The Cost of Madison Prep

 As reported  in today’s State Journal, I find the cost to the Madison School District of the Urban League’s current proposal for the Madison Preparatory Academy for Young Men charter school jaw-droppingly high.  It seems to me a School Board vote in favor of approving the Madison Prep proposal in its current form would inevitably require budget cuts from our existing school programs totaling millions of dollars over seven years.

One of the original guiding principles of the Urban League’s Madison Prep proposal was an “all-male student body.”  However, despite assurances to the contrary from the Urban League, the Wisconsin Department of Public Instruction (DPI) informed the Urban League and the Madison School District that it would violate state and federal law for the school district to authorize the establishment of Madison Prep as proposed without simultaneously making comparable educational opportunities available for girls.

The Urban League has responded by re-tooling its proposal.  Rather than enroll 60 boys each in sixth and seventh grade during its first year of operation, the plan now is to enroll 60 sixth grade boys and 60 sixth grade girls.  The proposal calls for adding an additional class of 60 boys and 60 girls each year for seven years until the school includes 6th through 12th grades and 840 students. 

This change addresses the gender discrimination issue.  But the revision also has the effect of significantly increasing the price tag of the proposal to the School District.

The Urban League is seeking a five-year contract with the school district for Madison Prep.  Under the terms of the contract, the District would agree to make annual per-student payments to the Urban League. When the School Board approved the Urban League’s application for a DPI planning grant in March, the proposal called for the District to make payments to the Urban League that totaled about $17 million over the five years of the contract.  The Urban League’s recent revision to its proposal calls for those payments to balloon to about $27 million.  (A link to the Urban League’s revised budget is at the end of this post.)

Much attention has been has been showered on the Madison Prep proposal, but little of it has focused on its enormous price tag.  The School District is being asked to make a financial commitment to the Madison Prep proposal that, as far as I can tell, dwarves the levels of commitment that other school districts in the state have made to charter school proposals in their communities.

The projected size of Madison Prep is bigger than the current size of all charter schools in the state, save two or three in Milwaukee.  In addition, the annual per-student payment that the Urban League seeks from the school district of about $15,000 is far higher than any charter school in the state receives.

In fact, it is almost twice the level of the state funding received by the 18 so-called “2R” charter schools that operate under the auspices of the City of Milwaukee, UW-Milwaukee and UW-Parkside ($7,775 per student).  It’s also nearly twice the level of funding that would be provided to independent charter schools approved by the proposed Charter School Authorizing Board under SB 22, the charter school bill pending before the legislature (the same $7,775 per student).

Some perspective on the size of the Urban League’s financial ask of the school district is provided by comparing it to school district’s financial obligation for Badger Rock Middle School, a new charter that has just opened its doors.

Badger Rock has an initial class of about 50 sixth graders and plans to add a class each year for three years.  Because it is an “instrumentality” charter school, the School District is ultimately responsible for the school’s operation, though the district has a five-year contract with the school.  The following table compares, for the first five years of operation, the total projected cost for Badger Rock compared to the “Per Pupil Charter Payments from MMSD” requested for Madison Prep:

 

Year 1

Year 2

Year 3

Year 4

Year 5

5-Year Total

Badger Rock

$668,643

$1,042,302

$1,369,391

$1,380,313

$1,421,417

$5,882,066

Madison Prep

$1,802,028

$3,567,159

$5,360,716

$7,384,589

$9,407,413

$27,521,965

$27 million over five years is the gross cost to the school district of Madison Prep.  The net cost will be less, because students attending Madison Prep will not be attending other Madison schools and so the district can save some expenses at those other schools.  But the savings will be far less than $15,000 per student.

The upshot is that, if approved, the establishment of Madison Prep would result in significant new net expenditures for the school district.  The level of these Madison Prep-related expenditures will increase annually for each of the seven years that Madison Prep adds new classes (three years of middle school and four years of high school).

