracing these facts.

My question for the board is: Why has the district posted a surplus for five of the last 6 years, especially since those six years encompass the worst economic downturn since the great depression? I am in complete agreement with Ms. Treuden when she says “when actual spending is within 2% of planned spending, that is a good result.” My concern is that the word “within” should designate an equivalent statistical variance around zero.  Three years should have posted deficits and three surpluses. Instead, the district has seen five of six years post, in some cases, significant surpluses. Despite my tenure on the board, it is unclear to me as to who is responsible for making sure each cost center spends their budget. My plea to them is: Spend your budgets. I’d rather my tax dollars go toward supporting the district vision of excellence than toward increasing the fund balance. It is unconscionable to me that classroom budgets were underspent by $20,000 last year while kids are being issued broken and mildewed textbooks, some even missing pages, because there is no money in the budget to replace the damaged merchandise.  I contend that money does exist, just in the wrong area.

I have an inkling that the many changes that have been introduced into the budget process since 2007 has rendered obsolete the base budget on which all subsequent budgets have been built. Instead of continuing to build the next budget on an erroneous baseline budget, it seems to be time to smash the old budget paradigm and build a new budget process from square one, one that more accurately represents actual spending in the district. Ms. Treuden is an outstanding business manager and would do a great job given accurate input for her model. Return staff to sustainable levels that give kids opportunities to follow their dreams, buy textbooks that support increasing curriculum rigor to the Common Core, implement state of the art safety measures, upgrade technology  to support Twenty-First century learning models, implement programs to meet the educational model of all students and create a strategic plan to prioritize these items. Support your Vision.  The time is now and the money could be there. Thank you for your time.

Friday, November 1, 2013

Mill Rate Set at $12.30 at the Spooky October 30 School Board Meeting

The confluence of three unexpected financial windfalls in the district reduced the projected mill rate from the September 25th annual meeting estimate of $12.40 to $12.30. This is still an increase of 21 cents from last year's $12.09, which was indeed disappointing. For a $250,000 home whose valuation remains steady from last year (changes are usually made every 5 years or so), this means paying an additional $52.50 in property tax to support the ECSD. A buck a week. Without the changes in the economic indicators described below, the increase in property tax bill for a home of that worth would have been $77.50 higher, or about a buck fifty a week.

The first economic indicator that contributed to the lower mill rate than previously projected was an increase in the school district equalized property values by about 0.9%. In reality, the values increased by more than double that, 1.97%, but the #$%^& TIF property value has to be backed out of the funding formula because its deferred tax status. Isn't Evansville reaping all kinds of rewards from awarding that TIF to the not-soybean crushing plant, Mayor Decker?

The second  surprise to hit the district was an unexpected increase in state aid despite under-spending the budget by nearly some 345 thousand dollars last year. This was courtesy of our governor who wanted to give property tax relief in the form of increased state aid while maintaining the revenue cap, which would result in lower local taxes.

Now the third element enters in. We are a declining enrollment district. Our total enrollment dropped to 1717 this year. This is the fifth straight year of enrollment decline since a high enrollment of 1831 was reached in 2008.  This is a 6.2% decrease in enrollment in five years. Those 114 kids represent over a million dollars in revenue lost. With the new law enabling enrollment out of a district at any time, the state provides an increase in the revenue cap equivalent to the number of kids in the district for the September count but in another district for the January count. I'm not sure about the reasoning here, but for Evansville, it represented nine more kids' revenue added to the cap. To review:

Mill rate=(Total Local Tax Levy/Total Equalized property value)x1000

The Total Levy went down by just a skosh from the September estimate and the equalized property value increased. These two arithmetic changes both contribute to a lower mill rate. Yeah!

Now I'd like to explore the lack of accuracy associated with our district's estimate of expenditures, or what is lovingly referred to as a budget. The planning side of school finance is probably one of the most unnecessarily convoluted processes on the planet, but the following data is really of great concern to me because property taxes that support the school district (and every public entity, I suppose) are based on the budget, not the expenditures. Since the fiscal year ending in 2008, the school has created two budgets that predicted a surplus, one that predicted a balanced budget and three that predicted a deficit (see data in this document: http://www.ecsdnet.org/subsites/Doreen-Treuden/documents/2013-2014%20Budget%20Information/State%20of%20the%20Budget%201-30-2013%20FINAL.pdf). The only time an actual deficit was realized was in 2011-12, when the predicted $672K deficit ended up as a $157K deficit. As a result, a lot of surplus has been added to the fund 10 balance since then. The total amount placed into the Fund 10 Balance since 2008 is $1,095,588.93, or an average of about $183K a year. All the changes in economic indicators since September has produced a surplus budget for 2013-14. An additional $165,483.13 is projected as a surplus this year. The district track record for projected spending vs. actual errs on extremely conservative side. The average annual overestimate of budgeted vs. actual spending for the ECSD since 2008 is $296,102.99. They think they're going to spend an average of nearly $300K more than they really do. Does that mean the district will actually realize a surplus of $461,586.12? I think a case could be made that it's time for the district to scale back on the estimates. The case they make when confronted with any kind of criticism regarding this issue is that "the estimate is within 2% of the actual." Ok, that's a fair statement. However "within 2%" suggests that there will be a natural statistical variance around zero difference such that half the time they will be 2% high and half the time they will be 2% low. ECSD budgets have consistently resulted in a considerable addition to the fund balance because the annual estimate is consistently 1.7% high (out of six budgets, only one year showed the actual budget exceeded the planned budget and that year there was still a surplus, just lower than predicted). I think this is an indication that it's time for a change in the process of estimating expenses. Especially in light of all the cuts made in our curriculum in the last two years and the resultant loss of very good teachers who left because they weren't valued or saw the handwriting on the wall.

The district has that policy that states that the district will strive to have a 15% Fund 10 balance by 2020. I strongly support having a healthy Fund 10 balance. But the 2013-14 budget results in a surplus of $165K and a projected 14.6% Fund 10 balance. If the pattern holds for actual spending vs. planned spending, it's very likely the fund balance will go over 15% by next June 30. Okay folks, you have six more years to meet this fund balance goal. You don't have to get there right now.  Hire some teachers. Buy some technology, implement safety measures, bring ECSD back to some semblance of an educational institution, not a public school on life support. Probably one of those STRATEGIC PLANS would be handy right about now...