Not a Gift Horse; Not Satisfied — The MMSD Budget

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Look me in the eye
Then, tell me that I’m satisfied
Was you satisfied?
Look me in the eye
Then, tell me that I’m satisfied
Hey, are you satisfied?

The Replacements, “Unsatisfied” (click to listen or download).

The Madison Metropolitan School District budget is not a gift horse, it is the product of a state-mandated process by which our elected and appointed school officials — with required input from taxpayers and other community members — arrive at taxing and spending decisions that fulfill their fiduciary duties to provide the best education possible for our children, while being good stewards of the funds in their charge. This year, those mandates and duties are being expanded to include some pledges that were made during this past November’s successful referendum campaign.

It is indeed proper to look very thoroughly into the mouth of this budget, to look at how well it meets it’s mandates, fulfills it’s duties and honors the pledges that were made previously. When I do that, I’m relatively pleased, but I’m not satisfied.

Without dissatisfaction there is complacency and little motivation for improvement. When you aren’t satisfied, you keep dreaming and reaching.

The Partnership Plan and a Broken Promise

As part of the basic proposal of the Partnership Plan, the Board and administration asked the voters to approve a recurring referendum, one that provided less revenue than would be needed to meet the annual budget gaps created by Wisconsin’s broken state school finance system. In return, they promised to find both efficiencies and non- or minimally harmful cuts, to make up the $1 million of the $3 million difference in the budget shortfall. At the time that the Partnership Plan was proposed, the projected budget gap unmet by referendum authorization was about $3 million. By this Spring, other factors had raised this number to $3.9 million. At the same time, a new bus contract saved close to $800,000, so we are back to about $3 million. As part of the Partnership Plan, $2 million in Fund Balance spending (referred to as Fund 10) was promised to “address the remaining” budget gap. Money from the Fund 80 Fund Balance was pledged to minimize tax increases. Initiating a strategic planning project was also part of the mix. This included the creation of the Fund 41, known as the Capital Expansion Fund, that was meant to increase state aid via amortization. It was presented as part of this plan, but since it made sense with or without a referendum, I never thought it belonged; the same might be said for the strategic planning.

All of these concepts, except one, were intact in the initial budget proposal from the administration. The pledge of $2 million from the Fund Balance in the 2009-10 budget was missing. Some further changes in the budget came about due to things like new inter-district transfer estimates. Normal stuff. But quite curiously, the $2 million in Fund Balance money to be used on the education of our children was totally abandoned.

You can interpret this pledge made during the referendum in at least three or four ways. You could believe that the pledge was made to reduce the projected budget gap by $2 million from the Fund Balance.

You could consider it a pledge to limit “same service cuts” up to $2 million in Fund Balance spending. You could consider it a pledge to spend the $2 million, whatever projections and budgeting indicated a “same service” budget would be. You could say that the pledge was maintain the quality of education to the degree made possible by up to $2 million in Fund Balance spending.

By all of these interpretations, excerpt perhaps the last, the pledge was broken. I say perhaps, because the district administration has said that they were able to maintain the quality of education without the money from the Fund Balance; by their own calculations they were not able to meet “cost to continue” without it, but I’m not 100% satisfied this is true (more on this below under “Is the Quality of Education Being Maintained”).

At this point, I want to note that there are good fiscal reasons to maintain or grow a Fund Balance. But it must be further noted that those reasons also existed when the Partnership Plan was proposed. And in the context of that plan, one would have thought that a higher standard would have to be met in order to champion a fiscal position that could trump the pledges made earlier in a referendum campaign.

The Partnership Plan represented an attempt to balance the desires of those of us who would have liked a bigger and better referendum and those who wanted something smaller or no referendum at all.

At the time I thought the compromise tilted too far toward the “small/no” position. The proposal to not use the Fund Balance money tilts it even further in that direction and breaks the trust. Broken trust is difficult to repair. I supported the referendum and worked to pass it. I solicited the endorsements and volunteer efforts of others. The $2 million in Fund Balance spending had a large influence in my commitment; without that pledge I would have supported the referendum from the sidelines.

Last week the Board and administration moved to restore some of that pledge, in a manner that seems to reflect, at least partially, the “spend the $2 million, whatever projections and budgeting indicate about “same service” interpretation.

Some of the Promise to be Restored: “Class and Half Specials,” and “Ready, Set, Go” Conference

At the April 3, 2009 Madison Board of Education meeting they “moved forward” a budget amendment which will put an end to the failed experiment in class and half specials (Art, Music, Phys. Ed.) in nine schools, beginning in the 2009-10 school year (some background here, video of the meeting here, this amendment budget Q & As here). the $1.2 million needed for this fix will come from a combination of the Fund Balance ($500,000) and anticipated revenues from TIF closures ($700,00). This is a very good thing. I’m very glad they are doing this, but I’m not satisfied.

