In the final Work Session of the Shelby County School Board 2.0, I can't have been the only person dismayed by the comedy of errors that unfolded. This mixture of inherited, appointed, and elected individuals just can't quite seem to keep it together.
Blunder after blunder.
There was Commissioner Mary Anne Gibson carefully explaining the root cause of the transportation problems to the man now in charge of transportation, Hitesh Haria. It was kind of her to take the time to clarify just why parents were so upset. Except for her fundamental misunderstanding of how budget cuts work, and how they impacted who was eligible for bus service. You see, according to Commissioner Gibson, the expansion of the hilariously-titled Parent Responsibility Zone (handily-acronymed as "PRZ", since it's not a "thing" until it has an "acronym") has resulted in an increase of what she actually called "new riders". There are just so many new families using bus service now, that Central Office should understand that these folks are frustrated because of their difficulties navigating transportation services.
Except for the fact that the changes to the transportation system were specifically designed to save money. The way that the changes saved money, partly, was that the number of eligible riders was reduced. Commissioner Gibson correctly understood that the PRZ had been expanded, but failed to understand what that did - that by increasing the number of parents now responsible for their children's transportation, there was a reduced number of riders. There are definitely new riders, but it's not due to an expansion of bus service - any new riders would just be new to local schools or new to a neighborhood far enough way from school that bus service is provided. Commissioner Gibson had it right that parents were frustrated, but her explanation belied some very fundamental misunderstandings about the impact of some of her votes for budget cuts in transportation services.
Commissioner Kevin Woods had a real doozy, too. He started off okay - after all, he brands himself as a fiscal conservative, actively looking for any trace of waste, fraud, or abuse. In the discussion about the delayed paychecks to about 130 teachers, what Commissioner Woods wanted to do, we can only assume, was ask about the level of attention paid to the possibility of accidentally paying people who shouldn't be paid. And his question did actually lead to the newsworthy acknowledgment that Central Office accidentally paid a dead person. Computers! Data entry! [Insert cuss word here!]
But Commissioner Woods couldn't have been more disrespectful in how he asked his question. My description just above is quite generous, as it turns out. What Commissioner Woods actually asked was how the school district was trying to prevent giving anyone an "extended vacation". I'm not sure there could be a more awful way to characterize the current financial status of those employees that the district has been forced to lay off. It's not just the terminations - that Commissioner Woods voted for - it's the hurry-up-and-wait approach that the School Board took to its critical staffing decisions. Take, for example, a Central Office person who had been working long enough to be eligible for retirement but who was not selected for the positions to which they applied. Not only were they not eligible for the much-touted severance packages because they were eligible for retirement (this, for the record, is called "being forced into retirement"), but because of the timing of the district's selection process and the timing of the state retirement office, such an employee would wait for at least two months for any income after their last paycheck. Such an individual would not be eligible for unemployment either, because their employment ended with the school year and they had filed retirement paperwork. They just had to wait.
The School Board did not exactly take care to make sure that their terminated employees, employees who had devoted their careers to Memphis City and Shelby County Schools, were treated as well as they should have been. Add to this shabby treatment, Commissioner Woods' classification of any errant payroll payment to such an employee as contributing to that employee's "extended vacation".
This is the same Commissioner Woods whose seat is now in question, and who must stand for election again since Chancellor Armstrong threw out the August 2012 election results for the District Four race. Commissioner Woods will again face former MCS Commissioner Kenneth T. Whalum, Jr. After Commissioner Woods' low blow to the district's laid-off employees, Commissioner Whalum had no comment. Because he wasn't there. Because while he still collects his School Board paycheck, Commissioner Whalum is currently (still) refusing to perform a critical function of elected officials by not attending the public meetings of the body on which he serves. Good luck, District 4!
Unfortunately, the mis-steps were not limited to our inherited, elected (?), and appointed public officials. New cabinet member and Chief Innovation Officer Brad Leon, proudly thirty days on the job, still is not quite sure how Innovation Zone schools have been selected. The Innovation Zone is, of course, his primary area of responsibility. Thankfully, Dr. Rod Richmond was there to fill in the School Board (again) about the process for selecting Innovation Zone schools.
Other high points: the ongoing inability of Commissioners to correctly identify whether a staffer's first name is actually that staffer's first name or last name, a refusal to compare an initial charter school application to a revised charter school application in order to understand what deficiencies were addressed, and an apparent lack of memory of the Board's recent reauthorization of a charter school in the bottom 5% of the state (wait, there are charter schools that perform WORSE than traditional public schools? yes. yes, there are. and, um, you voted for them.)
An actual real-life gold star should go to outgoing Commissioner Sara Lewis who has apparently been running a free, volunteer taxi service for carless parents who are told to report to the Gray's Creek facility for certain student services. Commissioner Lewis noted that no public transportation is available to the office building, and that some parents just cannot easily get out there. Hopefully, a solution will be forthcoming.
