The Atlanta Public School Budget Commission met yesterday to review the FY16 Preliminary Budget (see prior post here). The information provided by the Administration was at summary level and the specific change in spending for all departments was not fully disclosed..
The Commission is now focusing on establishing the revenue estimate for FY16. Currently the revenue for the General Fund is estimated at $668.8 million. However, there are a number of other priorities that the Board and Administration wants to fund and, if the decision is made to do so, the funding source must be established.
The Commission will meet next Tuesday to consider the following funding sources:
- Raise property taxes –each one point increase in the millage rate would generate an additional $18 million.
- Use the General Fund reserves – APS policy states that the General Fund reserve will not go lower than 7.5% of expenditures which places the floor on the General Fund reserve at approximately $50 million. The current projection is that the General Fund balance will be at approximately $62-66 million at the end of FY15 – and the $12-16 million over the $50 million threshold could be used to fund additional activities in FY16.
- Reallocate the proposed spending plan – the Board could request that the proposed spending plan be reallocated to fund other Board priorities by making additional cuts in other programs.
- Include the $13.5 million Beltline payment – the current budget proposal does not include any payments that are due from the Beltline (and the City of Atlanta) as the amount due is under dispute. Inclusion of this amount in the budgeted revenues would cover a substantial portion of the other priorities under consideration but yet unfunded.
- Generate some savings from the Pension Liability payment by restructuring the debt – this alternative could generate some incremental cash flow, however the timing and the amount of the savings cannot be determined as the Pension Committee Task Force has not yet reached a conclusion or provided a recommendation to the Board.
The decision to include additional resources in the FY16 budget is a tough one – raise taxes, reduce other costs, use the General Fund reserve or rely on potential resources that may not materialize during FY16.
On the expenditure side, the Board and Administration have four priorities that it would like to fund, but cannot do so until a decision on the revenue side is made. The four priorities are as follows:
- It is estimated that it will cost approximately $13.0 million to address the “pay parity” issue that will bring APS employees affected by the pay freeze instituted in 2010 to the same salary level of employees hired subsequently.
- $5.0 million in additional resources for the 10 clusters in APS – these resources would be provided to school leaders who would then have the flexibility to use the funds to address specific issues they are encountering in their schools.
- The Board has indicated a desire to expand the Pre-K program by eliminating the current waiting list and improving employee quality and retention by increasing compensation. The cost of the expansion and compensation increases is approximately $2.6 million.
- Increased spending on extracurricular activities and enrichment programs – the approximate cost of the incremental spending was not disclosed in the meeting.
Budget Commission Chair Matt Westmorland indicated that he wanted more time for all Board members to consider the issues they face and a meeting to consider the alternatives shown above has been scheduled for Wednesday, February 25th at 9:00 a.m.
I will add that the Board now finds itself in an interesting position. The Administration has taken certain steps to reduce the cost of the administrative functions by a total of approximately $7.7 million; however these savings have been used to fund State and other mandates (Special Education, increase in pension costs, etc.) The reallocation of cost begins to fulfill one of the major campaign promises from last year’s election. However, except for the mandates noted above, the budget does not actually increase the number of staffing resources in direct instruction or address prior inequities in compensation practices. If the Board intends to fund additional changes, it will have to make some very tough decisions.
On a technical note regarding the information provided by the Administration on the FY16 Preliminary Budget – while some specifics were included in the presentation, approximately 30% of the spending was grouped in an “Other” category and the specific expenditures for Program included in “Other” was not shown. Additionally, the FY15 Amended Budget – which was used for comparison to the FY16 Preliminary Budget – has changed substantially from the information released in December and again, it is unclear how the FY15 projected expenditures will look by Program.
The Board did request that additional detail at the Program level be provided in advance of the next Commission meeting – the Administration indicated that it would comply with the request.
I would add that until more comprehensive information is in the hands of the Board and the public, it is impossible to come to any conclusions on the FY16 Preliminary Budget. The Administration does get credit for generating the initial budget on a very timely basis and for using the FY15 Amended Budget as a comparison to next years spending levels. My understanding is that Finance is working hard to generate better expenditure forecasts and the information they are providing is far more relevant than the FY15 Original Budget that has been transformed by the new Administration.
In addition, it is very clear that the Administration is making every effort to produce an accurate representation of the FY16 spending and wants to be very open with the disclosure of any contingency funds included in the budget. This is a refreshing change from prior budgets that were chock full of hidden budget cushions.
As Superintendent Carstarphen stated as she was being introduced to the community last spring – “if you want to know the district’s priorities. follow the money”. By presenting a true estimate of next years spending by Program, she is providing the Board and the public with a clear roadmap to the district’s priorities.
My sense is that by presenting an open, detailed and honest budget for FY16, it will go far in moving the needle on establishing the integrity of this new Administration – and doing so is consistent with a component of the new APS mission that calls for “the community has trust in the district”.
While there are many components to this, an open and honest budget that truly reflects the direction this Administration is a great start.