The school district does not have a lot of spare money lying around that it can devote to Madison Prep.  Speaking for myself, I am not willing to cut educational opportunities for other students in order to fund Madison Prep.   If it turns out that entering into a five-year contract with Madison Prep would impose a net cost of millions of dollars on the school district, then, for me, we’d have to be willing to raise property taxes by that same millions of dollars in order to cover the cost.

It is not at all clear that we’d be able to do this even if we wanted to.  Like all school districts in the state, MMSD labors under the restrictions of the state-imposed revenue caps.  The law places a limit on how much school districts can spend.  The legislature determines how that limit changes from year to year.  In the best of times, the increase in revenues that Wisconsin school districts have been allowed have tended to be less than their annual increases in costs.  This has led to the budget-slashing exercises that the school districts endure annually.

In this environment, it is extremely difficult to see how we could justify taking on the kind of multi-million dollar obligation that entering into a five-year contract with Madison Prep would entail. Indeed, given the projected budget numbers and revenue limits, it seems inevitable that signing on to the Madison Prep proposal would obligate the school district to millions of dollars in cuts to the services we provide to our students who would not attend Madison Prep.

A sense of the magnitude of these cuts can be gleaned by taking one year as an example.  Since Madison Prep would be adding classes for seven years, let’s look at year four, the 2015-16 school year, which falls smack dab in the middle.

Under the Urban League proposal, Madison Prep would add a first-time ninth grade class in 2015-2016.  As a consequence, according to its most recent budget proposal, the Urban League would be seeking an increase in funding from the school district of a bit more than $2 million in 2015-2016 compared to its request from the School District for 2014-2015 ($7,384,589 versus $5,360,716).

We can figure out how much the district will save by adding this new ninth-grade class at Madison Prep.  The vast bulk of the savings would be comprised of (a) the number of teacher allocations that would be eliminated by having 120 fewer ninth graders in our four high schools, times (b) the school district’s average teacher cost.

In rough numbers, our high schools are provided one teacher allocation for each 23 students.  120 fewer high school students translates to 5.2 fewer teachers.  Our total average cost per teacher is about $80,000.  So, we’d figure about $416,000 as our savings in teacher costs attributable to 120 fewer high school students.

Assume we’d save an additional $250 in expenses per student, which is another $30,000, and we’d have $446,000 in new savings to offset $2,000,000 in new expenses.  For ease of reference, let’s round $446,000 up to $500,000.   This means our expenses for the year would go up a net of about $1.5 million as a result of that year’s expansion of Madison Prep to ninth grade.

While we cannot predict the specifics of the school district’s budget situation for 2015-2016 with any certainty, it is a very safe bet that the school district’s year-to-year increase in costs will exceed the increased amount of spending it will be allowed under the state-imposed revenue limits.  This means that, as usual, the School Board will have to identify and adopt cuts in existing programs to reduce the district’s spending down to the state-imposed limit.

The addition of a ninth grade at Madison Prep in 2015-2016 will obligate the Board to find an additional $1.5 million in cuts in order to offset that year’s net increase in school district payments to the Urban League.  Where will these cuts come from?  The only place they can: the budget that covers the services we provide to all our other students.

So, in a very real sense, the roughly 24,000 students who would not be attending Madison Prep would sustain $1.5 million in budget cuts of some form for the 2015-2016 school year in order to subsidize the 480 students who would be attending the charter school that year, and more particularly the 120 students who would comprise the school’s inaugural ninth grade class.

This example covers one year.  Multiply its effect by seven years and you have an idea of the financial impact of the current Madison Prep proposal on our schools and our students.

Over those seven years, the school district’s existing programs could sustain cuts in excess of $10 million in order for the district to make good on the Urban League’s bill for Madison Prep.  That’s a price that is higher than I am willing to pay.

Madison Prep Projected FY2011-2017 Budget-v1.2 2_24_2011 (1).xlsm

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13 Responses to The Cost of Madison Prep

  1. David Cohen says:

    Amen Ed. Over the past 7 yrs, the MMSD has SLASHED funding for special education, yet we can afford this boondoggle? I think Madison Prep, which is a worthy concept, should either be privately funded or start as an incubator, one grade at a time (like Madison Country Day), and let them prove that they can more effectively educate minority students than the typical MMSD school. Give them more money as they prove their worth. If it works, awesome. If it doesn’t, maybe some needy children won’t see their special ed assistants laid off as a result.

