Atlanta Public Schools issues preliminary FY15 Budget – Revenues $610 million, Expenditures $655 million with $45 million deficit


The Atlanta Public Schools released their preliminary FY15 budget yesterday. Revenues are anticipated at $610 million – up $39 million from FY14 and requested expenditures of $655 million – up $60 million from FY14. The result is a preliminary budget deficit of $45 million. The proposed budget deficit would use 54% of the General Fund reserves and bring the reserves down to approximately $38 million or 5.8% of total annual expenditures – well below the critical threshold of 7.5%.

CFO Burbridge indicated that the expenditure numbers were very preliminary and represented the requests made from each major division within APS and the administration would go through an extensive review to begin cutting the total expenditures back from $655 million to $630 million which would result in a General Fund reserve drawdown of $20 million for FY15 and leave a reserve balance of approximately 10% of proposed expenditures.

The following are some of the key highlights of the Budget Commission discussion:

  1. The excellent news is that the projected revenues are up substantially from FY14. The projected increase of $39 million is primarily coming from an increase in local tax revenues with some additional amounts from increased state QBE revenues. Mr. Burbridge also indicated that there was potential upward pressure on the revenue numbers – meaning that they could go higher than the current projection.
  2. Mr. Burbridge indicated that the FY14 revenues were coming in much stronger than expected and it was possible that the budget deficit of approximately $25 million for FY14 would be reduced to zero. This estimate also included the possibility of an increase in the FY14 budgeted expenditure by $5 million and that would bring in total FY14 expenditures in at $600 million.
  3. Head of C&I Karen Waldon spoke for over an hour and 45 minutes on the objectives for improving educational outcomes. The major priorities she addressed were a renewed focus on non-traditional education programs including online learning and e-books; enhancing wraparound services for students; a greater focus on early education; the continued implementation of Common Core; and establishing a Chairperson for each discipline at each of the middle and high schools to better coordinate content. [Comment – Unfortunately, her presentation was sorely lacking in any numbers regarding the impact on student outcomes. I still don’t get it – essentially she was saying “give us more money, but don’t ask us how the incremental funds will improve educational outcomes. Hopefully the BOE will press her much harder on this in future meetings.]

The requested increase of $60 million in expenditures was composed of the following items:

  1. An increase of $10 million for charter schools – this increase is the result of both an increase in charter school enrollment and the increase in local revenues.
  2. An $11 million provision for a 3% pay raise across the system.
  3. A $7 million increase in IT expenditures to expand system bandwidth and provide additional technical support for the schools.
  4. A reduction of $1 million for media paraprofessionals.
  5. A $6 million increase to convert approximately 120 bus drivers to full-time. Currently bus drivers all work part-time on a 4 or 5 hour daily schedule. [Comment – of all the proposals made, this seemed the most tentative and my sense is that it will not make it through the process.]
  6. A $9 million increase in Curriculum and Instruction. This increase includes the addition of 50 staff to take on part of full-time responsibilities for coordinating the Student Support Teams at each school to address high risk students and a reserve for emergency funding of priorities that arise during the year.
  7. A $10 million increase to eliminate furlough days and to reduce the savings from Vacancy Management. [Comment – since the inception of the FY14 budget I have asked on numerous occasions how was the administration monitoring the Vacancy Management cost savings in the budget. I received no answers, but essentially Burbridge admitted yesterday that the Vacancy Management savings in the FY14 budget would not be achieved and there was no system to effectively manage it.]
  8. A $5 million increase in benefits. However, the increase is far less than it otherwise would be as the Pension Liability Payment has been reduced by $5-8 million over the scheduled amount previously agreed to.

I think that it is interesting to note that many of the issues that were campaigned on during the recent election were effectively ignored by the administration, as follows:

  1. There was no discussion of budgeting at the school level and how in-school leaders would get additional responsibility and accountability for the use of funds.
  2. There was no reduction in class sizes – the administration still wants to proceed with a +5 class waiver.
  3. There was no attempt by the administration to begin establishing a balanced budget in which revenues are equal to expenditures. Even if the administration cuts the current proposal, they still are advocating for a $20 million use of General Funds reserves.
  4. There was no clear indication that funding was increasing for grades K-3 or 4-5, which are the areas of early education the system can demonstrably impact.
  5. There was absolutely no indication that central office administration was being cut or that resources were being transferred from administration to the school-house.

Offsetting the General Fund revenue increases are a $33 million decrease in Special Revenues. There is a $16 million reduction in Federal Title Programs resulting from lower levels of carryover from prior years and a $16 million reduction in other Special Revenues for which the administration did not provide any reasons.

My sense is that the proposed preliminary budget is simply a “wish list” and that it will undergo a substantial revision before it is presented again next Tuesday. However, this initial presentation is a huge disappointment as it seemingly ignored the many issues that the voters clearly supported during the recent elections. It is now up to the newly elected Board to begin making good on their campaign promises and push for real change in how funds are being spent.

[Follow me on Twitter @Financial_Decon]

8 Responses to Atlanta Public Schools issues preliminary FY15 Budget – Revenues $610 million, Expenditures $655 million with $45 million deficit

  1. Robert Ross says:

    I would not seriously expect any major change in the administrative status quo until a new superintendent is hired. We are dealing with a placeholder at this point. My understanding is that the board is moving fairly rapidly to get someone permanent in place. Once that happens, I would expect to start to see some fairly substantial shifts!

  2. H.A. Hurley says:

    No surprise here!
    Promises, Promises, Promises!
    What are the legal costs to us taxpayers for Cheating Scandal and other litigations in APS?
    Where does one locate that data?

  3. Ashley Miller says:

    Nice to see you back in action! Missed you!

    Ashley

  4. Jarod Apperson says:

    $9,000,000 to hire 50 people? That’s $180,000 per person. Hmm…

  5. Jarod Apperson says:

    Ok, I see this also includes a reserve portion.

    • Jarod – the information we received on Tuesday was very high level with little or no specifics on the details of the incremental expenditure amounts listed. I think we will see more details next Tuesday. As to the $9 million increase requested by Waldon, in addition to the 50 people (I estimate that this is in the $4-5 million range) and the reserve (she did not specify how much), there is also funding for expanding the Atlanta Virtual Academy, transitioning to e-books, exploring starting a Vocational School Academy, funding the expansion of private/public partnerships to address high risk kids, and establishing a curriculum Chair for each discipline (English, math, etc.) at each middle and high school.

      Bob

      • Jarod Apperson says:

        Thanks for the extra context Bob! I hate that I will miss most of the budget commission meetings this year. Unfortunatley, I have a TR class conflict.

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