APS – Revised FY13 Budget Book to be Released

May 31, 2012

Per CFO Burbridge, a new version of the APS FY13 Budget will be released tomorrow, Friday, June 1, 2012.

That’s going to ruin my weekend!

Opposition to New Charter High School Proposal – The Financial Analysis Says Do it NOW!

May 31, 2012

Today’s AJC has an article regarding the proposed new Drew Charter High School. In the article, Superintendent Davis “said the district is open to new charter schools, but he doesn’t see how Drew’s proposed high school will meet a need that traditional schools cannot”. Let’s consider the proposed Charter School from a financial standpoint.

Excluding the monies spent for Charter Schools, currently the APS System’s General Fund spends over $171 million (36.1% of the FY13 Proposed Budget) for General Administration, Operations and School Administration functions. That works out to be approximately $3,750 per student based on the projected enrollment for FY13. More importantly, the administration and operations functions amount to 57% of the total amount spent on direct instruction. To further clarify this, for each $1.00 spent on direct instruction, the APS spends $0.57 to administer and support the direct instruction function.

Now let’s compare that cost to what APS is spending on Charter Schools. APS contributes a certain amount of funding it receives from the State and City and the amount is based on a specified formula. In FY13, the amount is budgeted at $44 million. Additionally, APS has approximately $2.2 million budgeted for all the administrative, monitoring and other functions it performs for the Charter Schools (includes Special Revenue Fund allocations). That works out to be approximately 5.1% of the amount spent on direct Charter School funding.

So let’s get this straight – APS will spend 36.1% of its funds to administer and operate a school – plus the cost of teachers, or it can spend 5.1% to administer the Charter School system and offload all the other costs. That’s a deal that I would take in a heartbeat. Will the Board of Education see it the same way? Or is “control” more important to them?

APS – Another Shocker! School Admin Function Increases Staff by 6 Positions!

May 31, 2012

The FY13 Proposed Budget increases the staffing for the Deputy Superintendent of Instruction Division (school administration only) by six positions. Is anyone surprised? Enrollment is decreasing, seven schools are being closed, 350 teachers are being let go – and the conclusion is – we need more administrators!

At first glance, my impression was positive – all but eight of the positions for the “reform programs” were being eliminated (see prior post).  As to why the last eight positions in the School Reform Teams are not being eliminated is beyond my understanding. But then a closer look presents a different picture. Essentially, the 17 positions cut in the in the “reform programs” have simply been transferred to other school administrative functions – plus an additional six positions. I guess we need more administrators to administer the reforms that cost $40 million over the last five years.

In terms of cost cutting, this Division has a FY13 Proposed Budget of $46.6 million which represents a cut of approximately $2.4 million, or 4.9% (not reaching the 10% goal by half). And this is when a picture is worth a thousand words.

Surprised by what you see above? Salaries are up by $344k (but the corresponding Employee Benefits are down 6.4% – likely another budget error or allocation issue). So the bulk of the expense reduction is represented by a decrease in Professional Services of $1.1 million and Other Purchased Services of $938k. How about that in the name of “austerity”. And think of the message that is being sent to the troops that are reducing their ranks by 350.  What a magnificent example set by the leadership! Again –  do as I say, not as I do.

A word about the departments included in School Administration – the departments treated as “administrative” all oversee other instruction departments, are primarily made up of “administrative positions” or do not include any teachers in the listed departmental positions.

And now to the dirty detail work – let’s look at it department by department and see if we find any other surprises.

Deputy Superintendent of Instruction (1610) – Well this is interesting. The office run by the Deputy Superintendent has added 12 positions since FY12. Five accounting positions, three Compliance Coordinators, two grants administrators and one Communications Liaison (but no partridges in a pear tree – thank goodness!). I thought we already had an Accounting Department, an Internal Audit Department and a Communications Department – but, I must be mistaken. And with these additions, Salaries increased by $2.2 million or 368.7%. However, Professional Services came down by $805k or 73.4%. So we now have a new definition for “fiscal austerity” – limit the increases in cost to no more than $1.6 million or 77.1%!

School Administration (1101) – Jackpot! This department is the winner in terms of positions added – a total of 74 as compared to FY12. To be fair, the largest increase is the addition of 53 Assistant Principals which Superintendent Davis was strongly in favor of – one Assistant Principal for each school. In addition, this department added 13 Academy Leaders and 37 Office and School Clerks. In summary, this department has an overall increase of $3.3 million, or 10% as compared to the FY12 Amended Budget.