  2. Torrey says:

    Ed – What is the current per pupil expenditure amount for MMSD?

    • Average cost per student for the school district actually isn’t that easy to calculate. Do you include the cost of Madison School and Community Recreation (MSCR), which is part of the school district? How about the gross cost of food service, which is designed to operate on a break-even basis and not cost taxpayers anything?

      Our state-imposed revenue limit for 2011-2012 is $285,310,839. Last year, our official September full-time-equivalent student count was 26,241. This suggests a per-student cost of about $10,900.

      But the revenue limits don’t include all costs, so one could argue the average should be higher. On the other hand, the September student count does not include the number of summer school students, a percentage of which are added to the student count for revenue limits purposes. Also, we’re adding nearly 2,000 students this year with the start of four-year-old kindergarten. These factors point to a lower per-student cost.

      The more important point is that our average cost per student, whatever it is, doesn’t affect my analysis of the cost of Madison Prep.

      I understand that supporters of the school sometimes compare the projected per-student cost for Madison Prep with some measure of existing per-student cost for the school district.

      Whatever rhetorical value one might find in that kind of comparison, it says nothing about what impact the cost of Madison Prep would have on the school district’s existing programs. That impact is determined by how much the school district would pay to the Urban League for the operation of the school and how much the school district would save in its costs of operations as a consequence of students attending Madison Prep rather than district schools. The amount of those savings is much less than the school district’s overall per-student cost, due to the difference between fixed and variable costs and other factors.

      There may be other ways of looking at the school district’s savings than what I describe. I’d be interested in hearing others’ views on that point.

  3. Jill says:

    Ed – Is there an explanation somewhere of the process that will be used to admit students to Madison Prep? I remember Kaleem saying somewhere along the line that the school would be open to all boys (now girls too I’m assuming) in Dane County. So, you can’t necessarily assume that all students who would attend Madison Prep would be current MMSD students, since the school might attract current private/parochial school students or other non-MMSD students. Isn’t that correct?

    • Jill –
      According to the Madison Prep website (http://www.madison-prep.org/enroll/faqs/), the school will be open to “[a]ny student residing in the Madison Metropolitan School District (MMSD).”

      A student who lives in Madison and is currently attending a private school could apply to attend Madison Prep. The financial impact of this would be that the school district would not realize any savings at its other schools, since this student would not otherwise be attending one.

      The student would boost the school district’s enrollment count by one, thus qualifying the district for additional state aid. But since the Madison school district receives less than $2,000 per student in general state aid (far less than the state average), the additional aid wouldn’t come close to covering the payment the district would make to the Urban League to cover the student’s attendance at Madison Prep.

      The material on the Madison Prep website does not seem to suggest that a student could open enroll in Madison Prep from another school district. If this were somehow to occur, the district would get a bigger bump in state aid, since districts have to compensate each other at a rate of somewhere in the $6,000-$7,000 range for students who switch districts through open enrollment.

  4. Torrey says:

    Thanks for the numbers Ed. You are correct that the average cost per student doesn’t affect your analysis of the cost of Madison Prep. But I wanted the numbers (rough as they may be) in order to frame the issue from a different perspective.

    My “gut check” feel on your breakdown of the variable costs to be attributed to each student is that the numbers seem understated. You seem to be assuming variable costs per student of about $4000, to use round numbers, which equates to a fixed cost per student of about $7000. Only 36% of the cost to educate a child in MMSD is variable? That just seems low to me, although I am no expert on that. But I think it’s worth further exploration at some point. And even if $4000 is accurate, to me it would seem to indicate that the fixed expenses (overhead) within the system are higher than they might need to be (and fixing that could free up funds for Madison Prep). One thing I think we can agree on is that the variable expenses for our most struggling students (those Madison Prep hopes to attract) are higher than for average or above average students (due to the extra resources required for those struggling students).

