Wednesday, June 9, 2010

School District 2010-2011 Budget

The Board of Education looks at a proposed 2010-2011 budget tonight. The Board Finance Committee spent two hours reviewing a draft earlier this week. Many of the budget decisions, of course, have already been made. We conducted a lengthy process during the fall of last year designed to bring forward cuts. Staffing decisions were made in April. But, its an unfortunate reality that Board's of Education don't have an accurate picture of their revenues until too late in the year, and this year was a particularly challenging year, because of the State's financial crisis.

As we look at the budget, I thought it might be useful to begin a discussion of how school board members use the budget as one of a number of accountability instruments to monitor how the school district is being operated. Its going to take a number of posts to wade through these topics. Our review of the budget is only one of the important accountability reviews that the board of education has at its command in monitoring the district. Over the next couple of weeks, if I have time, I'll try to post on the other monitoring devices as well.

Change in Budget Format to Enhance its Use as an Accountability Tool

One of the things that the board of education has done in the last five years is to change the structure of the budget document to make it a better accountability tool. When I joined the board of education, it was almost impossible to use the budget to understand trends in expenditures or to use the budget as an accountability tool. The budget was all trees and no forest. You could find a line item for paper in a particular school, but you couldn't find out how major budgetary items had changed over the years. National governmental finance experts urge elected governmental officials to convert their budgetary format so that they can see the big picture--to monitor the things that are really important, and to use the budgetary document as a planning tool. Among the features installed were:
  • Seven years of budget history comparison (5 past years, current year, and projected following year). This allows the board, district leaders, and the public to look at budgetary trends over the years. This makes it far easier to understand what is happening to expenses and revenues and to put this year's budget in context. Another reason why the long term budgetary trend analysis is important is that some years have unique accounting aberrations that make it difficult to analyze, without looking at previous years and future years. That's because we are on a "modified accrual" accounting basis mandated by the State of Minnesota Department of Education which doesn't always allow us to book revenues and expenses to the appropriate year. Looking at 7 years of budget numbers puts these aberrations in context, and helps us understand true budgetary trends. (For example, last year was an unusual year, because of stimulus funding, and in many budget categories, we make better comparisons between this coming year and the year before last.)
  • Special Education Education financial history Chart. Our budgetary document now includes a seven year tracking history of special education expenses and revenues. We began including this tracking device after completing an outside financial study of special education. We wanted to be able to monitor the the state's reimbursement practices as well as the important special education cross subsidy that has dogged our district and many other districts across the state. We use this chart also to provide information to our legislators so that they can understand the scope of the special education financial crisis that we and other districts face. This year's special education budget trends chart raises alarms. Total revenues supplied by state and federal government for special education are being reduced by 2.3 percent! (The state doesn't allow us to reduce expenditures, so when it reduces revenues, we are automatically in the hole.) While the federal government has increased our special education revenue support by about $200,000, the state government has reduced its special education support by $750,000. In other words, the state government is sucking up the federal increases and using that money for other purposes. This "supplanting" should, at least in spirit, be unlawful, because the state government is not supposed to be taking away federal increases. But the reductions combined with pressure on services caused by an increasing number of students with disabilities creates one of our most pressing budgetary concerns this year.
  • Instructional Staff Pupil Ratio (ISPR). This year, the board is adding a chart that tracks our instructional staff pupil ratio. That is a measure of the number of students in the district divided by the number of classroom teachers. We decided to add this tracking device, because when the district passed the operating referendums in 2003 and 2008, it undertook to maintain the ratio of classroom teachers as compared to the number of students. This ratio focuses on classroom teachers only. That is, it does not count special education teachers, counselors, nurses and other licensed staff that don't lead a classroom. A six year history of this ratio shows that in 2003, when the public passed the operating referendum,, the instructional staff pupil ratio was 27 students per classroom teacher. With passage of the operating referendum, the ratio dropped to 25 students per instructional staff, and has fallen to 23 in 2008-2009. Another reason we monitor this ratio is that most parents tell us maintaining the classroom teaching staff is really important to them.
  • Total Licensed Staff Pupil Ratio TLSPR). This is a ratio that is more commonly reported by most school districts and so it is easier to compare ourselves to other districts with this ratio. This year, the Board of Education added a chart which tracks the ratio of all licensed staff to the number of pupils. This includes all licensed staff, as I have said, so it is not a true measure of classroom teachers versus students. We also directed that the budget compare this ratio to a number of other similarly sized districts (such as Bloomington, Duluth, Moundsview, and North St. Paul). The comparison shows that our ratio has risen from 13:1 to 15:1, but that it remains the lowest among the comparison districts, which have TLSPR's ranging from 15:1 (like ours) up to 20:1, with the median ratio being about 17:1.
  • Administration Comparisons. This year, we also added a three year tracking of administrative cost per student, and student's per administrator with a comparison over this time period to other school districts. This comparison requires a bit of care, because we cannot be absolutely sure that every district codes exactly the same information to the same categories. The comparison shows that reported administrator cost per student ranges from $302 per student to $542 per student, with our district near the bottom of the range, at $365 per student. The number of students per administrator reported ranges from a low of 215 in Duluth to a high of 410 in Eden Prairie, with the District at 309. Since this is a new comparison statistic, we'll be spending time this year, looking at these statistics to see whether it leads us to make adjustments in what we do. (For example, when we first looked at staffing ratios in special education, back in 2005-2006, it led us to institute a variety of reforms that we felt would assist in bringing special education caseloads and staffing into line with other similar districts.) In short, we have found that adding comparison information to our budget has assisted the board in its accounting and monitoring functions. Sometimes the information that we get confirms that we are on the right track. Other times it leads us to ask hard questions and results in needed reforms.
We look at other comparisons as well, when we try to understand our budgetary trends. Later in the summer, we will get comparisons between our district and so-called regional center districts that have many characteristics similar to ours: Rochester, Mankato, Wilmar and Duluth would be examples of such districts. In addition, we track comparisons between our district and districts close to us. Putting all of these statistics together, give us several different windows on our financial indicators.

That's enough to digest for today's post. In my next post, I'll talk some more about different ways in which our board and superintendent monitor district accountability indicators. I want to end with this point. We're trying to be a continuous progress district. The idea behind continuous progress is that we make transparent information about how we are doing, whether it is flattering or unflattering. The beginning of solving problems is by making problems transparent. Financial indicators are only one window on accountability, and this post has only discussed some of the financial indicators that we monitor. So there's more to talk about in future posts.

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