Research, Planning and Accountability (1680) – On a stand-alone basis, I understand the need for this department, although I do not understand why seven of the 21 positions are Administrative Assistants (even the CFO does not need that many). However, when considering this department along with the Strategic Planning Department and the Organizational Advancement Department – I think we may have reached a “bridge to far”. While I value the planning, research, accountability, strategy and organizational advancement functions in an organization – when is too much simply too much? I think we are there.

Office of High School (1678) – This department has been shut down for FY13.

Exceptional Children – Admin (1629) – The changes in this department are also interesting. Superintendent Davis indicated that expenditures for the Exceptional Children’s programs had to be increased – and we saw a substantial increase ($4.0 million) at the Direct Instruction level. However, the administration function for this team has cut expenses by $941k or 41% and reduced the staff from 15 positions to two for FY13. Actually, if this was the general direction that the System is taking, I am all for it – increase the teachers and others that have direct contact with students and substantially reduce administrators. Let’s hope that the example shown in this department takes hold in the entire System.

Professional Development (1506) & Teaching and Learning (1507) – Another interesting point to note – these two departments are being reduced in FY13 by $689k or 27.7%. However, I don’t believe this reduction should cause concern as there is $3.5 million in the Special Revenues Fund allocated for these purposes.

All the Rest – Student Placement and Appeals (1693), Student Programs & Services (1598), Center for International Studies (1247), Expanded Day/Special Project (1503), External Programs (1231) and Records Center (1642) – all relatively small departments and the changes do not amount to much.

APS – The $40 Million Cost of Reform – What Are the Results?

May 30, 2012

Over the last five years over $40 million have been spent on “reform programs”. This includes monies spent on the High School Transformation, Middle School Reform, Project Grad and four School Reform Teams. While most of this has been cut from the FY13 Budget, there is still over $1 million for the remaining vestiges of the four School Reform Teams in the FY13 Budget. Let’s assume that these reform programs were well intentioned and produced results.

And it is now time for an accounting – the intentions may have been good and the money was spent – and what were the results? What improvements were gained in the education of the students? What cost reductions due to increased efficiencies were realized? What other benefits to the system were gained?

After spending $40 million, I think the taxpayers deserve some answers.

APS – Note on Special Revenues – Where is the Rest of the Data?

May 30, 2012

Up front, let me say that to fully understand the fiscal priorities and direction of the current APS Administration, we have to be able to see the entire FY13 Budget – which must include the Special Revenues Fund. While APS has released the listing of amounts for each Special Revenue Fund item, they have not released the detailed listing of spending by Object (Salaries, Employee Benefits, etc.) or the number of employees funded by each Special Revenue account.

The current FY13 General Fund Budget is $565 million and the Special Revenues Fund is $157 million or nearly 22% of the FY13 Budget. However, without the detailed information for the Special Revenues Fund (which was fully disclosed in previous years) a full assessment of the spending priorities of APS is not possible.

Will they release the Special Revenue Fund information as they have in the past or will it remain a mystery?

Also, I am making some assumptions, including:

  1. The Special Revenues Fund detail was shown to the Budget Committee and the full Board.
  2. They reviewed and considered a fully consolidated FY13 Budget in advance of its approval and fully understood what was being spent by program and department, as this would be the only responsible course of action.

I will bet my assumptions are wrong!

APS – Impact of Custodial Staff Reduction – Are the Savings All There?

May 30, 2012

A major component of the cost reduction in FY13 is the transition from maintaining custodians on staff to being outsourced under contract. In the Building Operations (6701) department, the budget shows a $3.9 million reduction in Salaries and 108 custodial positions cut. However, there is no corresponding reduction in the Employee Benefits. If we apply the historical Employee Benefits percent (21.1%) then there should be an additional $475k reduction in this line item – is this additional potential savings real or is this simply another budget allocation error?

Also, since the custodians are being contracted for, I would expect an increase in the Custodial Support (6716) department which oversees the outsourced custodial services. In fact there is a $247k or 3.6% increase (seems low) in the Purchased Property Services to cover the cost of the new contracted custodial staff. What is surprising is that the five Custodial Service Inspectors who were on staff in FY12 and oversee the contracted custodians have also been cut. It is not clear if these positions have been transferred to another department or if the budget is simply in error.

