APS – Fails Direct Instruction Expenditures Test in FY12 – Reasons Given Do Not Hold Up to Scrutiny – Administrators Favored Over Students

April 28, 2013

Under GA law, 65% of each school district’s expenditures must go to Direct Instruction and the calculation and allowable expenses is spelled out by the GA Department of Education. In addition waivers can be obtained for exceeding certain student achievement levels or for “financial hardship”. It appears that APS determined that it had not met the 65% threshold for FY12 and the Board of Education authorized Superintendent Davis to request a waiver under the “financial hardship” exception. Please note that as of today, I have been unable to determine if in fact a waiver was actually requested or if the waiver was granted by the GA DOE. 

However, the fact that the Board authorized Superintendent Davis to seek a “financial hardship” waiver reveals a lot. As shown in the Board Resolution, the Board of Education sought a “financial hardship” waiver “because of the current economic crisis which has resulted in a decline of revenue, cuts from the State for state programs, and cumulative cuts from the State QBE funding”. On its face, the request seems reasonable until you begin looking at the numbers.

It is important to remember that the request was made in October 2012 – three months after the end of FY12 and when all the numbers were know and not subject to major revision. So let’s look at the actual numbers to see where the “financial hardship” claimed shows up:

  1. “Decline of revenues” – overall, local and State revenues in total for the General Fund were up by $19 million, or 3% over the prior year. No apparent “financial hardship” here.
  2. “Cuts from the State for state programs and cumulative cuts from the State QBE funding” – in FY12, State funds were $13 million (10%) higher than in FY11 and $33 million (31%) higher than FY10. Again, no apparent “financial hardship” here.

So, given that the numbers do not add up to “financial hardship”, why didn’t APS meet the 65% requirement and then have to request a waiver? Based on the spending priorities adopted by the Board over the last five years (ending in FY12), the answer is very clear. Spending on Direct Instruction has come down approximately 7% – which is reasonably consistent with changes in enrollment. However, spending on all other categories – including School Administration, Operations, Transportation and General Administration – are only down 4%. And the worst offenders are School and General Administration, whose expenditures have INCREASED by approximately 1%. 

As I have noted before, and it is also clear in this analysis, School and General Administration costs continue to be out of control and inconsistent with the cuts in spending for students and teachers.

And it does not appear that this issue was fixed in FY13 – will they fix it in FY14? As noted before, so far there is no indication that spending cuts will hit the seemingly favorite constituency of the Board – School and General Administrators! It is a sad state of affairs.


APS – FY 2014 Budget – When Will We See It?

April 26, 2013

According to the published schedule, the initial FY 2014 Budget was supposed to be presented on April 1. Since then, I am aware of at least one Budget Commission meeting that resulted in some news, but the information presented was limited. Based on the article by Mark Niesse at the AJC, the initial draft of the FY14 Budget calls for $595 million in spending – but only $550 million in revenues and $45 million will have to be cut or require another dip into the General Fund cash reserves.

Initial items under consideration for cuts are the same ones we have heard about over the last three years – not pay teacher bonuses, not give teachers raises, reduce payroll by 26, some savings by restructuring bus services and outsourcing janitorial positions. However, the most significant component proposed to fill the gap is to use $20 million of the General Fund Reserve that now stands at approximately $69 million – this would result in a General Fund Balance of approximately 7-8% of annual expenditures. While I think this is a reasonable level, I still have a lot of problems with both the process so far and the proposed solutions, as follows:

  1. With a Budget Department of at least 8-10 people, why isn’t the budget delivered on time?
  2. Last year a Preliminary Budget was released so that the public could see what expenditures were being considered prior to adoption by the Board of Education. However, the Preliminary Budget was so riddled with errors that they were “hammered” for such a sloppy job. So far this year there is nothing.
  3. By not releasing a Preliminary Budget, the Administration is controlling the “talking points” and the public is unable to assess what is specifically in the Budget.
  4. The proposed cuts discussed by the Administration are almost exactly the same as those proposed last year – most of which were never fully implemented.
  5. As I have noted in the past – and will continue to focus on – the School Administration and the General Administration staffing levels have ballooned over the last 5-7 years. However, no mention of downsizing these functions yet. As usual the focus is on teachers and janitors – not on the real spending problem.

