All The Different Proposals
By Alex Saitta
April 6, 2011
How The Budget Process Works ó Then And Now:
Contracts to school district personnel have to be issued by April 15 according to law. (For this year that date was pushed back to May 15.) The final budget isnít approved until June, so the first major board vote that occurs in the budget process is new hires and position eliminations for the next year. That decision was made on April 4 this year. Eighty-five positions were eliminated, but positions were also added as well (e.g., a new principal and assistant principal were added at Chastain Elementary).
In the past, the Superintendent would submit a list of positions he wanted eliminated and the board would just rubberstamp it. The budget vote was handled in generally the same manner. The Superintendent submitted his budget proposal, it was tweaked or modified a bit by the board and it was passed.
This year is shaping up to be much different. This board is more involved. On March 14 the Superintendent submitted a proposal for position eliminations and the associated budget with that. The first proposal had more than 100 position eliminations. The associated budget was in balance had about 18 associated cuts or savings listed.
Each board member weighed in on the mix of position eliminations and the cuts/ savings associated with the overall budget. For example, I expressed concern with 22 classroom teacher positions being eliminated, yet only 1 position in the district office was going to be eliminated. I also didnít like the introduction of new fees, taking the teacher supply cards and losing the SROís.
After gathering the input from the board, and the board from the people, the Superintendent then created a new proposal. After that proposal he got more feedback and revised the list of position eliminations and the associated budget. My point is, once the process starts the proposal becomes a product of the Superintendent and the elected school board members. Thatís the way it should work and it worked that way this year.
Temporary State Funding For 2011-12:
The main issue here was state money. The state is giving the district more money for the 2011-12 budget, but most all of that extra money ($2.3 million) is non-recurring or one time money. The state is getting the extra money by running down one of their savings accounts.
The board had expressed concern over living off of temporary money after riding the roller coaster of federal stimulus money. The first year the district was given $8.3 million in stimulus money. The second year it was given $5.3 million.
Each year around December the district administration will give the board a rough estimate of the upcoming budget. The first year as stimulus money was going to fall from $8.3 to $5.3 million, there was a projected deficit because of that cut. When that news hit, everyone in the system started to worry about their jobs again. I say again, because state revenue was falling and the worry was already on the rise.
Now this year, we knew federal money was falling from $5.3 to zero. Again the crisis of worry was reignited when the initial budget deficit projection was announced. Because of the drops in state funding and one time stimulus money, the last two or three years employees have spent months worrying about their jobs rather than focusing on educating the students.
Monday, March 14 Meeting - The First Proposal:
Dr. Huntís first proposal didnít spend a dime of that temporary state money. Naturally the cuts were going to have to be deep. Five of the board members expressed support for that at the March 14 meeting, because they wanted the budget balance once and for all and to put an end to what has become the crisis of worry.
Monday March 28 Meeting - The Second Proposal:
As principals, teachers, and parents complained about the deep cuts, the board members to varying degrees started to move to the political left on that issue. Dr. Huntís second proposal then spent about $1.75 million of that $2.3 million temporary state money and left about $500,000 for a contingency. To me, that was the most responsible budget proposal of them all.
A contingency is money the district is likely to receive, but it puts aside some expected revenue just in case an unforeseen expense pops up during the budget year. For example, last year the district put aside $1 million of revenue for unforeseen expenses. So when the roof at Six Mile Elementary went bad ($500,000) cost, some of that $1 million was used to pay for that. Contingencies are used to cushion a budget from unforeseen budget busters like a roof going bad. A contingency is designed into every large budget in some way, shape or form.
The Third Proposal:
At the March 28 meeting, Jim Shelton leaped to the left of Dr. Huntís second proposal and made a motion to spend all the temporary money. That was defeated 2 to 4, and it was supported by Shelton and Dr. Cooper. My feeling was spending all the temporary money was dangerous for two reasons.
One, it left no contingency. If a roof went bad during the year, without a contingency weíd be up a tree. Two, while the state is promising this extra $2.3 million in new money, the last three years the state has not delivered on its beginning of the year promises. If that occurs again and the district has budgeted to spend all of that promised money, we'd be up a tree.
Some will say the general fund account has money in it, so just cover any shortfall by digging into that account. True, there is money in that account, but all of that money is needed to get the district through the year. There is no savings in that account. In fact, last year for 1 ½ months the district had to borrow $4.9 million using TANS (tax anticipation notes) in order to meet payroll. Think about it. If there was savings in that account, the district would have used the savings instead of borrowing money and having to pay interest charges.
Why The Moves To The Left?
The initial proposal was too conservative or far to the right, not spending any of the $2.3 million in temporary state money. My personal thoughts were as permanent cuts in non-essential areas were made in the budget, Iíd support spending more of the temporary money. For example, as the number of position eliminations in the district office rose from 1 to 9, I was willing to spend more of the temporary money.
