PWCS Can Find Money for Cars, But Not To Reduce Class Sizes

At the March 19, 2013 School Board meeting, the board approved the budget for the 2014 – 2015 school year.  The budget provides for limited class size reductions in 6th grade, a 3% salary increase for faculty and staff (of which 2% is from PWCS and 1% is from the state and will go directly back out to pay for a 1% increase in VRS contribution rates), and a step increase for faculty and staff at Step 1.  Health insurance costs will increase 4% for faculty and staff.

Many of you will recall that this fall the Superintendent provided a plan for reducing class sizes in three grade levels – kindergarten, 6th grade, and 9th grade.  This plan was developed at the request of the School Board based on their expressed opinions that reducing class sizes at the “transition” points would produce the greatest results.  The total projected cost of this plan was $3,563,323, which would have added 40.2 new teachers (cost $3,143,883), 3 new professional development coaches (cost $244,440), and additional funding for conferences (cost $175,000) {see full plan here ===>Class Size Reduction}.

The Superintendent’s budget for the 2014 – 2015 school year only funded class size reductions in 6th grade.  Gil Trenum and Alyson Satterwhite presented a plan last night that would have adjusted the Superintendent’s proposed budget and funded the two additional pieces of the class size reduction plan, increased allocations to schools by $3 per pupil, and provided funding for replacing the tracks at Gar-field and OP.  That plan could only garner the support of three school board members – Gil Trenum, Alyson Satterwhite, and Lisa Bell.

What was in this plan, that only three school board members could support?

I was on the Gainesville / Brentsville District Budget committee and will share what we developed for Gil and Alyson that formed the basis for the plan. (please see UPDATE at the end of the article for clarifications and corrections).

Priorities

  • Our first priority was to find money to increase teacher compensation.  We found that in the Utilities budgets, and adjustments there were able to provide enough additional money that teachers could get an additional 1% increase.  We know 1% more isn’t much and isn’t enough, but the savings we found were enough for the additional increase.
  • Our second priority was to find enough money to provide for the 9th grade and elementary grade class size reduction.  The total cost of those, excluding the professional development pieces, was $1,758,723.
  • Our third priority was to find money to increase the allocations to schools for supplies.  The total cost of increasing the allocations to schools by $3 per pupil was $261,141.
  • Our last priority was to find about $845,000 to repair and expand the tracks at Gar-Field and OP.
  • Total cost of the last three priorities – $2,864,864

Where we found it

Tracks

For the tracks, we proposed applying $1 million of the 2nd quarter carry forward to replacing the tracks at Gar-Field and OP.  In the 2nd quarter budget update for the 2013 – 2014 school year, staff requested that they be allowed to carry forward about $27.8 million in savings that would be used for capital improvements in the 2014-2105 school year.  We proposed applying about $1 million of that to replacing and expanding the tracks at Gar-Field and OP.

This, along with the plan for adjusting the budget to reduce class sizes, was rejected last night.  At the meeting Mr Cline did commit to replacing these tracks this summer and said he will present a plan for it in May.

That left us with about $2 million to find ($2,019,864 specifically).

The first place we felt needed adjusting was Other Tuitions, Fees, and Revenues.

Revenue Adjustments

Each year PWCS receives money from multiple different sources – the federal government, the state, and county taxpayers. PWCS also receives money for various things we do, like student parking fees and sales of equipment.

Since 2010, projections for these items have been about $3.5 million to $4.9 less than what was actually received.  Some of the items on the list have to be projected at zero, like charitable donations or grants that we’ve applied for and aren’t sure we’ll receive.  But others, like antenna rental and student parking fees, which are based on contracts, are supposed to be budgeted based on a reasonable estimate of what will actually be received.

For instance, student parking fee revenue has been consistently budgeted at around $125,000, but actual revenue received since 2010 has been between $250,000 and $300,000.  Gil Trenum asked Dave Cline about the low estimates for student parking fee revenues in January of this year when student parking fee revenue was adjusted $155,000 higher in the 1st quarter budget update.  Mr Cline said that the projection was low and could probably be adjusted.  It could be that this was raised too late for changes, as doesn’t appear that any adjustments were made to student parking fee revenue projections for the FY 2015 budget.

