Another look at the 65% test waiver passed by the Board of Education

December 3, 2014

In yesterday’s post, I indicated that there was a reasonable justification for approving the waiver on the requirement that schools spend 65% of their funds in the classroom. However, I also noted that a full set of reasoned and detailed justifications for approving the waiver were not provided to the Board. Even so, the Board passed the waiver 5-3, with Meister, Briscoe-Brown and Amos in opposition (Lee was ill and was not present for the vote).

As background, Georgia law mandates that 65% of a district’s expenditures be directed to specific in-classroom activities as defined by the statute. APS failed to spend more than 56.4% in both FY13 and FY14 and, based on the submission of a waiver for FY15; it is unlikely that the percentage in FY15 will increase much above the percentage reached in the last two years. The district can also pass the test if the level of defined expenditures increases by 2% over the prior year. However, the level did not increase in FY14 and it is unlikely that the 2% increase will not be met in FY15.

The submission of a waiver is not required until sometime in mid-2015 after the FY16 budget is prepared when the data is in hand to estimate the level of compliance with the statute. Given the early adoption of the waiver well in advance of the Board needing to do so, it indicates that the administration and the Board members voting for the waiver do not intend to make a serious effort to try to transfer more resources into in-classroom activities in advance of even considering them during the upcoming FY16 budget discussions.

If this is not the case, then why vote for it now without all the facts and information in hand to make a fully informed decision?

From what I could discern from the presentation and subsequent discussion, the administration was justifying the waiver for the following three reasons:

  1. As a matter of expediency to take the issue off the table early in the process.
  2. There was no plan in place to strategically make changes to bring APS into compliance.
  3. The current percentage of in-classroom spending is the result of a number of prior Board actions and decisions that allocate spending in a manner that results in a failure of the 65% test,

I think that justification 1) and 2) above are easily dispensed with – expediency is not a credible justification as the waiver does not need to be submitted until next June and there will be a budget process  in place to develop a strategy and an expenditure plan to start bringing APS into compliance.

However, the third justification has a significant amount of merit and the administration could have easily expanded upon the decisions that the Board has made in the past that significantly impact the organizations ability to become compliant with the statute. But to do so, the administration would have had to open a can of worms that it likely did not want to begin addressing.

If that in fact is the case, then let me be the bearer of some of the bad news.

First, let’s go to the numbers. Based on the data provided by the administration, there was a total of $390 million of qualifying in-classroom expenditures out of a total of $691 million (this includes General and Special Revenue Funds). To meet the full 65% test, APS would have to shift $59.4 million from other activities to in-classroom spending. That means that nearly 20% of the $301 million of spending on non-classroom activities (as defined) would have to be shifted out of that category. Sound impossible? Maybe, but let’s begin looking at some of the policy decisions that have been implemented by previous Boards that impact this.

One of the more recent significant decisions made by prior Boards was to not close some of the small schools in the district. The cost of keeping the small schools open – including extra in-school administrators, building maintenance and operations, security services and bus routes – is very significant. My estimate is that the incremental costs to keep inefficient schools open is in the neighborhood of $12 million. To get this kind of savings would require closing nine elementary schools, one middle school and one high school. This would not be an easy task, but if the Board wants to begin improving in-classroom spending, it will have to tackle the redistricting issue one more time.

Another prior decision that needs to be addressed is the underfunding of the pension plan. In FY14, APS will put over $49 million into the underfunded pension plan and the number goes up from there. Why? Because prior Boards going back 30 years irresponsibly failed to address the problem when it arose in the 1970’s. Had the issue been addressed when it arose, APS would now have the flexibility to use the $49 million for in-classroom activities. However, today the money has to be spent on a pension plan that provides no benefit to current students and only a small fraction of the $49 million is related to current employees.

In addition, over the last three years, the Board has not been able to get the administration to reign in central office school and general administration costs. Since FY13, these combined costs have risen by over $9 million or 29%. And, as I have noted before, these costs continue to escalate even though the enrollment for the traditional schools have declined by nearly 3% during the last four years. While I understand that it is difficult to adjust administrative spending to annual enrollment changes, APS must adjust administrative spending to the longer term trend of declining enrollment. If it had done so, admin spending would not have gone up by $9 million, but in fact decreased by $1 million.

In conclusion, the administration should have made the case for the 65% test waiver based on many of the facts above which indicate that there are structural issues that are not easily solved and impact the in-classroom spending percentage. However, this is not to say that the current Board should make no effort to find a way to add another 2% in FY16 to come back into compliance in the near term. The 2% represents approximately $14-16 million that should be reallocated to in-classroom spending to remain in compliance with the statute.

And, to kill two birds with one stone, how about reallocating the $14-16 million to reducing the class sizes and bringing down the class size waiver that remains a controversial item before the Board?

While it will require some hard decisions, these decisions should be taken on during the upcoming budget season and a reasonable effort should be made to reach the 2% target. And until such an effort is made, there is no compelling reason why the waiver should have been passed in the last Board meeting – or for that matter – even be considered until after the FY16 budget is complete.

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Board of Education rejects +5 class size waivers

December 2, 2014

The Atlanta Public School Board of Education rejected the proposed maximum class size waiver of +5 by a vote of 4-4. As the proposal did not get a majority, the measure did not pass. Voting in opposition were Meister, Briscoe-Brown, Amos and Collins. Board member Lee was ill and not present for the vote.