Some of this move to spend more money was politics. Donít forget this is a public body just like the US Congress. If the public pushes hard enough they will get what they want. That's good if we have the money to pay for it. It is irresponsible if we can't afford it. When that happens some elected officials will cast fiscal discipline aside and often times just borrow the money to give the voters what they are demanding.
Look at the federal government. The people say do not cut this and do not cut that. Elected officials want their vote, so they donít say, ďNoĒ we canít afford it. Instead, they say no problem, and then pull out the US Government credit card and charge it. Politicians in Washington have done that to the tune of $14 trillion in debt. That is $120,000 in debt per household.
You say that will never happen in Pickens County. I got bad news for you. It has already happened. In 2004 the building program started as a $158 million solution. After meetings much like we saw on March 28 and April 4, the ďneedĒ rose to $178 million, then to $197 million, then $315, then $354, then $365 and now $374 million, and the district is half way through program.
Jim Shelton made the point at the March 28 meeting, saying borrowing using TANs last year only cost the district $7,300 in interest. True, that wasnít much. What was not discussed is how far that ďweíll just borrow itĒ approach has already buried the citizens of this county in debt. The districtís debt obligation (principal and interest) the last few years has risen from $38 million to $600 million. Thatís was a 17 fold increase.
Next year the people of Pickens County will have to make a $24 million bond payment. (Most all of that is interest.) And that $24 million you pay wonít buy any new teachers or even one new pencil. If we didnít have to pay that much in interest payments, weíd be able to build a new middle school each year for the next 20 years. Thatís how much money is already going down the drain because this old board wanted to give the public all these buildings, when it couldnít afford to buy them.
Monday, April 4 Meeting:
There were three more proposals to eliminate positions that were considered by the school board on Monday, April 4. The Superintendent had a list that appeared to generate $300,000 more in expenses than revenues for the 2011-12 budget. That was known as Plan B. Up until this point, all the proposals drafted by the district office before had equal revenues and expenditures. Not only was the Superintendent recommending all the temporary money from the state be spent, but he went further in the spending, so expenditures were more than revenue.
The next proposal, advocated by Jim Shelton and Herb Cooper, and later became the Superintendentís final recommendation, was going to add another $1 million in spending on top of that. That was Plan A. That was going to put 2011-12 spending $1.3 million more than revenues. This proposal planned to spend all the $2.3 million in temporary money and would have had to take $1.3 million from the general fund account. Given the general fund account is only going to grow by about $300,000, made it likely more money was going to have to be borrowed later in the year to plug the deficit. Those who supported the plan said no, but they were rationalizing in my opinion as often occurs when people want to spend money they donít have.
To me a budget with a $1.3 million deficit, that was sitting on $2.3 million of temporary state money, and had the makings of a budget Washington DC style.
That plan failed to pass.
What Was Passed:
The alternative positions elimination plan was put forward by Dr. Hunt before and it was associated with a balanced budget.That was Plan C. It was tweaked a bit before the vote and it passed 4 to 2. All the temporary state money was being spent, but the budget would not be in deficit and would not have to rely on additional borrowing.
Highlights of the plan include keeping the alternative school in the John T. Simpson building.
Given the size of the deficit, it appeared back in February the number of classroom teaching positions to be eliminated looked like 30 or so. Over the next six weeks we focused on non-classroom cuts and the number of classroom teachers to be eliminated fell to 22, then to 11 and finally to 0 positions.
While the SROís wonít be voted on until the final budget vote in June, currently they are back in the balanced budget.
The final list of position eliminations was a compromise. It had more good than bad. The good included what I just listed above. Personally, I don't support spending every dime of expected revenue ó no contingency. But like I said, everyone had to compromise.
Jim Shelton said at the April 4 meeting a gun was put to Dr. Huntís head to come up with these proposals. Untrue. (Yes, literally, he said a gun was put to Dr. Hunt's head.) The truth was I just gave my feedback, and said if the proposal is this Iíll vote for it. If it is that, I wonít vote for it. Every board member gives such feedback. Given the aim is to find where the majority of the board stands, naturally the next budget proposal from the district administration move one way or another. That is not pointing a gun to someoneís head. That's a board and Superintendent coming to a compromise proposal.
The way the process is supposed to work is an issue is put forward ó the budget in this case. Then elected leaders formulate their positions on that issue ó that happened at the first meeting on March 14. Next the public learns the details and starts to weigh in on the situation with emails, calling board members and speaking at meetings. That occurred in late March and early April. Then the elected officials take all that in, compromise and vote ó that occurred April 4 when the position eliminations were finalized.
It wasnít pretty at times, but far and away it was the most democratic budget process the school board ever had. The only concern I have is how the school system was politicized. Employees and PTAís were encouraged to get involved (good), but this occurred during school time (bad). Not every one was doing this, actually, it was a small percentage, but that isnít the time and place when that type of stuff should occur.