APS – Sale of AIS Property – Parent Presents Compelling Arguments Against It

May 31, 2013

Today’s MidTown Patch published an open letter written by Tom Tidwell to the Board and Superintendent regarding the sale of the AIS property. His analysis is very thorough and complete. Prior to reading it, I viewed the sale of the property as  a needed “one time” revenue source that could be used to fund additional teachers. However, Tom presents a very strong case that the economic value of the property far exceeds the $6 million APS would receive upon its sale. As such, I agree completely with his conclusion that the property should NOT be sold at this time.

However, I do not completely agree with Tom’s conclusion that the $6 million should be taken from General Fund reserves. While the General Fund reserve could be taken down to the $41 million level, I also agree with the excellent explanation provided by COB Reuben McDaniel during the last Budget Commission meeting. Mr. McDaniel clearly explained the risks inherent in other revenue line items and the risk to the General Fund balance reserve when considering all the components of the Budget.  As such, my preference would be to find additional expenditure reductions along the lines that I have discussed in prior posts and to not plan at this time to use General Fund reserves in excess of the $21.5 million that is currently planned.

Again, Tom – thanks for your excellent write-up on the AIS property issue. Nicely done and I join you in urging the Board to not approve the sale of this valuable piece of property.

APS – Budget Committee Forwards Unfinished Budget to Board – Board Passes Millage Rates – Board Defers Passing FY14 Budget to June 27

May 30, 2013

The Budget Committee continued to struggle with the “class size” issue and the often unclear answers to questions it has put to the Administration. However, time has run out and the Committee had to “forward” a recommendation on the FY14 Budget to the Board to meet statutory deadlines. The information “forwarded” to the Board includes a series of open questions or statements of position by the Budget Committee, but no numbers as the detailed Budget still is being prepared. The Board “received” the recommendation, which included a resolution by Reuben McDaniel, Chairman of the Board to find an additional $2 million that would be used to hire up to an additional 26 teachers. In addition, the Board passed two resolutions that keep the property tax millage rates at the same level as this past year.

There was extensive discussion on a series of issues, as follows:

  1. Class size – Board Members Meister and Harsch-Kinnane focused on the cost of reducing class sizes. Based on information provided by CFO Burbridge, the cost of reducing class sizes down to a maximum of three over the DOE maximum for the fourth through twelfth grades is approximately $3.5 million. To reduce the class size for the same grade levels down to two over the DOE maximum would require an additional $4.9 million. My sense is that the $4.9 million was the preferred target, but Meister and Harsch-Kinnane are not official members of the Budget Committee and therefore they could not offer resolutions on the matter. As noted above, McDaniel did offer a more modest resolution for $2 million, which passed. The $2 million would be achieved with the use of no more than $1.5 million of General Fund reserves and additional furlough days for staff with a salary range at the Principal level or above.
  2. Under questioning, the Administration stated very clearly to the Budget Commission that the Budget did not contain any layoff of teachers in the pre-K through twelfth grades.
  3. Again, under very pointed and direct questioning, both Associate Superintendent Steve Alford Smith and Deputy Superintendent for Curriculum and Instruction Karen Walden stated unequivocally that no central or school administrative staff had received any raises during the past year or were there any raises for these staff members in the upcoming Budget. However, they did say that certain individuals did receive salary increases as a result of being promoted to new positions. Several Board members remained skeptical and requested additional information related to the numerous Departmental reorganizations, changes in positions titles and apparent compensation increases shown in the Preliminary Budget. I think this one is going to get very interesting given the strong and unequivocal denial that any salary increases had been given out.
  4. As a side note, the Administration has posted an updated schedule of all full time positions accounted for in the General Fund. The new schedule has an increase of 40 positions, bringing the total positions to 5,590. I will be reviewing this in detail and will also use this information to more specifically show where departmental reorganizations have resulted in salary increases.
  5. Harsch-Kinnane requested more information on the apparent increases in the budgets for Fine Arts, Foreign Language and Athletics. CFO Burbridge stated that there was no increase in total dollars spent in these areas, but that the specialty teachers had simply been reclassified out of the Classroom Instruction Department where they have been shown in the past.
  6. Karen Walden was specifically asked about the size and cost of the School Administration that is housed at the central office. Ms. Walden staunchly defended the level of spending and indicated that there was little if any room for any cuts to these departments. My sense is that certain Board members remained skeptical on this issue – one member stated – “it feels very heavy to me”.

There were a number of additional questions and statements of position established by the Budget Committee, but none of the additional items had a significant financial impact on the proposed Budget. For additional detail, please see the Talk Up APS Blog that provides a detailed presentation of the discussions.

APS – Budget Committee & Special Legislative Meeting Today at 3PM – FY14 Budget Must Be Passed

May 29, 2013

The Budget Committee of the Board will meet today at 3PM to consider additional proposals to the FY14 Preliminary Budget. Time has run out and the FY14 Preliminary Budget must be passed today to meet the statutory deadlines. As a result, the full Board is also scheduled to meet today at 5PM to pass the Budget.