    But let’s simply use all your numbers as laid out here, including your assumption about the variable costs, to frame the issue in a different light. You had stated that “Over those seven years, the school district’s existing programs could sustain cuts in excess of $10 million in order for the district to make good on the Urban League’s bill for Madison Prep.” With about 24,000 students still in MMSD traditional schools, cutting $10 million overall equates to $416 in cuts per student. Essentially you are talking about taking the per pupil funding (using your rough estimate) from about $10,900 to $10,484 – about a 1% cut.

    I don’t like cuts, you don’t like cuts, no one likes cuts. But looking at the figures in this context creates a different picture (and emotional reaction) than throwing the large $10 million figure out there. Are we really to believe that, if we really had to, we could not find a way to properly educate the majority of our children at our current funding level less $416? In fact I would venture a guess that MMSD’s per pupil funding was somewhere right around that amount (even in inflation adjusted dollars) sometime in the very recent past. When you look at the cuts on a per student basis and compare it to the benefits – the 840 students who will be on a much better track towards being productive members of our community – I think the right decision becomes much more clear, at least for me.

    I hope that helps to provide a different perspective on the issue. Thanks for listening.

  5. Torrey says:

    Also, I need to correct one error in my calculations above. The 1% cut figure I cited is incorrect. Moving from $10,900 to $10,484 in funding over 7 years would be a cumulative 3.8% cut (although in single years it would necessitate cuts of well under 1% for that particular year).

  6. Mad4Madison says:

    Ed –

    As always, thanks for your detailed explanation regarding your position on a very “hot” issue right now. While you and others may not always agree, you will state your view in a non-confrontational way that can allow for an open dialog.

    My question is this: What are the total cost for 4K? You stated that we have 2,000 children enrolled in 4K. I would be curious to see the comparison for educating 2,000 children in 4k is copared to 120 children in 6th Grade at Madison Prep.

  7. Kristen says:

    Torrey,
    I believe that 80% of the MMSD budget goes to salaries. If a new charter school pulls one or two kids from 100 different classrooms, Madison still needs to have those 100 teachers. (It won’t make enough of a dent to create an opportunity for any individual school to lose a full allocation.) So your “$416 cut from each kid” is more complex than it sounds.

    Last year, the district went through a very difficult process trying to identify budget cuts. If you didn’t attend those budget hearings, I recommend reading the documents and watching the videos. I find that in general, the cuts on that scale that are proposed tend to affect the kids who can least afford it:

    https://drupal.madison.k12.wi.us/node/6001

    I’m hoping that they end up finding a compromise that creates a strong partnership between MMSD and the Urban League. Personally, I’m more likely to support a charter school when:
    a) it predominately pulls from one attendance area (local, neighborhood schools when possible) – Many of MMSD’s attendance area neighborhoods fit perfectly with the demographic Madison Prep is trying to reach, so I think that would be a win-win for everyone
    b) it is a true partnership between the school district and the charter school leaders. For me, the main benefit of a charter is when the district can take the lessons learned at the charter and apply them back to the school population at large.

    My fear is that in order to fund a great new charter school, another population receives devastating program cuts. I, for one, wouldn’t be able to support any new school, no matter how wonderful it was, if it destroyed an effective special ed program or the services to our Hmong communities. (Both of which were on the table two years ago.)

    And I second Mad4Madison’s comment of thanks to Ed for providing this space where people can comment/disagree/debate respectfully on education issues.

  8. I’d like to respond to points made in the previous comments.

    Torrey says that my estimate of variable costs for our students may be too low and that the amount of cuts in existing expenditures needed to foot the bill for Madison Prep may not seem so unmanageable in comparison to the size of the school district’s total budget and in light of the benefits that Madison Prep is likely to provide.

    Yes, it’s possible, perhaps probable, that my estimate of the school district’s cost savings generated by the transfer of a student from one of our existing schools to Madison Prep is too low. To know for sure, though, we need to identify the categories of cost-savings that I am overlooking. It’s a fact-intensive issue. I realize that the facts of interest are primarily ones that the school district is best situated to develop. I hope that we’re all able to get a better sense of the numbers as the process unfolds.