At that meeting the Board also “moved forward” an amendment to restore the “Ready, Set, Go” conferences. The discussion of how to pay for that was not concluded. The initial proposal from Lucy Mathiak to “find the money” by cutting expenses paid for via purchasing cards was ill-conceived. Budgeting should not be done by looking at how things are paid for (p-cards, purchase orders, etc.,), but rather what is needed and what is affordable. Still I am very glad that it appears “Ready Set Go” conferences will be back, but I’m not satisfied. [As of this writing, I cannot find copy of this amendment on the district web site.]

Some people might say that it is proper to say “good work” and “thank you” and leave it at that. I don’t agree. I’m not satisfied.

I strongly support this use of the money to address the Specials mess (and to fund “Ready, Set Go” conferences if it comes to that) and further believe that this budget should include $1.5 million more in Fund Balance spending. This spending could be used to avoid cuts, restore previously cut programs or practices, expand current programs or practices, or initiate new things (see this post and this list for what has been lost over the years).

Is the Quality of Education Being Maintained?

If the definition of maintain is a lack of dramatic, direct cuts to programs and policies, the answer is certainly yes. It is clear that the combination of the successful referendum and adept management have produced a budget that will maintain the same general breadth and quality of education. This deserves respect and applause.

However, the budget does contain some significant cuts from “same service” calculations. Some of these may constitute erosion. Although there are reductions in unallocated positions in elementary and secondary education, these don’t bother me much because of the reduced enrollment projections and the fact that many unallocated positions are maintained. The ones that do bother me are in Education Services (Special Education and English Language Learners – ELL). I’m also not satisfied the “cost to continue” calculation for Vocational Education “Other Expenses” is not a cut in disguise.

By the district budgeting, there is a reduction of 31 positions and $1.8 million dollars in the Education Services budget. That’s a big hit, especially for a department that has taken some big hits in the recent past. One of these positions and $132,000 is through getting rid of a temporary administrative post. That still leaves 30 “unallocated” positions and almost $1.7 million (unallocated means that these are not part of the initial staffing estimates). The administration says “this has no effect on existing programs and services.” I’m not so sure, I’m not satisfied that this will be the case.

To be fair, even with the reductions, the department will gain a net 11.3 FTE. At the budget press conference, there was talk of looking at the initial “cost to continue” request and finding that it was too large and that the reductions in the budget preserved “same service.” I’d like to know more, but a reduction of 30 positions does concern me.

I looked at some old budget material and found that in 2005-6, all of the unallocated special education positions were used (this came in response to a question about cutting 10 positions in 2006-7). In 2005-6 the ratio between Special Education staff FTE and Special Education students was 4.42/1. In 2008-9 that ratio 4.89/1. If the student count remains the same next year, it will be 4.78/1.

I also looked at staffing ratios in ELL. In 2005-6 it was 16.26/1; 2006-7, 17.93/1; 2007-8, 20.51/1; 2008-0, 18.38/1. Again, assuming a constant number of students, the 2009-10 ratio will be 18.50/1. We also know that in 2009-10 the district will have to add one FTE specialist in Arabic and another in French.

Maybe same service in Educational Services, maybe “more with less,” and maybe also a department where we could add something back, as we did with “Class and Half” and “Ready, Set, Go.” At very least, we need more of an explanation than was given in the budget document (none), or at the press conference (little), would be nice.

The possible cut in Vocational Education, “Other Expenses,” is different. On page 93, here you can see that although non staffing expenses for Vocational Education was $481,000 this year and about the same previous years, the “cost to continue” figure for 2009-10 is $299,000. Is this a $182,000 cut? I don’t know, I’ve asked the appropriate people and still don’t know. There may be other anomalies like this that I haven’t noticed.

I don’t know how I feel about the “maintain quality” issue in general. I’m not satisfied either way and when I think about the $2 million that was pledged to do real “same service,” “cost to continue” maintenance of quality, I think that some consideration should be given to chopping that 30 FTE’s down to 15.

Some Concerns about Process

I said at the top that the budget proccess is state mandated. In Chapter 65.90 it is spelled out. One important idea is that the budget must be presented to the public 15 days in advance and that there must be a public hearing before the budget is passed. At subsequent times, the budget may be altered by a super-majority, 5 votes in the case of Madison, and no hearing is required.

As I understand it, public participation is considered to be so important that it is required. The hearing on the MMSD budget is 6:00 PM, May 6 at the Doyle Building (and may be continued on May 10).