Shelby County School Board 2.0 will end this week after its last business meeting. Shelby County School Board 3.0 will be back down to 7 members - well, six anyway - for the September meetings. The old SCS and MCS board members are not the only ones who have been doing some posturing in the two years since Judge Mays brokered the 23-member School Board deal. Often, the County Commission's 2011 appointees tried to cast themselves as the voices of reason, above the fray of the bickering of the entrenched legacy school boards. Less than all of them are correct. My take is that we're about to find out if they actually have picked up enough skills to govern: to ask the tough questions, to take the tough stands, to stand up to the public, or the superintendent, or to the state as needed. Too often, the folks who are keeping their seats have been happy to deflect, to distract, to roll their eyes, to step out of the room for important votes. Once there are only seven (six) Commissioners left, it will be much more difficult to avoid more individualized public scrutiny.
I, for one, am hopeful that the robust discussions and full airing of important issues to which we've become accustomed will continue.
Showing posts with label Budget. Show all posts
Showing posts with label Budget. Show all posts
Saturday, August 24, 2013
Wednesday, February 20, 2013
A Budget Primer - Courtesy of Steve Ross
We're finally seeing some traction for meaningful analysis of the schools budget. I couldn't bring myself to get into the numbers, so I concentrated on process - big picture stuff.
Thank goodness Steve Ross has a higher tolerance for putting together the actual numbers - on his own, with no help from the consultants. It's not quite safe to assume that all of our Board members really understand how the schools get paid for. The Tennessee School Board Association gives presentations to Boards - the Board members are not exactly without the resources to figure this stuff out. But most of the unfortunate aspects of the public discussion has resulted because of lack of understanding by the public and by our elected officials of the fundamentals of school funding. To the list of resources we now should add the two most recent posts from Steve Ross - Required Reading.
Steve Ross got started on Sunday. Since then, he's been furiously writing and explaining. First, he explains where the money comes from, then he explains where the money goes. Great work. Seriously, great work.
I've heard most of the pieces of this, but not in one place. Mr. Ross has really done a lot of work to pull this together. And his commentary is important.
And, I think, raises some questions that the County Commission needs to answer. The state lets the County know what its minimum level of funding is. Shelby County has funded both systems slightly over that minimum. However, "[a]s you can see here, the County has consistently, over the past 4 years, funded the City schools less, as a percentage of BEP than the County Schools. Sure, both numbers are more than the minimum, but the lack of true parity turns into real money in short order. $63m of real money in fact."
The County Commission would likely tell us that with the extra Memphis contribution, and the fact that for capital improvements, Memphis gets $3 for every $1 in SCS capital spending, that Memphis just didn't need an equitable level of funding. Maybe that used to fly - in a merged system, it doesn't.
But this policy by the County Commission has real results. What would be an example of how that little bit of extra disproportionate funding could be spent? One example might be the shiny new Grays Creek facility that SCS built out in Arlington. This building did not follow the usual process - through the former Needs Assessment Committee (recently disbanded) - which was put in place to make sure that capital expenditures in the two school districts were equitable. Capital expenditures are funds spent on building buildings, repairing them, and other one-time infrastructure expenditures. As mentioned above, the proportion was $3:$1 and generally, if SCS wanted to build a school, it would come up with the cost, and MCS would get three times that amount. It has to do with proportionate spending between the two districts and functioned as a pain point for the county, and a point of negotiation for the city.
So how could SCS build a building that didn't go through the Needs Assessment Committee and that didn't result in equitable funding for MCS? My understanding is that it managed to build it entirely with surplus funds. Each year, just about any money that was left over at the end of the school year was put toward the building as a "one-time, non-recurring educational expense". That's right, with all of the cuts that were necessary in SCS over the last few years - ask the administrators and teachers, they'll tell you how they were impacted - SCS still managed to have enough "surplus" funds to build the beautiful Grays Creek facility.
You might be for or against the merger, and you might be for or against municipal school districts. But the merger, for the year that it exists, just might let us have a real discussion about what equitable funding looks like, why it's important, and how it impacts the classroom.
Thank goodness Steve Ross has a higher tolerance for putting together the actual numbers - on his own, with no help from the consultants. It's not quite safe to assume that all of our Board members really understand how the schools get paid for. The Tennessee School Board Association gives presentations to Boards - the Board members are not exactly without the resources to figure this stuff out. But most of the unfortunate aspects of the public discussion has resulted because of lack of understanding by the public and by our elected officials of the fundamentals of school funding. To the list of resources we now should add the two most recent posts from Steve Ross - Required Reading.
Steve Ross got started on Sunday. Since then, he's been furiously writing and explaining. First, he explains where the money comes from, then he explains where the money goes. Great work. Seriously, great work.
I've heard most of the pieces of this, but not in one place. Mr. Ross has really done a lot of work to pull this together. And his commentary is important.
And, I think, raises some questions that the County Commission needs to answer. The state lets the County know what its minimum level of funding is. Shelby County has funded both systems slightly over that minimum. However, "[a]s you can see here, the County has consistently, over the past 4 years, funded the City schools less, as a percentage of BEP than the County Schools. Sure, both numbers are more than the minimum, but the lack of true parity turns into real money in short order. $63m of real money in fact."