    I’m also not as ready as Torrey to assume that Madison Prep would set its students “on a much better track towards being productive members of our community.” As far as I can tell, there’s never been a school, charter or otherwise, that has tried this particular model, including an International Baccalaureate curriculum, as a strategy for salvaging the academic careers of students who are at genuine risk of not graduating from high school.

    Just because it’s never been tried before doesn’t mean it can’t work. But it does suggest that caution is warranted before embracing the program whole-hog and contractually committing many millions of dollars of funding over many years to its implementation.

    Mad4Madison asks what’s the total cost to the school district of the four-year-old kindergarten program that we just got underway. My recollection is that the cost to the school district of the program is roughly $12 million a year, which is offset in part by about $4 million we have previously been paying for early childhood education programs. The makes the net cost about $8 million per year.

    The wrinkle here is that the young students in 4K will boost the school district’s student count. This will help us out on both principal factors that determine the amount of general state aid we receive – the school district’s property value per student and our level of expenditures per student. The mysteries of the school funding formula are deep, but, by its fourth year of operation, our 4K program should generate more in state aid for the district than its net $8 million-a-year cost.

    This means that we had to find the funds for what worked out to be about $8 million in year one of the program, $8 million in year two, and $4 million in year three, or a total of $20 million over three years. After that, the program should be self-sustaining.

    It’ not fair to compare the cost of 4K to Madison Prep because our per-student costs for middle school and high school are a lot higher than our per-student costs for a half-day 4K program.

    Both David and Kristen echo the point I had raised about the potentially harmful impact of the cost of Madison Prep on the school district’s existing programs, fearing that budget cuts would disproportionately affect our most vulnerable students.

    This boils down to a position that I am hearing with increasing frequency: The Madison Prep proposal is too expensive. But there is much of value in the model. Can’t we figure out a way to implement the most promising components of the proposal in an affordable way, perhaps as a pilot program in an existing school?

    I’d very much like to figure out a way in which we could. The substantive components of the Madison Prep proposal that I find most appealing are the plans for an academically rigorous curriculum, a culture of high expectations, a “no excuses” approach to academic performance, and a longer school day and school year.

    I’m okay with uniforms if that is thought to be important. I’m also okay with separate classes for girls and boys, assuming the two groups are taught the same things in the same ways.

    I welcome an approach that expects greater parental involvement, though I am cautious about excluding needy students who happen not to have supportive parents. I fear that a charter school inherently discriminates in favor of students who benefit from parents or guardians concerned and savvy enough to arrange to get their children enrolled.

    I’d hope that a program based on the Madison Prep model would be designed to meet the needs of students who are genuinely at risk of not graduating and heading down the schools-to-prison pipeline. I am not particularly interested in satisfying the desires of those seeking a less expensive alternative to private schools.

    If the Urban League’s Madison Prep proposal remains in its current form, I can’t support it. My principal though not exclusive concern is that it is just too expensive.

    My hope is that we can somehow get to a point where the school district can talk to the Urban League in a truly collaborative way about how, together, we can design a program for testing out the key components of the Madison Prep model in an existing MMSD school – potentially as a charter program – in a financially feasible way.

    Ed

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  10. Mad4Madison says:

    Ed –

    Again, thanks for the comments.

    The reason for my cost question had to do with something rather simple – how much to educate 2,000 4K students vs. 600 middle / high school students. I recognize that the comparison may be a bit apples and oranges, but the costs are indeed the issue. While I disagree with some of the comments as to why they have arrived at being “against” Madison Prep, I am on the “nay” side of the decision. Perhaps I am going to be labeled as a tax payer that does not want to spend more, but the reality is that I am willing to spend more – just not THAT much more for such a limited focus.

    I would echo your comments about taking the ideas and bringing them into the classrooms today. However, some of those ideas (extened school year and extended school days) get us right back to the issue with MTI and a MOU. We will see where this all plays out in the future.

  11. Pingback: Madison Prep and the Attack on Public Education | AMPS

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