65.90 also describes what must be in the budget presented prior to the hearing. It read in part:

(2) Such budget shall list all existing indebtedness and all anticipated revenue from all sources during the ensuing year and shall likewise list all proposed appropriations for each department, activity and reserve account during the said ensuing year. Such budget shall also show actual revenues and expenditures for the preceding year, actual revenues and expenditures for not less than the first 6 months of the current year and estimated revenues and expenditures for the balance of the current year. Such budget shall also show for informational purposes by fund all anticipated unexpended or unappropriated balances, and surpluses.

For some reasons that I understand and for others that I don’t, the MMSD budget does not list all “anticipated revenues” nor “all anticipated unexpended or unappropriated balances, and surpluses.”

As a side note, I also didn’t like the “non binding” budget votes on April 30.

The biggest anticipated revenues are Title I and IDEA monies from the stimulus package. The Federal Department of Education issued estimates of distributions in March, well prior to the publication of the preliminary MMSD budget (remember that this entire budget is predicated on estimates of what the State will do with their budget, what property values will be, how many students we will have, how contract will be settled, etc.,). Madison will get $11.7 million over two years, with, I believe, a bit under half coming in the 2009-10 fiscal year. That’s over $5 million in anticipated revenues that are not part of the budget.

There are good reasons for this. First, it takes time to work this into the budget and figure how to use the money wisely. Second there will be further clarification on the strings attached in the coming weeks (although once the Budget is set and if the “maintain quality” assertions are true, “Supplement not Supplant” issues become moot, it will be by definition supplementary…maybe that’s the point). What is lost is the chance to see the entire budget picture, to see how things fit together within the mandated process. Perhaps a delay to have time to put the pieces together prior to beginning the public process would have been better.

The $700,000 in TIF money is also an anticipated revenue that was not part of the initial preliminary budget (although from what I can gather the district was only made aware of this after the preliminary budget was issued).

The Budget issued also does not contain a clear statement of the projected status of the Fund Balances, whether at the close of the 2008-9 fiscal year or the close of the 2009-10 fiscal year (the latter may be pieced together from the line-by-lines, I believe). As I noted above, there are many factors that could influence all parts of the budget and that certainly includes the bottom line of Fund Balances.

That said, although I am not sure about the legal requirements, I know that this information is required by principles of good governance and due diligence. I’ll add that this information is very much part of the Budget process in districts around the state and was included in budgets Erik Kass prepared in Waukesha.

Without this information, the Board and the Public cannot know how they are managing their assets. They don’t know if they are squandering their savings and risking lower bond ratings and higher interest rates. They don’t know if they are making progress saving for that big purchase (4K anyone?). They don’t know if there is money sitting there doing little or nothing while needs and desires go unmet. The bottom line, the projected Fund Balances should be part of the discussion.

Green Bay, where Superintendent Dan Nerad was in charge, before coming to Madison, avoided many of these difficulties by doing the formal budget process and hearing in the Fall, right before the levy is certified. In Madison we do it in the Spring and then make adjustments to the levy (and other things) in the Fall.

Not 100% satisfied with the process.

Some Other Budget Observations

There are many things in the budget I like, for example two more Social Worker/Psychologists and one more Nurse, are good moves, but I’m not satisfied.

MMSD will be spending about $26,000 to test all 1st graders in order to identify Gifted and Talented students. I don’t like more testing and it isn’t clear what will be done once they are identified. Not satisfied that this is a good idea.

If my calculations, based on the projected decrease in state SAGE aid are correct, next year MMSD will have about 100 fewer SAGE aid eligible students in SAGE funded reduced class size classrooms. Not satisfied with this at all.

The set asides to begin implementation of the Fine Arts Task Force work, the Math Task Force work and the Strategic Planning are fine, although I have my doubts that there is little useful policy recommendations in the Math Task Force Report that will ultimately be implemented.

Closing Thoughts

Dissatisfaction reveals a faith that improvement is possible and is a first step in working toward that improvement. Some may see this as too negative and others may see it as nit picking. That this takes place within a general context of happiness that there are no glaring harmful cuts in this budget should not be lost; that there are only what some may see as nits to pick is in itself evidence that educational quality is not being seriously threatened in the budget.

The opportunity to scrutinize is built into the process, the uncertainty and lack of satisfaction that came as a result of this scrutiny can be healthy, especially if it leads to certainty and improvement.

I don’t expect anything major to change prior to the budget being passed, but I’m still glad I took a close look in that horse’s mouth and reported some of what I saw; I’m glad to communicate that at least some aren’t satisfied.

Thomas J. Mertz

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Filed under Accountability, Best Practices, Budget, education, finance, Local News, Referenda, referendum, Uncategorized

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