In the last Committee meeting, the Administration was tasked with providing the detailed cost of reducing the “class size waiver” to the DOE maximum and to propose cuts that would compensate for the increased cost of teachers. It was clear that the Administration was a bit reluctant to provide this information and their only solution was to dip further into the General Fund reserve. It will be interesting to see what, if any, other proposals they make today. However, time is on the Administration’s side as the Budget has to be passed today.

In the event that the Administration’s only solution to the issue is to dip further into the General Reserve fund balance – which is not prudent – my recommendation would be to pass the Budget “as is” with the inclusion of the recommended cuts so far presented. Additionally, the Board should pass an  amendment to the resolution to include specific instructions that between now and final passage of the Budget on June 10, the Administration provide for an additional $7.5 million in cost cuts to the School Administration, General Administration and Facilities and that those funds be spent on teachers. Further, the Board should limit the “class size waiver” to a maximum of three over the DOE maximum.

This amendment allows the Board to meet the statutory deadlines, allows for a Budget to be published that accurately presents the expenditures on Direct Instruction and provides for cuts in other Divisions that can be detailed out in advance of final passage.

If the “class size” issue is important to you, let the Board members know today in advance of the meeting. My sense is that there are four strong votes for limiting the class size waiver – a fifth vote is needed to place the system on a path to reducing class size.

APS – Parents – A Call for Action Now on Class Sizes

May 28, 2013

The Atlanta Public School system is at a financial crossroads and it now has an opportunity to make the right choice on behalf of the students. Over the last month, there has been a continuing struggle to pass a budget for next year – finances are tight – however, the Administration now has the opportunity to reallocate resources in a way that will benefit the kids in school.

The major issue in front of the Board of Education is the average class size and, for the last several years, the Board has requested a waiver from the GA Department of Education’s mandated class size at the Elementary, Middle and High School levels. In the past, the waiver requested by the Board has allowed class sizes at the Elementary and Middle School levels to go from one to five additional students above the statutory maximum (up to three in the High Schools). But this year parents have risen up in opposition to the “waiver” and inundated the Board with pleas for help. The parents are passionate as they talk about their children in classes even above the “waiver” levels and they are concerned that they will encounter the same problem in the upcoming year.

The Administration has indicated that removing the waiver in its entirety across all schools would cost an additional $24 million – a level of resources the system just does not have available for the upcoming year. At the same time, the Administration has also indicated that the cost of reducing the waiver to “one to three” – which would only impact the Elementary and Middle Schools – is approximately $7.3 million. This is a critical point, as the issues regarding the class size are most acute at the Elementary and Middle School levels. So the Board faces a very stark choice – approve the waiver “as is”, or reduce the waiver to a level that eases the problems where it is most acute and incur the cost to do so.

The reduction in the waiver is the right thing to do, but where will the resources to pay for it come from? Over the last year, I have looked deeply into the system’s finances and the answer is very clear. It is now time to reallocate money from School Administration, Facilities and General Administration functions and move it to Direct Instruction by increasing the number of teachers for the upcoming year. Why is this possible now? It has become very apparent over the last several years that, when budget cuts are made, the impact is primarily on teachers – the administrative functions have essentially been spared staff reductions. This has been the case even though a number of schools have been closed and enrollment in the system has declined. This trend of driving resources to administrative functions, at the expense of teachers and class size, has to be reversed.

After an extensive review of the detailed Preliminary Budget for FY14, there is room for cuts in the administrative functions. In fact, my assessment is that there is at least $8.25 million that could be taken out of the administrative and operations functions and redirected towards Direct Instruction and provide more teachers in the classroom. This amount is more than sufficient to begin to alleviate the “class size” problem and would allow the Board to reduce the waiver request to no more than three above the DOE maximum. Will all the problems be solved by doing so? Absolutely not, but at least it is a start in the right direction. Remember who educates the kids – it is teachers and not “administrative staff”.

The Board and the Administration have a mandate to educate our children – it is now time to drive resources towards meeting that mandate in a way that is most effective by placing additional resources in the schools and taking them out of the downtown central office.

The Board will likely vote on this on Wednesday – so time is short and you must speak up now so that your voice will be heard. If you agree, contact your Board Member and let them know that this issue is important to you – and that their position on this issue will sway how you will vote in November.

APS FY14 Preliminary Budget – Summary of Findings & Recommendation – Let’s Get it DONE!

May 28, 2013

Over the course of the last month, we have looked in depth and analyzed the spending for every major function in APS and now the long slog through the “financial deconstruction” phase on the FY14 Preliminary Budget is complete. Digging deep into the details helps to gain “financial clarity” and the information leads us to the “right” financial decisions (but not always the easy ones). It is now time to come “up from the details” and summarize where we are:

  1. Revenues of $570.5 million, expenditures of $590.5 million and the use of $20 million of General Fund reserves.
  2. To get to the $590.5 million in expenditures, the Administration has proposed $20.4 million in cuts, the largest being no district wide bonus ($9.6 million), better Vacancy Management ($5.9 million), reduced cost of implementing a police force ($1 million), savings in Custodial staffing ($500k) and reduced energy cost ($500k).