In addition to adjusting student parking fee revenue, we felt there were other areas where adjustments might be warranted (see here for details ===>revenue-adjustments).  These adjustments would have resulted in an increase in Other Tuition, Fees, and Revenues of $1,069,500.  Even with this increase, projections for other tuitions, fees, and revenues would have been roughly $2.5 to $3.9 million below what will actually be received on the 2015 school year.

Assuming these changes were accepted  left $950,364 to be found.

Reserve Adjustments

Each year PWCS holds money in reserve so that there is money for things that aren’t expected.  These reserves are primary budgeted in the section of the budget titled Benefits and Reserves.  When you compare what’s budgeted for the reserve accounts with what was actually spent, it looks like a lot of waste because the budgets are in the millions and actuals are zero.  This is because the money that’s budgeted in the reserves is either used or carried forward.  When monies in the reserve accounts are used, they’re removed from the reserve account and allocated to school or department accounts.

For instance, the holdback allocation is a reserve of money to be used to provide services to children identified as special needs during the year, to provide additional support for students who need more English language support, and to provide materials and space for students who arrive after September 30.  During the construction boom of the early to mid 2000’s, this reserve was frequently used to the penny, and even had to be supplemented by the General Reserve, as enrollment was increasing so quickly.

Every year in January PWCS provides the 2nd Quarter Budget Update.  This update lets the board know how things are going, whether revenue will be higher or lower than expected, and, when savings or revenues have been realized, adjusts the budget going forward to reflect those savings or additional revenues.  That update is where we “found” many of the revenue adjustments noted previously.

Since 2010 the reserve accounts have had savings of $5.3 million (2010) to $21.8 million (2014) that has been carried forward to other school years or the CIP.  PWCS did reduce the amount budgeted for reserves by about $6.2 million for FY 2015 from 2014 projections (the year $21.8 million in savings was realized).  We believe that an additional 1.5% reduction in the reserves could be achieved. That reduction would reduce expenses by $258,263 (see details here ====>reduce reserves).

Assuming these changes were accepted left $692,101 to be found.

Reduce Vehicle Replacements

PWCS maintains a fleet of vehicles that are used by school division personnel.  These are not buses or vehicles used to transport students.  Some of these vehicles are personal cars, many are trucks and vans used by the people who plow the parking lots, deliver supplies and materials to schools, repair school buildings, and maintain the grounds at our schools.

These vehicles are replaced on a set schedule.  From FY 2007 to 2009 PWCS replaced about $700,000 of vehicles every year.  In FY 2010 and FY 2011, in response to the economic collapse and reduced funding from the state and county, PWCS budgeted zero for vehicle replacement.  This left a deficit of about $1.4 million of vehicles that needed to be replaced, but weren’t because there was no money for it.  Actual vehicle replacements in 2010 and 2011 were about $74,000 and $191,000, respectively.

That deficit in vehicle replacements had to be made up over the next few years.  Budgeted vehicle replacements were $1 million in FY 2012 and $834,000 in 2013, an increase over actual spending in 2007 – 2009.  Actual vehicle replacements were $902,000 in 2012 and $775,000 in 2013.  Each of these two years, despite the deficit in replacements in 2010 and 2011, the budget for vehicle replacements exceeded actual replacements by about $60,000 – $100,000.    Budget for vehicle replacements for FY 2014 is $1.037 million.

The budget for vehicle replacements for FY 2015 is $1,519,898, about $500,000 more than was requested for FY 2014 and about $617,000 more than was spent on actual vehicle replacements in 2012, the year the most was spent replacing vehicles since 2007.

Because the amounts budgeted for vehicle replacements for the past few years have exceeded actual vehicle replacements and because the budget for FY 2015 is so much larger than the previous budgets, we believe some wiggle room might be in the vehicle replacement budget.  We suggest that the FY 2015 vehicle replacement budget could be reduced by $616,898, which would bring the budget to $903,000, which is $135,000 less than the FY 2014 budget and equal to actual vehicle replacements in 2012 (the year the most was spent on vehicle replacements).

Assuming these changes were accepted left $75,203 to be found.

Reduce Expenses

Like the school based budgets, the central administrative budgets are tight.  Many, if not all, departments are understaffed.  Just finding $75,000 was difficult, but we found several areas where we felt additional cuts could be made to central administrative budgets without too much difficulty.  We proposed 3 different approaches that could be used to find that savings.  All three approaches do not need to be used to find the $75,000.  Any one of these three approaches, or a combination of them, could be used to find the $75,000 needed.

