Wharton MBA’s 4 Alternative Solutions to Budget Recommendation of cutting District HS GT Program – Feb 6, 2017

Feb 6
to bcc: romitche, bcc: alasell, bcc: suharmon, bcc: ajsteven, bcc: crupert, bcc: dmcminim

Everyone realizes the difficulty in balancing budgets, as we all go through that process in our own homes, and I appreciate your tough task regarding the school budget. There is always prioritization and a give and take to determine what to keep and what to sacrifice. I also understand that only hearing problems without also hearing alternatives or solutions doesn’t really help.

But sometimes a program is so vital – like the high school GT program, a national model for a successful program whose closing would give so many kids no viable alternative – that it requires deeper digging to find a way to keep it alive.

That’s why I’m proposing 4 alternatives to the Cabinet’s recommended budget elimination of the District’s vital HS GT Program.

To give you a little background, while I am a parent of 2 kids who have been in the District’s ES, MS and HS GT Programs, I am also a Wharton MBA. I’ve been a management consultant for PriceWaterhouse in New York, retired from the Army as a Lieutenant Colonel and am currently the Chief Technology Officer for an international K-12 education non-profit. I have a background that helps me understand both budgeting and education and have evaluated and managed many budgets.

Here are 4 options I suggest you consider to save the HS GT program:

  1. Cut one additional Achievement Director than has already been recommended. This program with 14 current Directors can easily support a reduction to 11 or even 10.
  2. Use some of the $17.5M in Materials and Supplies Contingency that is hidden in the budget. In 2016-2017 this is actually a $7.5M increase from 2015-2016.
  3. Reduce the amount of savings you’re looking for. Only one year after negotiating a new contract with the teacher’s union, it is extremely hard for most people to comprehend the need for another $25M in compensation increases. Spending a little less would still be an improvement for teachers.
  4. Determine if some of the $24M in 2015-2016 budget surplus is sustainable and use some of the sustainable surplus to fund high school GT.

The Superintendent and his Cabinet need to carefully review these viable alternatives.

Here are some details:

  1. Cut one additional Achievement Director than has already been recommended

Several years ago we lived in Evergreen before moving to Lakewood so that our daughter could be part of the District HS GT program. Evergreen’s two excellent MS and HS principals were pulled out of the schools to become Achievement Directors, so I know where these Directors came from. At the time, I questioned the added value that these dozen or so highly paid ex-principals could provide in a time of constrained budgets, but I can see where these directors could have been a good resource for new principals, principals in struggling schools, or long-term principals in need of fresh ideas.

It may be time to review the program’s scope and effectiveness. I can certainly see the value in having mentors for new principals, but after several years it would seem that the amount of time needed to support veteran principals – and the number of highly paid Directors — could be reduced. At their salary and benefit level, it would only take the reduction of one additional Achievement Director to counteract the proposed cut of the student-facing teachers running the District’s HS GT program. In a budget “crisis”, you need to see what you can cut from the top before you start cutting programs that directly affect kids.

If I were in your position, I would ask the following question:

Can the high-cost Achievement Director program still be successful in mentoring and assisting the principals most in need with a further reduction of 1 Achievement Director?

I would think with 14 people on the Org Chart, the answer to that question would be yes.

  1. Use some of the $17.5M in Materials and Supplies Contingency hidden in the budget. In 2016-2017 this is $7.5M more than in 2015-2016.

I understand the need and use of Contingency in budgets and use them in my own budgets. For that reason, there are numerous reasonable Contingency line items I’m ignoring, but when Contingency makes up 63% of the entire Materials & Supplies Budget for schools and increased 79% from 2015-2016, something is drastically wrong!

As a fiscal manager I would be asking questions such as:

  1. Why can’t we budget better and allocate these contingency funds to appropriate categories? The 2015-2016 budget year has finished so there should be a good idea on what categories these contingency funds were used for. At first glance this looks like either a slush fund or a way to hide what the money is really being spent on.
  2. Why do the contingency lines need to increase so drastically? A 79% increase from 2015-2016 is ridiculous.
  3. What’s the oversight of these line items? Who has spending approval for well over $17M in funding?
  4. How much did these lines contribute to last year’s budget surplus of $24M?
  5. Why does Contingency make up 63% of the entire Materials and Supplies budget? That is just not right.

Here are some numbers from the District’s approved 2016-2017 Budget. The high percentage of contingency has to make you wonder:

Materials and Supplies 2015-2016 2016-2017 Variance %increase 2016-2017 Total Materials and Supplies Budget %Contingency of Materials and Supplies
Elementary $6,701,763 $12,998,773 $6,297,010 94% $18,025,512 72%
Middle $955,804 $1,572,907 $617,103 65% $2,974,748 53%
Senior $1,637,578 $2,625,895 $988,317 60% $5,661,647 46%
Option $573,291 $455,227 ($118,064) -21% $1,161,027 39%
Total $9,868,436 $17,652,802 $7,784,366 79% $27,822,934 63%

Surely there is a way to reduce this non-transparent slush fund and use it to fund the programs you’re cutting.

  1. Reduce the amount of savings you’re looking for. Only one year after negotiating a new contract with the teacher’s union, it is hard to comprehend the need for another $25M in compensation increases.

I won’t deny that there are legitimate reasons why some compensation investment is needed (compensation for the hiring of veteran teachers and inflation-based increases), but does that really add up to $25M? I think there are some opportunities to reduce the proposed budget cuts by reducing the goal of $25M in compensation increases.

  1. Determine if some of the $24M in 2015-2016 budget surplus is sustainable and use some of the sustainable surplus.

I’ve seen that $24M was a surplus from the 2015-2016 budget. While using that surplus for deferred maintenance is an undeniably good use for this money, I think we need to ask the question if any of that surplus is sustainable. If it is sustainable, it certainly could be used as a source for the savings you are looking for.

Again, the Superintendent and his Cabinet need to carefully review these viable alternatives.

We need to remember that students should be the first priority in the education budget, and find cuts that directly affect as few as possible. We also need to make sure children on the margins don’t suffer the brunt of the reductions.

Thank you again for your time and consideration,

Bob Greenawalt