APS – FY14 Budget – Implications of Not Considering Additional Spending Cuts – Short Term Thinking & Major Election Issue

As I noted in a prior post, the Budget Commission instructed Superintendent Davis to come back to the full Board with an additional $1.3 million in cuts prior to approving the FY14 Budget. During the meeting on Thursday, the Board went into Executive Session to discuss this and other issues.

When the Board returned, the budget resolution offered did not include the additional $1.3 million in cuts. Superintendent Davis indicated that due to a $1.5 million higher FY13 year-end General Fund reserve, the “risk” of dropping through the $41 million critical threshold was overcome and therefore the additional $1.3 million in cuts did not have to be enacted.

Let’s think a bit about Superintendent Davis’ assertion and the implications of not adopting further cuts.

While the contention may be accurate; this tells us a lot about Superintendent’s time perspective on issues. It is short-term at best – this is his last year at the helm and FY15 issues are not his problem. But FY14 issues are and his pushing aside the additional $1.3 million in additional cuts (or more as I have contended) is irresponsible.

The General Fund reserve is now projected to be at approximately $45.3 million – a $4.3 million cushion over the $41 million critical threshold. But remember, there are other significant financial risks on the horizon, such as:

  1. The $6 million in revenue from the sale of the property to AIS is now in question. Without this sale, the reserve could easily drop to $39 million.
  2. In each of the FY11-13 years, the Board approved a budget and then spent far more. In FY11 – $23 million more, in FY12 – $28 million more and in FY13 – $6 million more than the original budget. Is the fact that they Board has a track record of spending far more than the original budget approved not a significant “risk” in FY14? Even using the lowest amount, again, the reserve could fall to the $39 million level or lower.

Are there other unknown “risks” that will affect the FY14 Budget?

If history serves as a guide, the answer is yes. The unknown “risks” (some positive – most negative) always show up. Whether it is additional encumbrances (which are not in the current budget – $5 million in additional cost over budget in FY13), the new program “du jour” or the understatements of cost in the original budget – it is with almost certainty that they will appear in the coming months.

What then?

The fiscal cliff is still there and will have to be dealt with – Superintendent Davis’ is short-term and has punted on the issue. But the Board members who approved the FY14 Budget – COB Reuben McDaniel, VCOB Byron Amos, Emmett Johnson (not running for reelection), Yolanda Johnson (not running for reelection), Brenda Muhammad and Courtney English should explain their fiscal decision in the upcoming election.

While there are many issues the candidates for the Board will have to address, the looming fiscal crisis is one of the most important as it will affect every decision the Board makes going forward. With their votes to approve the FY14 Budget with a $26.6 million deficit, McDaniel, Amos, Muhammad and English are now firmly on record with their positions on the issue.

One Response to APS – FY14 Budget – Implications of Not Considering Additional Spending Cuts – Short Term Thinking & Major Election Issue

  1. Robert Ross says:

    On the upside, he may e doing us all a favor by holding the line until a new board and new superintendent take the helm. It will give them more flexibility in the future.

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