The County Commission would likely tell us that with the extra Memphis contribution, and the fact that for capital improvements, Memphis gets $3 for every $1 in SCS capital spending, that Memphis just didn't need an equitable level of funding. Maybe that used to fly - in a merged system, it doesn't.
But this policy by the County Commission has real results. What would be an example of how that little bit of extra disproportionate funding could be spent? One example might be the shiny new Grays Creek facility that SCS built out in Arlington. This building did not follow the usual process - through the former Needs Assessment Committee (recently disbanded) - which was put in place to make sure that capital expenditures in the two school districts were equitable. Capital expenditures are funds spent on building buildings, repairing them, and other one-time infrastructure expenditures. As mentioned above, the proportion was $3:$1 and generally, if SCS wanted to build a school, it would come up with the cost, and MCS would get three times that amount. It has to do with proportionate spending between the two districts and functioned as a pain point for the county, and a point of negotiation for the city.
So how could SCS build a building that didn't go through the Needs Assessment Committee and that didn't result in equitable funding for MCS? My understanding is that it managed to build it entirely with surplus funds. Each year, just about any money that was left over at the end of the school year was put toward the building as a "one-time, non-recurring educational expense". That's right, with all of the cuts that were necessary in SCS over the last few years - ask the administrators and teachers, they'll tell you how they were impacted - SCS still managed to have enough "surplus" funds to build the beautiful Grays Creek facility.
You might be for or against the merger, and you might be for or against municipal school districts. But the merger, for the year that it exists, just might let us have a real discussion about what equitable funding looks like, why it's important, and how it impacts the classroom.
Sunday, February 17, 2013
More Local Budget Commentary
Last night, I posted some initial thoughts about the manufactured school budget mess. Today, I'm relieved to find out that I'm not the only one that thinks that the County Commission is pulling a fast one.
Take a look at this post from Steve Ross. Sometime political candidate, longtime political student and blogger - he's doing some good work. He prefers big picture political stuff, but we should be glad he took a look at our local school budget process.
Mr. Ross makes some important points that I'm still thinking about. Mr. Ross tells us that this budget is premature - regardless - because the state hasn't yet told us what they'll be paying, or what Shelby County must pay - and those real numbers will be available in the next couple of months. Good point, and firm revenue plans and requirements are, of course, critical to the process. The exercise is academic at this point in the calendar year based on the state's process. Even if preliminary line item budgets are available, they can only be preliminary until we start to see the finalized revenue process that takes place at the state level.
Mr. Ross also tells us that the proposed budget for next year is actually $200 million LESS than it was last year. I'm paying attention now, and am interested in the underlying numbers that got Mr. Ross to that conclusion. If only we had some actual numbers to look at from the School Board. I think it could be right just based on the projected loss of revenue from the state due to the ASD, and what the district is expecting for increases in charter enrollment. It seems high to me, but that statement is a shot in the arm to a public discussion that's entirely focused on the supposed irresponsibility of a School Board asking for irresponsible increases in funding.
We need these commentaries to fully discuss these important issues (and prioritize expenditures and cuts) - send them along as you see them.
Take a look at this post from Steve Ross. Sometime political candidate, longtime political student and blogger - he's doing some good work. He prefers big picture political stuff, but we should be glad he took a look at our local school budget process.
Mr. Ross makes some important points that I'm still thinking about. Mr. Ross tells us that this budget is premature - regardless - because the state hasn't yet told us what they'll be paying, or what Shelby County must pay - and those real numbers will be available in the next couple of months. Good point, and firm revenue plans and requirements are, of course, critical to the process. The exercise is academic at this point in the calendar year based on the state's process. Even if preliminary line item budgets are available, they can only be preliminary until we start to see the finalized revenue process that takes place at the state level.
Mr. Ross also tells us that the proposed budget for next year is actually $200 million LESS than it was last year. I'm paying attention now, and am interested in the underlying numbers that got Mr. Ross to that conclusion. If only we had some actual numbers to look at from the School Board. I think it could be right just based on the projected loss of revenue from the state due to the ASD, and what the district is expecting for increases in charter enrollment. It seems high to me, but that statement is a shot in the arm to a public discussion that's entirely focused on the supposed irresponsibility of a School Board asking for irresponsible increases in funding.
We need these commentaries to fully discuss these important issues (and prioritize expenditures and cuts) - send them along as you see them.
Saturday, February 16, 2013
Thirty Cents Away from a Quarter
It's hard to know where to begin on this budget mess. So many culpable parties, so little real discussion of how to - at the very least - maintain the good that is taking place in schools across Shelby County.
