APS – Time to Focus on What the FY14 Draft Budget Says

In summary, the following are the “headlines” from the newly released detailed FY14 Preliminary Budget:

  1. Total expenditures (as adjusted) in FY14 are consistent with FY13.
  2. No change in total spending for Direct Instruction in FY14 – “class size waiver” issue not addressed.
  3. Student Services spending up 7.1%.
  4. School Administration staff located at the Central Office are up 17 positions.
  5. Cost of Operations up $1.2 million due to better budgeting and increased security services.
  6. General Administration Departments cut expenditures by $5.2 million or 8.2%.

The gory details are described below.

Up to now, we have been looking at the Administration’s proposals and the Budget Commissions deliberations. The numbers have been moving around a lot, but the information released last Friday is now likely to be close to the final Budget for FY14. As such, all the discussions, deliberations and “budget cuts” to-date are now irrelevant – the only thing that is relevant now is how the current proposal compares to the prior year and what do the numbers tell us about the Administration’s priorities and where are they focusing resources for the upcoming year.

As a start, Superintendent Davis has said on several occasions that the FY14 budgetary plan was essentially, and I paraphrase, a “status quo budget”. When the mandated changes (the increase in the State Benefit Plans and the increase in the required Unfunded Pension Payment) are factored into the analysis, Davis claims that the spending for FY14 is generally consistent with the prior year. In fact, this claim holds up to be true as shown in the Chart below.

APS FY14 Apples to Apples 060313

When comparing the spending on an “apples to apples” basis, the expenditures in FY14 are down slightly (less than 1%) over the prior year. Please note that the statement made by Davis has an underlying and unspoken assumption – that the spending in FY13 was the right amount and allocated properly. If you accept this assumption – which I do not – then we are to infer that FY14 spending in total is also reasonable.

The next and most important step is to determine if the Administration has changed the allocation of resources between major functions within the organization. Essentially, let’s follow the money and see where the Administration is prioritizing funding. At a summary level, the following Chart compares the current FY14 budget to the FY13 Amended Budget.

APS FY14 Summary V2 060313

Let’s look at each major component and see exactly what is happening, as follows:

  1. Direct Instruction – At face value, the $10 million increase looks good. However, the entire increase in Direct Instruction is due to the changes in the State Benefit Plans. As such, spending on Direct Instruction is nearly the same as last year. However, when we look at the underlying departments that make up Direct Instruction, there appears to be a substantial reallocation of resources. The Early Intervention Program came down by $8.8 million due to changes in State funding and eligibility issues. This said, Superintendent Davis has indicated that the same number of teaching resources will be applied to this program as last year (including use of Federal Revenues that are not reported in the General Fund). In addition, there has been a substantial change resulting from reclassification of teachers out of the Instruction Department to specialty areas (Fine Arts, Athletics, Foreign Language and Vocational Education). However, as the “pro-forma” information is not provided for last year, it is virtually impossible to determine exactly how much of additional resources were provided to these specialty areas. We should be able to get a better understanding once the revised Staffing Reports are released.

    Also, even though there was a significant parent outcry regarding the “class size” issue, this version of the budget indicates they were not listening. Unless something changes, expect the same problems you encountered last year.

  2. Student Services – In FY14, this entire area was restructured and broken down into its specific disciplines (Counselors, Psychologists, Nurses and Social Workers). When comparing these groups to FY13, something interesting arises. Salaries have increased by $1.7 million even though the number of staff has decreased by three – something does not seem quite right here. I will look into this much further once the Staffing Report is released. In addition, the Professional Services has decreased by $1.0 million to a reasonable level.
  3. School Administration in the Schoolhouse – This function is primarily composed of Principals, Assistant Principals, Academy Leaders, School Secretaries and School Clerks. Overall, the FY14 expenditures declined by $1.6 million, primarily as a result of a total of 18 fewer staff and a reduction in Professional Services. It also appears as if last year’s decision to increase Academy Leaders has been reversed as the number for FY14 is consistent with FY12.
  4. School Administration at the Central Office (includes Professional Development) – In FY14, the total expenditures have come down by approximately $500 thousand as compared to FY13. However, Salaries are up due to an increase in staffing of 17 positions. The Salaries and Benefits increases were offset by a net reduction of $1 million in Professional Services, Purchased Property Services, Other Purchased Services and Supplies & Materials. As I have noted before, this group should seriously reassess its staffing levels and lower it significantly.
  5. Operations – Operation Management, Facilities and Custodial Services expenditures are down $1 million from FY13 primarily due to a reduction in utilities cost. Safety & Security are up $400 thousand as a result of expanding the relationship with the Atlanta Police Department to strengthen school security. Transportation Services are up $1.8 million due to a more realistic budget that includes the cost for field trips (this was not included in prior years). Again, as I have noted before, there is substantial room in the Facilities function to further lower costs.
  6. General Administration – The General Administration functions finally heard the message and made some substantial cuts in FY14. In total, expenditures came down by $5.2 million or 8.2%. From a percentage cut standpoint, the standouts are Finance (down 16.1%), Information Technology (down 12.4%), Legal (down 21.6% – primarily due to lower CRTC costs) and Marketing and Communications (down 10%). The lone holdout with an increase in expenditures for FY14 is Human Resources with a 16.7% increase in cost (he has a lot to prove in FY14).
  7. Charter Schools – It appears that there is an increase, however, the increase represents the amount of funding withheld in FY13 pending the outcome of the litigation appeal.
  8. Unfunded Pension – The increase of $5 million is required by the manager of the Pension Plan to meet outflows from the Plan. Expect this number to keep increasing in the future.

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