Time is growing short and APS will have to release the numbers soon – it will be interesting to see what choices they make – and more importantly – what hard decisions they refuse to make.

As a side note, in the news article noted above, Niesse reported that APS has 7,700 employees. This is the first time I am aware that APS has released this number. It has never been shown in any budget documents in the past as only staffing for the General Fund Budget is shown and the number of employees in the Special Revenue Fund and other Funds has not been published in the past. It is clear that APS knows the total number of employees in the Consolidated Budget and I will be pushing hard to get this information for both FY 2013 and FY 2014 as this information is critical to substantiate many of APS’s statements – both current and in the past. My sense is that in the past, games have been played that indicate staffing level reductions when in fact, this has not been the case. Stay tuned.

APS – Tech High School Ranked in US News & World Report as a “Best High School” – Oops!

April 25, 2013

As reported in today’s Buckhead.Patch, Tech High School was ranked by US News & World Report as a “Best High School” – one of three in the APS district. Why oops? Tech High had to shut down last summer primarily as a result of APS inappropriately withholding funds from the Charter Schools. Interesting – APS claims to have the best interest of the students at heart – so I am sure they made provisions to get all former 200 Tech students into schools that were performing better than Tech. LOL – what a joke.

As I noted yesterday, I would not be surprised if Tech was planning a lawsuit against APS – the ranking noted above will only serve to increase APS’s liability! It would be funny if it wasn’t going to come out of the taxpayer’s pockets and the former Tech students had not been harmed. Students “best interests at heart”? Not likely.

APS – Charter School Lawsuit to Recover Withheld Local Revenues from APS – Fundamental Issues Explained

April 24, 2013

Recently, I received the following comment to my post comparing Per Student Spending for Charter Schools and for direct APS students.

Jason commented – “I am confused by your statement that charters do not incur pension liability costs – and, subsequently wonder if your numbers are correct.  Isn’t APS currently withholding money from charters for pensions?  Isn’t that what the lawsuit is about?”

The questions go to the heart of the matter and represent a significant amount of confusion in the public domain regarding the issue. First, let me say that I have not read the transcript from the trial, but have read the Judge’s December 2012 order (see here) requiring APS to issue any funds that were previously withheld from the Charter Schools.

And now to the questions Jason posed:

  1. Charters do incur pension liability costs and they are incorporated into the QBE formulas that are used to allocate “local revenues” (property tax collections, etc.) to the Charter Schools.
  2. APS was withholding “local revenues” from the Charters – and they did it in a very sneaky way. Under current law, “local revenues” are allocated based on the proportion of QBE expenditures incurred by the Charters to QBE expenditures incurred by APS. While the calculation of the numbers is complex, the determination of what constitutes “local revenues” is quite clear as codified in the GA statutes.
  3. The GA statutes have no provision that allows APS to reduce “local revenues” by deducting any type of expenditures incurred – but that is what APS did resulting in a lower allocation to Charters.
  4. The following example shows what APS did compared to what the Judge ordered (the numbers used are for illustration purposes only):

Charter School Lawsuit CalculationThe bottom line is that APS was trying to recover some of its unfunded pension liability by improperly manipulating the allocation formula for “local revenues” and was called to account by the Judge.

I will also note that APS – along with all Board of Education members – is appealing the decision. Given the clear cut nature of the calculation methodology in the GA Statutes as very clearly described in the Judge’s decision, every non-incumbent candidate for the School Board should beat the incumbents over the head with this issue. It was underhanded, inappropriate, sneaky and most importantly – illegal.

And as a side note – Tech High folded as a result of the “local revenues” withheld last year – do you think they might be planning a lawsuit against APS? If so, the taxpayers will pay dearly for the actions of the APS Administration and School Board.