Now for a bit of financial clarity regarding the decisions made. First, let’s assume the budget numbers are accurate as presented. If that is the case, then if the entire custodial fuction was outsourced, there would be an additional reduction in cost of $3.5 million in Salaries and Employee Benefits and an increase of $300-400k in Purchased Property Services for a net savings of $3.1 million. So the decision to keep the remaining custodial staff on board has at least a $3.1 million price tag.

Is it worth the $3.1 million cost?  Superintendent Davis and the Board seem to think so.

As a further note, since the terminated custodial staff is covered by the pension plan that is underfunded, does the elimination of the current positions reduce the future pension liability (and the related underfunding)? If so, what additional cost savings would there be if the entire custodial function were outsourced (and any other functions covered by the underfunded penison plan)?

APS – Possible Budget Errata – Looking for Answers

May 26, 2012

I am trying to get some additional information and clarification on a number of issues that impact any reasonable further analysis of the FY13 Budget. I have called and left messages, but have not received any response. Maybe a more public request will get some answers. The questions are as follows:

  1. Included in the summary data for each department is $1.527 million for General Fund Grants. This amount is detailed, by total only, for each Cost Center. However, the Cost Centers shown are all from the Special Revenue Fund and not the General Fund. I will also note that the Special Revenue Fund information provided does not provide the detail on the Objects or the staffing information (as provided in previous years). Questions:
    1. Should the General Fund Grants information be shown in the General Fund FY13 Budget or is this more properly reflected in the Special Revenues Budget?
    2. If it should be included in the FY13 General Fund Budget, what are the specific staffing and Objects details supporting the numbers?
    3. Will the staffing and the Objects for the Special Revenue Fund be released in advance of the adoption of the FY 13 Budget?
  2. The detailed financial information by Department for the FY12 Amended Budget adds up to $595.2 million. However, the Summary page by Objects shows that the FY12 Amended Budget is $605.1 million – a difference of $9.9 million. What accounts for the difference?
  3. A footnote to the Summary by Department indicates that the FY12 Amended Budget included 5,652 positions (as opposed to the 5,467 positions in the FY12 Approved Budget).
    1. In which departments and by job title, what were the additional 175 positions?
    2. Same question for FY11 if the number of positions increased from the FY11 Approved Budget.
  4. Minor reconciling errors in positions between the detail and the summary page.
    1. 9645-Information Applications – Detail Page – 28 positions, Summary Page 21 positions
    2. 9004-Marketing & Community Relations – Detail Page – 11 positions, Summary Page 12 positions
    3. 1277-JROTC – Detail Page – 43 positions, Summary Page 40 positions
    4. 6712-Painting – Detail Page – 12 positions, Summary Page 11 positions
  5. The number of Teachers as shown on the listing of positions is 3,153. The number of Teachers that add up from the detailed pages adds up to 3,228 or 75 additional teaching positions. Which is correct?
  6. The following are significant changes in the number of Teaching positions in various departments (developed from the detailed departmental listings) – are these changes in staffing of Teachers by department correct?
    1. 1235 – Foreign Language – FY12 113 – FY13 160 – Change +47
    2. 1246 – Art – FY12 41 – FY13 91 – Change +50
    3. 1267 – Music – FY12 65 – FY13 140 – Change +75
    4. 1266 – Phys. Ed – Elementary – FY12 63 – FY13 146 – Change +83
    5. 1084 – Early Intervention Program – FY12 299 – FY13 161 – Change -138

You may be asking – why is this detailed stuff worth bothering with? The answer is simple – you have to get the detail right before you can begin assessing the Budget and then begin asking the financial and other key questions.

An example of this is as follows (assuming the numbers above are correct):

The number of Music and Art teachers increased by 125 or 118% and no Science or Math teachers are presented in the Budget. Is this an indication of the direction APS is taking? Now I don’t believe that there are no Math or Science teachers in the Budget – but you can see how getting the numbers right is critical to being able to assess the philosophy or the priorities of the Administration.

Once we get the numbers right, then and only then, can we begin to understand and ask questions about the key priorities and the fundamental direction the Administration is heading in.

Note – the questions above have been addedd to the list on the FY13 Budget-Questions, Comments & Errors Page. Again, as I get answers to the questions posed, I will put the information in that Page.

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