Cut New Vehicle Purchase in Facilities Services

Facilities Services proposed purchasing a new truck for a new employee who transferred from Building Services.  The cost of this vehicle was projected to be $96,782.  Eliminating that vehicle would more than cover the additional $75,000 needed.

Cut Non-Personnel Budgets for Central Administrative Departments by 1.1%

The non-personnel budgets for the following central administrative departments total $6,617,703:  School Board, Superintendent, Communications, Technology Services, Student Learning, Professional Development, Accountability, Human Resources, Financial Services, Supply Services, Transportation, Risk Management, and Facilities Services (in addition to salaries and benefits costs, we removed bus and vehicle replacements, new purchases of buses and vehicles, fuel for those buses and vehicles, and transportation supplies from those budgets before calculating the non-personnel costs).  

A 1.1% cut to those departments non-personnel budgets would provide the additional $75,000 needed.  The cuts to each department, assuming that’s how they were distributed, would be as follows:  School Board – $2,400, Superintendent  – $2,100, Communications – $7,600, Technology Services – $1,400, Student Learning – $8,400, Professional Development – $1,800, Accountability – $9,400, Human Resources – $6,500, Financial Services – $2,800, Supply Services – $2,900, Transportation – $9,800, Risk Management – $1,300, and Facilities Services – $17,000.

Line by Line Cuts to Department Budgets

The least desirable of the approaches, in our opinion, was going line by line through the department budgets and proposing cuts, because of the variability in budgets and needs from year to year.  However, our review of the line items for these central administrative departments show that there are areas where cuts could be made to find the $75,000 needed.

For instance, the school board consistently over budgets for conferences and equipment replacements.  Reducing budgeted amounts for those accounts could result in $15,700 in savings.  The Superintendent consistently over budgets for equipment replacements and additional equipment purchases.  Reducing budgeted amounts for those accounts could result in $29,000 in savings.  Student Learning consistently over budgets for printing and office supplies.  Reducing budgeted amounts for those accounts could result in $20,000 in savings.  Facilities Services consistently over budgets for new equipment.  Reducing budgeted amounts for those accounts could result in $20,000, or more, in savings.

Zero Based Budgeting

Hiring a consultant to develop a process for conducting zero based budgeting was projected to cost about $250,000.  That amount was included in the FY 2015 proposed budget.  Last night the Superintendent proposed that an unfilled position in Risk Management could be used in place of this consultant and that the process PWCS follows could simply be to copy whatever it is PWC does.  The school board agreed with this proposal, which freed $250,000 that they promised would be used to reduce class sizes {editor’s note:  this has been promised before and never delivered.  Reality is that unless the increase in instructional staff is planned and budgeted now, it won’t happen}.

If PWCS chooses to actually apply the $250,000 to reducing class sizes, then it would allow us to eliminate cuts to central administrative budgets and reduce the cut to vehicle replacements by $174,698.

CORRECTION – Chairman Johns proposed that PWCS follow the process PWC uses, which is zero based budgeting, rather than hire an external consultant to develop the process.  The Superintendent, after consulting with staff, suggested that a position that has been unfilled for almost a year in Risk Management could be moved to Finance so that a staff member would be available to complete the zero based budgeting.

Where it Stands Now

Only Lisa Bell, Gil Trenum, and Alyson Satterwhite supported these changes.  Neither Milt Johns, Dr Michael Otiagbe, Lillie Jessie, Loree Williams, nor Betty Covington agreed that the changes were acceptable.  Some, but not all, expressed concerns about the cuts to the increase in requested vehicle replacements.  Others, but not all, expressed concerns that some of the department heads weren’t present (the heads of HR, Transportation, and Risk Management weren’t present).

The BOCS has not approved a tax rate and the General Assembly doesn’t have a budget.  Until those things are complete, PWCS has no clue how much money they’ll get next year.  Once the county tax rate is approved and the state approves a budget, the school division will know how much funding they’ll get and whether any adjustments are needed to the proposed budget.  If changes are needed then the Superintendent will propose an adjustment to the budget.  These changes could be raised then, and could be considered again.

CORRECTION:  Some, but not all, school board members were also concerned that the cuts were premature because neither the BOCS nor the state have told PWCS what their allocations will be.  They felt that these cuts could be irrelevant if the numbers from the state were higher than expected, lower than expected, or if the county approves a tax rate that is lower than the advertised rate.

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