Board member and Budget Committee Chair Westmoreland made the motion to accept the waiver and it was seconded by Grant. Upon the rejection of the waiver, Board member Grant – who voted in support for the +5 waiver – requested that the matter be reconsidered, however, under parliamentary procedures, a vote for reconsideration can only be made by one of the members voting against the measure. No further action on the item was considered by the Board prior to adjourning.

The Board also considered a FY16 waiver from meeting the 65% test which, under Title 50 of the Georgia statutes, mandates that 65% of a district’s expenditures be directed to specific in-classroom activities as defined by the statute. APS failed to spend more than 56.4% in both FY13 and FY14 and, based on the submission of a waiver for FY15; it is unlikely that the percentage in FY15 will increase much above the percentage reached in the last two years. The district can also pass the test if the level of defined expenditures increases by 2% over the prior year. The waiver was passed on a 5-3 vote with Meister, Briscoe-Brown and Amos in opposition. Board member Lee was not present for the vote.

As a historical note, the class size waiver typically has been passed in prior years shortly after the budget is prepared and the resource levels that will (or will not) be devoted to reducing class sizes is known. The 65% test waiver is typically not passed until near the end of the fiscal year when it can be determined that the waiver is needed. The consideration of both of these waivers now is highly unusual and some the Board members questioned the need to do so in advance of the FY16 budget discussions in the spring.

While there was extensive discussion on both topics, my sense is that the three most important paraphrased quotes are as follows:

  • Superintendent Carstarphen – We agree that changes need to be made… We are not prepared to move on these changes now… What we have not seen is a coordinated, thoughtful and informed effort [to address both of these issues]. There isn’t a plan – if we are going to change, we need to be strategic about it.
  • CFO Burbridge – [if the waiver is passed] the FY16 preliminary budget will be prepared using the +5 maximum class size.
  • Board member Meister – I have faced this decision for five years … and there are always data integrity issues. It is now time to draw a line in the sand for the sake of the kids. I know it will be tough and hard to eke out a 2% increase and a waiver of +3. If we as a Board don’t do it now [when will it happen]?

I have carefully reviewed the taped discussion (see here on livestream) to find the compelling reasons why each of these waivers needed to be passed now instead of passing them after a full and complete set of discussions on the FY16 budget that incorporates these two items. The only reason that was in any way articulated was that the waivers should be passed now for expediency reasons and to get them out-of-the-way.

And in many ways, Carstarphen’s remarks in support of the passage of the waiver almost seemed to provide the compelling reasons not to pass them last night. As noted above, she stated that APS has not seen a coordinated, thoughtful and informed effort on these matters and there isn’t a plan.

Well, isn’t that what the budget process is all about? Shouldn’t the two waivers be part of the ‘coordinated, thoughtful and informed effort’ that is the budget process?  If there is no plan now, shouldn’t there be an effort as part of the budget process to create a plan to address both class size and allocation of resources to in-classroom activities?

My sense is that bringing both of these items before the Board now – and far in advance of actually taking these items into consideration during a budget process – was ill-conceived and “expediency” was an insufficient justification.

I also believe it is unfortunate that the 65% test waiver was passed. Based on my assessment of the numbers (none of which were presented last night), I believe that there is sufficient justification for passing the 65% test waiver in the future. However, the administration did not provide any compelling justification for passing it now and it certainly did not provide any numbers that would support their reasoning and clarify their position on the issue.

Further, I challenge any Board member that voted FOR either waiver to articulate a compelling reason why they had to be passed last night and why they could not wait until after a complete and thoughtful discussion on the FY16 budget priorities and expenditure allocations was completed in the spring.

A full and complete discussion on both waivers should be held within the context of available resources and their allocation based on the Board’s priorities. That is what the budget process is all about, and that is when the decisions on the waivers should be made.

I believe that the Board made the right decision to defer the decision on the class size waiver to a later date. Meister was right when she said it was time to “draw a line in the sand …if not now, when?”

The Board campaigned on and was elected to make tough decisions in favor of improving educational outcomes. And while the tough decisions still have to be made, they should be made as part of a budget process and not solely for reasons of expediency.

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APS – Allocation of Resources Between Direct Instruction & School Administration 3 of 6)

May 19, 2013

Below is a Chart that looks at the allocation of resources between Direct Instruction & Student Services and School Administration with questions for the Board and Administration below it.

APS Allocation of Resources School Admin vs Direct 051913

  1. There has been a small shift in the percentage of resources allocated between Direct Instruction and School Administration. However, if the proposed cuts discussed in the Budget Commission Meeting on May 16 are adopted, it is likely that total Direct Instruction expenditures will be flat or decrease as compared to FY13. This will also result in the percent of spending on School Administration activities to increase in relation to Direct Instruction. Is it the Administration’s judgment that the resource allocation between the two components is appropriate? What are the expected outcomes and benefits from redirecting resources towards School Administration?
  2. The Administration has indicated that, for purposes of the “65% Test” required by the GA DOE, APS is at approximately 57% (approximately 61% if Charter School Spending is included). Does the Administration have any plans to begin moving towards bringing this number into compliance with the State requirement over the next several years or is an ongoing annual “waiver request” part of the overall strategy?

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