In addition, based on the review of the FY14 Preliminary Budget, the following are my recommendation on where additional cuts should be made:

APS FY14 Summary of Cuts 052713

Implementing these cuts will not be easy, as it is never easy to do the same with less. However, it is the “right” thing to do. Why? The answer is simple – to reduce the “class size waiver” to a limit of three students over the State maximum, the cost is approximately $7.3 million. This reduction in class size would have a significant impact on Elementary and Middle Schools – where the problems are most acute.

And the “right” financial decision in this case is very straightforward – reallocate the $8.25 million to Direct Instruction and reduce the Elementary and Middle School “class size” to no more than a max of three district-wide.

As they say – no excuses – let’s get it DONE!

APS – FY14 General Administration Preliminary Budget – Some Good, Some – Not So Much

May 27, 2013

APS General Administration includes all the Divisions that operate at a purely centralized and administrative level. They include the Board of Education, Superintendent’s Office, Strategy & Development, Associate Superintendent, Finance, Human Resources, Legal and Information Technology. Below is a Chart that summarizes General Administration budgets by function and includes one, two and three year changes. A more detailed presentation by Department is shown at the bottom of the post.

APS FY14 GA Summary

A review of the information on these functions generates the following questions and comments:

  1. Board of Education – they have trimmed their support staff by one in FY14 and reduced the level of Professional Services – nothing left to cut here.
  2. Superintendent’s Office – The Associate Superintendent has been shifted from his Division to here, however, no change in the Salaries. Not sure why this is the case.
  3. Strategy & Development – As I have noted before, the FY14 Budget increase is a surprise as the major strategic planning effort was completed last year. Over the last three years, staffing has increased from 10 to 15 and the total budget has increased by 40% over the same period. Most of the additions are Project Managers with the likely responsibility of implementing the Strategy. But isn’t this a primary job for the Division Heads? The Strategy group should be cut back to at most $750k, with a savings of over $1 million.
  4. Associate Superintendent – There has been a small reduction in the FY14 budget as compared to FY13. But as I noted above, where is the Associate Superintendents salary reported? It does not appear here nor does it seem to appear in the Superintendent’s Department.
  5. Finance Division – This is the only team that has really taken an ax to the budget. Over the last three years, CFO Burbridge has done an excellent job of reorganizing the team to be more efficient and has reduced cost by over 26%. Well done!
  6. Unemployment Benefits – APS is self-insured and each year has to write a check for the amount determined by the State. With the lay-offs that have occurred during the last couple of years, this number is up.
  7. Legal – This is another budget that does not make sense to me. The major costs of dealing with the CRCT scandal should be behind them as the disciplinary actions are finished and it is now in the hands of the State Prosecutor. Given this, why is their budget up $975k over the last two years? Clearly there is room here for at least a $1 million reduction and, likely more.
  8. Human Resources – In the last couple of months, the Board approved the reorganization of this Division and the addition of 10-12 staff members. As the head or HR is new in the position, he deserves a chance to prove he can make substantial improvements. However, he must clearly demonstrate over the next year that the investment has been worthwhile. Let’s wait and see.
  9. Information Technology – This Division continues to post large year over year decreases in spending. How is this being achieved? The big decreases are in Professional Services, Other Purchases Services and Supplies. Clearly, the major projects requiring outside assistance are winding down. However, there is one anomaly here – Salaries are up 6% even though there is no increase in staffing. How can this be? As in other Divisions, simply reorganize and move people into higher paid job titles! As I have noted before, “shuffling the deck chairs” can work towards their advantage! My recommendation – take away the incentive to do this and mandate a 10% cut in total compensation and save $750k. Then leave it up the Division head to determine if he wants more staff at lower salaries or less staff at higher salaries.

In summary, some good changes have occurred, but there is still a long way to go. Strategy & Development should be cut $1 million, Legal should be cut by at least $1 million and IT by at least $750k, for a total savings of $2.8 million. These savings can then be redirected towards teachers and towards resolving the “class size” issue.

APS FY14 GA Detail

APS – FY14 Transportation Preliminary Budget – Salaries & Supplies Up as a Result of Appropriate Budgeting in FY14

May 25, 2013

Update – Headline was modified to more correctly state the changes.

Below is a Chart with the key data for the Transportation FY14 Preliminary Budget. It is relatively straight forward and only prompts a couple of questions, shown below and the answers I received from APS.

APS FY14 Transportation Budget 052413

Questions – Salaries have tended to bounce up and down over the last several years, while staffing stays relatively the same. Why is this happening? Does APS expect to hit the FY13 Amended Budget for Salaries? If so, why are Salaries up $1.8 million in FY14? What is the increase in Other Purchased Materials?

Answer – Prior to FY14, the cost of staffing and fuel for field trips was not budgeted, but was incurred as shown in the FY12 Actuals. The FY14 Budget includes the cost for these two items.

The answers are very straight forward and it is clear that the FY14 Preliminary Budget is more realistic of what is likely to occur than previous budgets. Bravo!

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