Add some fundamentally destabilizing forces - Memphis withholding $55 million, a Shelby County School Board intent on special district status - followed by the toxicity of prolonged, incredibly expensive federal litigation, the dysfunction of a too large school board, and a County Commission trying to pay as little as possible for the current level of what passes for education in Shelby County and that doesn't understand what it would take to provide a world-class education, and this is where we land. Oh - and don't forget a new property assessment which is expected to reduce property values and the County revenue available to provide any services, much less education services. And the County's overall rejection of a half-cent increase in the sales tax, meaning that the only way to increase revenue is to increase property taxes.
So should we start with the biggest problem? The oldest problem? The most pressing problem? The newest problem? The various sources of the various problems? On top of what we know in the public domain, it's hard to get a view into the shadows. If you're not angry, you're not paying attention. In no particular order, let's dive in.
1. The City of Memphis should be ashamed of itself. Pay the $55 million. Pay the $55 million. Pay the $55 million. Don't talk to us about PreK. Don't talk to us about how you've decided to spend the $68 million per year that you no longer have to pay in maintenance of effort, and why you've decided that taxes shouldn't correspondingly go down. Pay the $55 million. Pay the $55 million. Pay the $55 million. Since you don't have $68 million due for 2013-14, use that $68 million to pay off the overdue, interest accruing debt that you owe to the schools, and that you owe to all of us. Pay the $55 million. Pay the $55 million. Pay the $55 million. Don't negotiate, Superintendent Hopson. Don't cut a deal. Get us the $55 million and the interest and the penalties. And future merged school district: if Memphis fails to make good on its shameful debt, it's time to force payment and enforce the judgment, as your attorneys have no doubt already explained to you how to do. And get your attorney fees, too. Pay the $55 million. Pay the $55 million. Pay the $55 million. Please don't make me resort to petty name-calling and unfortunate invective, we're all grown ups here, and trying to have a rational conversation. You know it's the right thing to do, Mayor Wharton and City Council. Why waste more public money on the collection of this shameful debt? Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million.
2. The County Commission and Mayor Luttrell have forced the current crisis by asking for the budget 4 months early. Yes, there is much financial planning to do by our esteemed LEA, and some advance notice of the hoped-for budget is not just useful, but essential. And yes, the usual process used by district staff would result in a preliminary budget by the end of January. And yes, the School Board has unnecessarily delayed the process by failing to consider the recommendations before it. But asking for a balanced budget four months early has created false urgency, a reason for the School Board to do a rush job, and a reason for the School Board to punt. Even an April deadline would have resulted in better, actual numbers.
3. The Shelby County School Board is not the only entity to take advantage of the false urgency and the need for a rush job. In one of the early TSC reports, we see that the Transition Steering Committee was in talks with The Boston Consulting Group and Parthenon, two management consultant companies, and asked both for further information. About what, who knows. BCG was the consultant used by the Transition Planning Commission, and Parthenon has been used at the behest of the Gates Foundation on many of the staffing issues. By November 5, 2012, the TSC claimed to have gotten Board approval to use "consulting support for project management and technical assistance to facilitate specific issues associated with the merger . . ." Payment for the consultants "will be funded by community partners." No mention of which consultants were picked, or for how much, or exactly who was paying for what, but that probably took place at the Board meeting, right? Not exactly. Flip to pages four and five of the Board minutes from October 30, 2012. There's a resolution with very similar language: "given the daily demands of running two large districts, the Board approves consulting support . . ." to be paid for by community partners. Neither the minutes nor the agenda from that meeting provide any explanation of what consultants were actually selected, what specific tasks they will perform, at what cost, or who is paying that cost - only the basic timeline. But the resolution was rejected - and eventually withdrawn. Take another look at the minutes from October 30 - bottom of page five and top of six. The resolution was withdrawn, and the Board approved the timeline only. Is that a basis to hire a management consultant? Guess so.
Well, if there's been any question about whether BCG is back in town, it is firmly answered in the affirmative by only a cursory look at any of the documents presented by the TSC in the last couple of weeks. Remove the SCS and MCS insignias, maybe change the font, and you've got basically the same financial documents put together for the TPC. Just as an exemplar, take a look at Slide 8 from the last meeting of the TPC's Finance Committee meeting. This slide was the source of much consternation for the TPC, nicknamed "the waterfall". Just a quick look at the minutes show that much discussion was needed to explain the waterfall. Well, the BCG waterfall is a zombie and continues to stalk the staffs at MCS and SCS. These are the very same staffs that objected to the numbers and assumptions in the TPC work, and that now basically present BCG's work as their own.
How much money is BCG making off of this recycled work? BCG would tell us that this isn't recycled work, that it's just a recycled method. But let's talk about BCG's method. Here's a TSC update from December. Want to know why we're having so much gnashing of teeth from parents and teachers (I refuse to call them stakeholders)? From the TSC, the major assumption underlying the entire budget is a pretty major assumption: "your merged department's budget for FY2014 should be no larger than the MCS FY2013 budgeted amount." Talk about doing more with less.
