The FY13 Approved Budget amounts to $574.8 million and runs a nearly $17 million deficit. The Approved Budget represents a $10 million increase over the Proposed Budget. However, the Approved Budget decreases spending by $30.4 million or 5.0% over the previous year Amended Budget.
First, I have to say that I am disappointed that the Board chose to increase the FY13 Approved Budget over the Proposed Budget by $10 million. The increase results in a General Fund deficit of nearly $17 million. The day of reckoning is coming – the excess General Funds will be depleted – and the only alternatives left will be to raise taxes or cut spending dramatically. The Board could have taken some difficult steps and reached a balanced budget this year – but they chose not to. Instead, they kicked the can down the road for the next elected Board to fix. Potential candidates for the Board of Education – Beware!
On the bright side, the approved budget corrected many errors and it appears the budget team rallied to the effort. The first step to controlling spending is to get the numbers “right” in the first place and then to make appropriate adjustments as required. At least let’s hope the budget is solid as presented and that it will hold for the fiscal year without additional increases in expenditures as has been the case in the last two years.
Below is a table with the major changes summarized with explanatory notes below.
- As a result of the staff reductions, APS may have to pay an additional $4.0 million in Unemployment Benefits to the state. Hopefully this estimate is conservative and ultimately ends up as a budget cushion.
- The budget increased Employee Benefits by nearly $3.0 million to correct prior errors. The Employee Benefits are now at 26% of Salaries – this is slightly higher than the historical cost incurred and so may represent additional budget cushion.
- The Board decided not to go through with the decision to outsource the custodial staff in the Middle Schools. As a result, $2.9 million in custodial salaries are back in the budget and are offset by the $1.3 million cost of the contracted custodians.
- Salaries in the Transportation Services increased by $852 thousand. There is no corresponding increase in staffing, so I assume that this is simply a correction of a prior error.
- Information Technology salaries increased by $220 thousand – again, no corresponding increase in staffing, so I assume that this is simply a correction of a prior error.
- Direct Instruction salaries decreased approximately $60 thousand net. There are some significant reallocations of the dollars and staffing and it is likely that much of it was to correct prior budget errors. However, the big changes are a $1.2 million reduction in Direct Instruction, a $1.3 million increase in Foreign Languages, a $488 thousand increase in Art, a $378 thousand increase in Elementary Physical Education, a $592 thousand decrease in the Early Intervention Program and a $480 thousand decrease in the amount allocated for Summer School.
- An additional $1.0 million was added to the budget to deal with the legal fees related to the CRTC scandal. This brings the total for legal fees for this issue to approximately $1.7 million in the approved budget.
- The funding for the Charter Schools was decreased by $1.0 million. Does this provide a preview of the pending decision for the Drew Charter High School? The decrease in spending would indicate that the Board is not going to make a favorable decision on this.
- The Professional Services decreased by a net $50 thousand. However, there are a number of offsetting reallocations of the dollars in the original budget. The most significant are increases in the IT budget and the Facilities & Construction budgets amounting to an increase of $4.0 million. In combination, this appears to be the amount that is being transferred to the Building Construction Fund. Additionally, there is an additional $1.0 million allocated to the CFO’s Office for Professional Services. Offsetting the increase is a $3.3 million reduction in Direct Instruction and a $1.7 decrease in Student Services.
- The remaining net changes are approximately $356 thousand and these are spread across multiple departments.
Again, overall not too bad as the budget reduces spending by $30.4 million, or 5.0% as compared to FY12. However, the days of running deficits in the General Fund are nearing the end. If the Board stays true to form and passes additional increased spending amendments, as it has in the last two years, then the surplus in the Fund could be exhausted as early as next year.
Unfortunately, no matter how good your intentions, they never overcome the math!