APS – How to Fix an $8 Million Budget Shortfall Problem – UPDATED


[UPDATE – Jarod Apperson, who is extremely knowledgeable regarding school finance issues, provided me with a couple of significant corrections to the post below. First, if a Charter School uses an existing APS property it does so rent free. However, the upkeep of the property is the responsibility of the Charter School. Second, to fully realize the savings from establishing new Charter Schools, the administrative function at APS must downsize appropriately to reflect the lower enrollment in non-Charter Schools. Both great points and the post below has been revised to reflect them.]

As noted yesterday, the Atlanta Beltway payments of over $8 million are now seriously in doubt and the deficit for FY14 just climbed to $29.5 million. This level of deficit takes the General Fund reserve down to $41 million – which is as low as it can go without seriously impinging upon the District’s ability to pay its bills throughout the year without incurring debt.

The continuing approval of budget deficits over the last four years and the reliance on one-time revenues that do not recur in the following year has now brought the District to a near crisis point.

So what can be done? Where can they find the savings to bring the deficit back down to at least the $21.5 million level originally approved and that will put the District on a path towards a truly balanced budget?

The following are some suggestions:

  1. Eliminate the Departments with a salaries budget allocated, but no employees. These are the Teaching and Learning Admin (1272), the School Improvement & Leadership Development (1307) (not to be confused with 1511) and the Services for Students (1306) Departments. Total savings – $506 thousand.
  2. Align the Assistant Principals and Academy Leaders with the numbers of Principals and schools. There are 87 Principals, but there are 105 Assistant Principals, 25 Academy Leaders and 101 Registrars. At most there should be 87 Assistant Principals and 87 Registrars. However, smaller schools do not need an Assistant Principal – time to reevaluate the experiment started by Davis last year – it is just too costly. If Academy Leaders are present in a school, why the need for an Assistant Principal as well? Savings – at least $4.2 million.
  3. The C&I administration function (excluding the group noted above) has approximately 110 administrators. Cut 15 positions with an average salary $70 thousand – including employee benefits the savings is $1.4 million.
  4. In the last round of supposed “budget savings”, Operations offered up $400 thousand that was actually an initial budget overstatement – not a savings. How much more is there in their budget like this? Let’s find out. Cut $2 million from the Operations budget (exclude Transportation, Security, Utilities and Custodial Operations). This can be accomplished by finding more “budget savings”, cutting staff or a combination of both.
  5. From the Assistant Superintendent’s 4 Departments with 34 staff – cut 5 positions – savings $400 thousand.
  6. From Human Resources – 5 Departments with 60 staff – cut 10 positions – there will not need to be as much hiring in the coming year as was expected. Savings $820 thousand.
  7. From the General Counsel’s Office – 2 Departments with 10 staff – cut two attorneys – savings $270 thousand. There is likely additional savings in the Professional Services line as well.
  8. From Information Technology – 6 Departments with 90 staff (excludes Media Services) – this Division did a good job of making cuts in the first round of budgeting so their new cut needs to be less than the others – cut five positions for a savings of $450 thousand.
  9. From Finance – 9 Departments with 72 staff – again, this Division did a good job of making cuts in the first round of budgeting so their new cut needs to be less than the others – cut four positions for a savings of $310 thousand.

The total savings from the suggestions noted above amount to nearly $10.4 million – problem solved. And please notice that not a single teacher in the classroom was cut. In fact, given the extra $2.4 million in savings, let’s continue to prioritize teachers in the classroom and use the $2.4 million to add an additional 40 teachers.

Are these cuts “tough” – maybe, but they are necessary.

In addition, these cuts do not solve the longer term problem of budget deficits. Even with the cuts noted, the General Fund deficit will still be $21.5 million – which is a level that is unsustainable. The Board needs to begin planning a way to address this as there is no room in the FY15 Budget for deficit spending.

The longer term solutions include:

  1. Last year the recommendation was to close 13 schools, but only seven were closed – time to begin planning to shutter the other six in FY15. And this time, the administrative and operations functions will have to downsize further to reflect the lower number of schools.
  2. It is clear that Charter Schools result in a financial savings for the District. Charter Schools pick up the cost of their buildings and administrative functions and reduce the enrollment that needs to be administered by the APS central office. It is time to get aggressive with a plan to initiate an additional 7-10 new Charter Schools in the next two years. The Charters can use the existing overcapacity of the current school buildings and thereby cover the District’s expense of [added] maintaining the schools with rental revenue. In addition, the reduced enrollment in the existing result in lower administrative, operational and teacher costs. [added: to fully realize the savings from establishing new Charter Schools, the administrative function at APS must downsize appropriately to reflect the lower enrollment in non-Charter Schools. This savings would be in addition to cost savings from fewer teachers in APS and lower operational costs.]

A crisis always has a way of focusing the mind and adding steel to the spine. Let’s not “let a crisis go to waste” – it is time to make the very necessary fundamental changes now to place APS on a path to fiscal sanity.

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