BCG didn't even need the actual budget submissions from any department in order to do their "work". This is A Way to do a budget. But this is not The Way that budgets usually work. Usually, budgets are "bottom-up" - the departments submit budgets based on what it will cost to do their work. As the budgets from the departments are submitted up the chain, district staff leaders revise, negotiate, and generally work the numbers up and down the chain. But there's a clear understanding up and down the chain of how much particular line items cost, what is being sacrificed for savings, and what the expectations are for the various departments. BCG's Way is decidedly "top-down" - this is how much we're spending, so you, departments, figure out how to do your work with that amount. A certain amount of that happens even in the traditional model of how to form budgets as you get closer to the end, and money is tight. But this is not how budgets are built. On top of that, based on who is being presented to answer questions from the Board, we should be suspicious of the method. Dr. Tim Setterlund and Hitesh Haria are no dummies. They're honest, hard workers. And while they both have some (even considerable) budget experience, at budget time, the superintendents usually defer to their Chief Financial Officers. Neither CFO is being made available in public to answer questions from the Board. Neither is BCG - they're, in fact, so well hidden that if you didn't get up to your elbows in minutes and TSC reports, you might have missed their role altogether.
Another way we know consultants are involved? From this TSC update at the end of January, School Board commissioners had one-on-one meetings with staff (probably with BCG present as well). This allows district staff to respond directly to questions and concerns without pesky reporters and public meetings. Not only does this remove critical discussions from the public eye, but it allows staff and consultants to tailor their responses. Not everyone will get the exact same answer to any question even if the exact same question is asked. This method is designed not only to remove this discussion from the public (voters, stakeholders, whateveryouwantotocallit), but the method is designed to divide and conquer the Commissioners themselves. It isolates Commissioners so that they don't hear each other's questions, and can't build on the answers they are given, and can't follow-up on each other's questions. No big deal, nothing to see here. We'll "summarize" the input for you, and it will "save time" at the Budget Retreat so that everyone doesn't ask the same question. And we have to get this done yesterday. And don't worry about how much our work costs because other people are paying for it. And don't ask about what those other people want policy-wise, and how that gets incorporated into our advice. Nothing to see here.
4. If you don't like what you have seen in this high-level preliminary budget, wait until you get to see the actual line item budget. From the various presentations and TSC updates, we know about the ridiculous assumption that the old MCS FY2013 budget will be the merged district FY2014 budget, and we also know some of the trade-off's that the TSC and BCG have built into the budget: staffing levels, outsourcing, etc. But since this is a high-level preliminary "budget", we don't know exactly how the departments have made the numbers work. This will be critical for parents and teachers to understand what next year's classrooms will look like. Imagine Mayor Luttrell's surprise when he finds out that despite his stated hope to get line-item-level approval for the school budget for at least the next three years, There Is No Line Item Budget. For all of the work that Superintendent Aitken keeps telling us has been put into what has been presented to the public and the School Board, what we don't have is the work that we've come to expect to be completed by people who work in the respective finance departments in the time frame that they usually complete it. We needed the consultants so that the regular work could continue to get done, right? But who gave the instruction that the regular budget work didn't have to be done this year? We should, at this point, have preliminary line item budgets complete. And if it/they is/are done, how come these are not the line item entries that everyone is working from as they decide what and how to cut? Time to get closer to ground level, folks.
5. Given all of these things, it should have been no surprise to anyone, least of all the staff, that the budget as it was presented to Commissioners was dead on arrival. It is unclear whose advice was being followed, but despite the very negative reception from the Board, the public presentation of the "preliminary budget" to the public moved forward. If the hope from BCG or staff was that public support behind the budget would solidify and pressure the Board to approve it, then it was a miserable failure. This process, instead, allowed all the political cover in the world for the 15-5 vote to increase the amount of money to be asked of the County Commission. There have still been no binding votes on any of the hard issues, and everything is still very much up in the air. What is our baseline? Is it "current state" or is it "world class"? And what if neither is possible? Oh, and the County Commission is cranky because the gap is just too big.
6. The gap was always going to be big, and we're still not really talking about why. There was always going to be the loss of the maintenance effort from Memphis - about $68 million per year. But with all of those efficiencies that the TPC found, that should have been taken care of, right? Except for that the real problem is the abrupt anticipated decline in enrollment. Jim Horn explains it here - but the basics are that due to charter school and ASD enrollment upticks, the merged district is expected to lose $212 million in annual funding over the next few years. That's the budget gap. And that doesn't include the possibility of municipal school districts or the addition of vouchers into the budgetary mix. It's a budget gap that the district cannot control, and will have such an uneven impact that planning is made even more difficult - charters pull from multiple schools, 2 first graders from here, 3 from there, so it is unlikely that any school could "scale down" an entire classroom in even one grade due to the loss of enrollment. And the ASD keeps changing its model and the definition of "takeover". The other increases in expenses, for instance, those required by Norris-Todd related to the non-reduction of teacher salaries, are marginal compared to these other gaps.