APS – Beverly Hall – A Disaster Far Greater than Just the Cheating Scandal

April 19, 2013

As reported by CBS Atlanta “A lawyer for Beverly Hall says the former Atlanta Public Schools  superintendent is innocent and looks forward to having her day in court.” She deserves the presumption of innocence and I look forward to her having her day in court where I am sure justice will be done.

However, as I have written here in the past (see post “APS – Beverly Hall’s Legacy – Four Disasters – 1 Down – 3 to Go”), in addition to the cheating scandal, Beverly Hall presided over a number of disasters – three of which are still with us today, as follows:

  1. She started a building spree and over $100 million was spent for three new high schools that exacerbated over capacity from 15% to over 35% in the high schools. APS is still struggling with the issue today and every year millions more are spent on maintaining the excess capacity.
  2. She started many “reform programs” and spent over $40 million on staff and consultants to implement the “reforms” and the costs of the programs are still with us. Unfortunately, Superintendent Davis – in his State of the Schools speech in August (as reported in Get Schooled by Maureen Downy) – said “80% of APS’ schools were failing … and that none of the over 220 education reform models and initiatives tried by APS over the years had worked.”
  3. As the new “one time” costs associated with the reform programs were wound down, instead of being eliminated from spending, they were simply transferred to the School Administration Division budget. So over the course of five years, the number of “administrators” increased dramatically – and at a cost of over $60 million. And this cost lives on today at approximately $12 million per year for extra administrators – a cost that was readily approved by Dr. Davis and the current Board of Education – and with no end in sight.

The Courts will decide if she is a criminal in regards to the cheating scandal. However, the other three disasters she imposed on APS and the Atlanta taxpayers represent an assault of similar proportions.

APS & Charter School “Per Student Spending”

April 18, 2013

Recently I was asked the question – “Why does APS spend in the neighborhood of $14,000 per student and only funds Charter Schools at a $9,000 level per student? What are the differences?” The Chart below begins to shed some light on the differences in “Spending Per Student” by type of expenditure.

APS vs Charter Per Student Spending

A couple of comments to help explain the differences:

  1. The $14k noted in the question includes APS spending of Federal funds (primarily Title I and Nutrition) and SPLOST funds that are not allocated to Charter Schools. Accordingly, these amounts are left out of this analysis and the appropriate comparison is between APS General Fund per student spending and the amount APS funds to Charter Schools on a per student basis.
  2. APS spends $9,037 per student on the core functions of Direct Instruction, School Administration and Operations. This amount is $142 higher per student than the $8,895 spent per Charter School student. I believe the primary difference is attributable to the additional “local revenues” available to APS that are not allocable to the Charter Schools (E-Rate, Tuition charges, investment interest, etc.).
  3. There are two items that the Charter Schools do not incur, but APS does – Transportation costs and payment on the unfunded Pension liability. These costs amount to $1,310 per APS student.
  4. The biggest difference is the APS spending on General Administration – $1,247 per student. These types of costs are not funded for Charter Schools and the Charters must find ways to fund it on their own.

Based on this analysis, a couple of questions come to mind:

  1. Why is the cost of General Administration for Charter Schools not funded?
    The answer lies in the mechanisms used for State QBE funding and subsequent allocation of “local revenues” which is derived from the State QBE calculation. In short, the QBE does not take into consideration the General Administration expenditures as part of the methodology used.
  2. Is it equitable that local taxpayers must fund the cost of General Administration for APS, but that Charter Schools (which are also public schools) are on their own to fund this expenditure?
    My answer would be no. If the APS Board of Education has determined that it should spend $1,310 per student on General Administration (or over $57 million in the FY13 Approved Budget) then it should allocate a similar per student amount to the Charter Schools for the costs they also incur for these functions. If they did, the additional funds that would flow to the Charter Schools would amount to $6.5 million.

    Anyone want to take a guess as to which system would put the funding to better use? You know the answer.

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