7. It turns out that even with a lower per-pupil expenditure, the SCS staffing model is more expensive - and maybe, too prohibitively expensive to adopt across the merged district. It will take another post to explain how that could be possible, but the numbers bear out that bringing MCS classroom size to the current SCS classroom size will cost millions of dollars. Some folks in the county have lambasted the city for its lower performance levels. But perhaps, just, perhaps, as these folks in the county talk about what they will and won't put up for their children, they are starting to understand that some of the financial decisions impact the classroom. And it starts to get pretty hard to say that "my children deserve this" but "yours don't" when you're talking about kids all in the same district. With different districts, it's easier to pick out who deserves what. In the same district, we really should be concerned about equity. Not that the former MCS didn't make some unfortunate decisions about which schools deserved what resources - but it's time to clear the slate one way or the other and to be honest about how we're doing it.
8. Budget cuts were coming anyway. Property assessments will likely be reduced across the board. Both the city and county are in financial trouble, and that's before the looming sequestration. Even without the merger, the conversation about whether we can afford what we want, and whether we can even afford the minimum of what we were already providing - the conversation was coming. Taxes will be going up, and they need to go up to provide the same level of services we are already receiving because our revenues are going down and our costs are rising. What a mess. The merger gets some blame here, but it's not just the merger. The County Commission (and Mayor Luttrell) are attempting to use the merger to reduce the maintenance of effort in ways that would not have been possible but for the merger. In the situation we are in, preventing an increase has the effect of a decrease where certain increases are mandated by state law.
9. And what is Parthenon doing? Probably staffing stuff - and that is likely the next disaster. Anybody remember how the Gates project was partly about restructuring teacher compensation so that teacher pay would be based on student achievement? Or how Norris-Todd prevents decreases teacher pay due to the merger? Good luck in working out those conflicting goals in this treacherous financial situation, Parthenon.
10. People should just do their jobs. Stop withholding payment on shameful years-old debts. Stop creating false deadlines. Stop gambling that undefined funding requests won't alienate people that you need to work with in good faith. Stop trying to reduce funding to the schools. Stop trying to make sure your kids get theirs even if it means lowering the floor of acceptable education for other kids. Stop lobbying for the hiring of expensive consultants. Stop parroting what the consultants have presented as the God's honest truth when you know that the data has not been validated. Allow administrative staff to do their jobs. Validate the numbers and the data in a meaningful way.
These are some preliminary, big picture budget thoughts. No one has clean hands, and most, if not all, of our public officials bear some of the burden for contributing to a more difficult situation than was necessary. It was always going to be hard, but it didn't have to be this hard.
Add some fundamentally destabilizing forces - Memphis withholding $55 million, a Shelby County School Board intent on special district status - followed by the toxicity of prolonged, incredibly expensive federal litigation, the dysfunction of a too large school board, and a County Commission trying to pay as little as possible for the current level of what passes for education in Shelby County and that doesn't understand what it would take to provide a world-class education, and this is where we land. Oh - and don't forget a new property assessment which is expected to reduce property values and the County revenue available to provide any services, much less education services. And the County's overall rejection of a half-cent increase in the sales tax, meaning that the only way to increase revenue is to increase property taxes.
So should we start with the biggest problem? The oldest problem? The most pressing problem? The newest problem? The various sources of the various problems? On top of what we know in the public domain, it's hard to get a view into the shadows. If you're not angry, you're not paying attention. In no particular order, let's dive in.
1. The City of Memphis should be ashamed of itself. Pay the $55 million. Pay the $55 million. Pay the $55 million. Don't talk to us about PreK. Don't talk to us about how you've decided to spend the $68 million per year that you no longer have to pay in maintenance of effort, and why you've decided that taxes shouldn't correspondingly go down. Pay the $55 million. Pay the $55 million. Pay the $55 million. Since you don't have $68 million due for 2013-14, use that $68 million to pay off the overdue, interest accruing debt that you owe to the schools, and that you owe to all of us. Pay the $55 million. Pay the $55 million. Pay the $55 million. Don't negotiate, Superintendent Hopson. Don't cut a deal. Get us the $55 million and the interest and the penalties. And future merged school district: if Memphis fails to make good on its shameful debt, it's time to force payment and enforce the judgment, as your attorneys have no doubt already explained to you how to do. And get your attorney fees, too. Pay the $55 million. Pay the $55 million. Pay the $55 million. Please don't make me resort to petty name-calling and unfortunate invective, we're all grown ups here, and trying to have a rational conversation. You know it's the right thing to do, Mayor Wharton and City Council. Why waste more public money on the collection of this shameful debt? Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million. Pay the $55 million.
2. The County Commission and Mayor Luttrell have forced the current crisis by asking for the budget 4 months early. Yes, there is much financial planning to do by our esteemed LEA, and some advance notice of the hoped-for budget is not just useful, but essential. And yes, the usual process used by district staff would result in a preliminary budget by the end of January. And yes, the School Board has unnecessarily delayed the process by failing to consider the recommendations before it. But asking for a balanced budget four months early has created false urgency, a reason for the School Board to do a rush job, and a reason for the School Board to punt. Even an April deadline would have resulted in better, actual numbers.
3. The Shelby County School Board is not the only entity to take advantage of the false urgency and the need for a rush job. In one of the early TSC reports, we see that the Transition Steering Committee was in talks with The Boston Consulting Group and Parthenon, two management consultant companies, and asked both for further information. About what, who knows. BCG was the consultant used by the Transition Planning Commission, and Parthenon has been used at the behest of the Gates Foundation on many of the staffing issues. By November 5, 2012, the TSC claimed to have gotten Board approval to use "consulting support for project management and technical assistance to facilitate specific issues associated with the merger . . ." Payment for the consultants "will be funded by community partners." No mention of which consultants were picked, or for how much, or exactly who was paying for what, but that probably took place at the Board meeting, right? Not exactly. Flip to pages four and five of the Board minutes from October 30, 2012. There's a resolution with very similar language: "given the daily demands of running two large districts, the Board approves consulting support . . ." to be paid for by community partners. Neither the minutes nor the agenda from that meeting provide any explanation of what consultants were actually selected, what specific tasks they will perform, at what cost, or who is paying that cost - only the basic timeline. But the resolution was rejected - and eventually withdrawn. Take another look at the minutes from October 30 - bottom of page five and top of six. The resolution was withdrawn, and the Board approved the timeline only. Is that a basis to hire a management consultant? Guess so.
Well, if there's been any question about whether BCG is back in town, it is firmly answered in the affirmative by only a cursory look at any of the documents presented by the TSC in the last couple of weeks. Remove the SCS and MCS insignias, maybe change the font, and you've got basically the same financial documents put together for the TPC. Just as an exemplar, take a look at Slide 8 from the last meeting of the TPC's Finance Committee meeting. This slide was the source of much consternation for the TPC, nicknamed "the waterfall". Just a quick look at the minutes show that much discussion was needed to explain the waterfall. Well, the BCG waterfall is a zombie and continues to stalk the staffs at MCS and SCS. These are the very same staffs that objected to the numbers and assumptions in the TPC work, and that now basically present BCG's work as their own.
How much money is BCG making off of this recycled work? BCG would tell us that this isn't recycled work, that it's just a recycled method. But let's talk about BCG's method. Here's a TSC update from December. Want to know why we're having so much gnashing of teeth from parents and teachers (I refuse to call them stakeholders)? From the TSC, the major assumption underlying the entire budget is a pretty major assumption: "your merged department's budget for FY2014 should be no larger than the MCS FY2013 budgeted amount." Talk about doing more with less.
BCG didn't even need the actual budget submissions from any department in order to do their "work". This is A Way to do a budget. But this is not The Way that budgets usually work. Usually, budgets are "bottom-up" - the departments submit budgets based on what it will cost to do their work. As the budgets from the departments are submitted up the chain, district staff leaders revise, negotiate, and generally work the numbers up and down the chain. But there's a clear understanding up and down the chain of how much particular line items cost, what is being sacrificed for savings, and what the expectations are for the various departments. BCG's Way is decidedly "top-down" - this is how much we're spending, so you, departments, figure out how to do your work with that amount. A certain amount of that happens even in the traditional model of how to form budgets as you get closer to the end, and money is tight. But this is not how budgets are built. On top of that, based on who is being presented to answer questions from the Board, we should be suspicious of the method. Dr. Tim Setterlund and Hitesh Haria are no dummies. They're honest, hard workers. And while they both have some (even considerable) budget experience, at budget time, the superintendents usually defer to their Chief Financial Officers. Neither CFO is being made available in public to answer questions from the Board. Neither is BCG - they're, in fact, so well hidden that if you didn't get up to your elbows in minutes and TSC reports, you might have missed their role altogether.
Another way we know consultants are involved? From this TSC update at the end of January, School Board commissioners had one-on-one meetings with staff (probably with BCG present as well). This allows district staff to respond directly to questions and concerns without pesky reporters and public meetings. Not only does this remove critical discussions from the public eye, but it allows staff and consultants to tailor their responses. Not everyone will get the exact same answer to any question even if the exact same question is asked. This method is designed not only to remove this discussion from the public (voters, stakeholders, whateveryouwantotocallit), but the method is designed to divide and conquer the Commissioners themselves. It isolates Commissioners so that they don't hear each other's questions, and can't build on the answers they are given, and can't follow-up on each other's questions. No big deal, nothing to see here. We'll "summarize" the input for you, and it will "save time" at the Budget Retreat so that everyone doesn't ask the same question. And we have to get this done yesterday. And don't worry about how much our work costs because other people are paying for it. And don't ask about what those other people want policy-wise, and how that gets incorporated into our advice. Nothing to see here.
4. If you don't like what you have seen in this high-level preliminary budget, wait until you get to see the actual line item budget. From the various presentations and TSC updates, we know about the ridiculous assumption that the old MCS FY2013 budget will be the merged district FY2014 budget, and we also know some of the trade-off's that the TSC and BCG have built into the budget: staffing levels, outsourcing, etc. But since this is a high-level preliminary "budget", we don't know exactly how the departments have made the numbers work. This will be critical for parents and teachers to understand what next year's classrooms will look like. Imagine Mayor Luttrell's surprise when he finds out that despite his stated hope to get line-item-level approval for the school budget for at least the next three years, There Is No Line Item Budget. For all of the work that Superintendent Aitken keeps telling us has been put into what has been presented to the public and the School Board, what we don't have is the work that we've come to expect to be completed by people who work in the respective finance departments in the time frame that they usually complete it. We needed the consultants so that the regular work could continue to get done, right? But who gave the instruction that the regular budget work didn't have to be done this year? We should, at this point, have preliminary line item budgets complete. And if it/they is/are done, how come these are not the line item entries that everyone is working from as they decide what and how to cut? Time to get closer to ground level, folks.
5. Given all of these things, it should have been no surprise to anyone, least of all the staff, that the budget as it was presented to Commissioners was dead on arrival. It is unclear whose advice was being followed, but despite the very negative reception from the Board, the public presentation of the "preliminary budget" to the public moved forward. If the hope from BCG or staff was that public support behind the budget would solidify and pressure the Board to approve it, then it was a miserable failure. This process, instead, allowed all the political cover in the world for the 15-5 vote to increase the amount of money to be asked of the County Commission. There have still been no binding votes on any of the hard issues, and everything is still very much up in the air. What is our baseline? Is it "current state" or is it "world class"? And what if neither is possible? Oh, and the County Commission is cranky because the gap is just too big.
6. The gap was always going to be big, and we're still not really talking about why. There was always going to be the loss of the maintenance effort from Memphis - about $68 million per year. But with all of those efficiencies that the TPC found, that should have been taken care of, right? Except for that the real problem is the abrupt anticipated decline in enrollment. Jim Horn explains it here - but the basics are that due to charter school and ASD enrollment upticks, the merged district is expected to lose $212 million in annual funding over the next few years. That's the budget gap. And that doesn't include the possibility of municipal school districts or the addition of vouchers into the budgetary mix. It's a budget gap that the district cannot control, and will have such an uneven impact that planning is made even more difficult - charters pull from multiple schools, 2 first graders from here, 3 from there, so it is unlikely that any school could "scale down" an entire classroom in even one grade due to the loss of enrollment. And the ASD keeps changing its model and the definition of "takeover". The other increases in expenses, for instance, those required by Norris-Todd related to the non-reduction of teacher salaries, are marginal compared to these other gaps.
7. It turns out that even with a lower per-pupil expenditure, the SCS staffing model is more expensive - and maybe, too prohibitively expensive to adopt across the merged district. It will take another post to explain how that could be possible, but the numbers bear out that bringing MCS classroom size to the current SCS classroom size will cost millions of dollars. Some folks in the county have lambasted the city for its lower performance levels. But perhaps, just, perhaps, as these folks in the county talk about what they will and won't put up for their children, they are starting to understand that some of the financial decisions impact the classroom. And it starts to get pretty hard to say that "my children deserve this" but "yours don't" when you're talking about kids all in the same district. With different districts, it's easier to pick out who deserves what. In the same district, we really should be concerned about equity. Not that the former MCS didn't make some unfortunate decisions about which schools deserved what resources - but it's time to clear the slate one way or the other and to be honest about how we're doing it.
8. Budget cuts were coming anyway. Property assessments will likely be reduced across the board. Both the city and county are in financial trouble, and that's before the looming sequestration. Even without the merger, the conversation about whether we can afford what we want, and whether we can even afford the minimum of what we were already providing - the conversation was coming. Taxes will be going up, and they need to go up to provide the same level of services we are already receiving because our revenues are going down and our costs are rising. What a mess. The merger gets some blame here, but it's not just the merger. The County Commission (and Mayor Luttrell) are attempting to use the merger to reduce the maintenance of effort in ways that would not have been possible but for the merger. In the situation we are in, preventing an increase has the effect of a decrease where certain increases are mandated by state law.
9. And what is Parthenon doing? Probably staffing stuff - and that is likely the next disaster. Anybody remember how the Gates project was partly about restructuring teacher compensation so that teacher pay would be based on student achievement? Or how Norris-Todd prevents decreases teacher pay due to the merger? Good luck in working out those conflicting goals in this treacherous financial situation, Parthenon.
10. People should just do their jobs. Stop withholding payment on shameful years-old debts. Stop creating false deadlines. Stop gambling that undefined funding requests won't alienate people that you need to work with in good faith. Stop trying to reduce funding to the schools. Stop trying to make sure your kids get theirs even if it means lowering the floor of acceptable education for other kids. Stop lobbying for the hiring of expensive consultants. Stop parroting what the consultants have presented as the God's honest truth when you know that the data has not been validated. Allow administrative staff to do their jobs. Validate the numbers and the data in a meaningful way.
These are some preliminary, big picture budget thoughts. No one has clean hands, and most, if not all, of our public officials bear some of the burden for contributing to a more difficult situation than was necessary. It was always going to be hard, but it didn't have to be this hard.
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