TJ Mertz is turning his attention to broader community issues in preparation for his Common Council race and so is no longer in a position to blog regularly about what’s on the agenda for School Board meetings. Here’s my effort to fill part of that gap by providing a bit of a recap on last night’s relatively busy Board meeting. The agenda (with links to supporting documents) can be found here.
Green Light for Four-Year-Old Kindergarten
Our most significant action was a bit anticlimactic. In the middle of the meeting, and with little discussion, the Board voted unanimously to authorize the start of Four-Year-Old Kindergarten (4K) beginning with the 2011-2012 school year. Lots and lots of work by lots of people, spearheaded by Deputy Superintendent Sue Abplanalp, went into making this decision possible.
So, how are we going to pay for it? The general parameters of the cost impact of adding 4K have been clear for many months. In broad strokes, adding the program will lead to additional incremental costs of about $8 million in the first year, $8 million in the second year, and $4 million in the third year. (The gross costs are higher, but they are offset to some extent by the fact that current costs for early childhood programs will be absorbed into 4K.)
The cost goes down in the third year when the effect of adding the additional students into a 4K program starts having a positive impact on the amount of general aid we receive from the state. By the fourth year, the projected increase in state aid should completely offset the incremental cost of the program. Adding the program qualifies us for more state aid because we will have a larger pupil count. This reduces our total costs per pupil and the amount of property value in the District per pupil, and these are the two key variables that determine the amount of a school district’s general aid under the state’s funding formula.
We have had in mind for many months the likely property tax bump attributable to the start of 4K next year. Several months ago, when we refinanced the District’s post-employment benefits obligation, we effectively earmarked some of the cost savings we achieved through taking advantage of lower interest rates to next year’s property tax levy. We did this by re-jiggering the payback schedule to reduce our payment obligation next year by about $4 million. Subsequently, we received our second jolt of federal school stimulus money and figured out that fortuitously we could use about $4 million of the funds next year for paying salaries of newly-hired 4K teachers. The Administration then recommended that we redirect the savings from the post-employment benefits re-finance to technology and maintenance needs. This leaves us with about a $4 million property tax increase for next year attributable to the start of 4K.
In year two, the incremental cost of 4K is again about $8 million. Our plan for that year is to use about $4 million from our fund balance (more on fund balance below) to bring the incremental cost down to about $4 million, roughly the same as year one. The advantage of this is that we won’t need a new property tax increase in year two attributable to 4K. In year three, the incremental cost is projected to be about $4 million, roughly the same as what we are now looking at in terms of property tax levy for the first two years, so again no new property tax increase should be required.
In year four and subsequent years, the program should pay for itself through increased state aid and so we should no longer need to impose the $4 million property tax levy that will be required for the first three years.
Yellow Light for Badger Rock Middle School
Our agenda also included a motion to approve the proposal submitted by Badger Rock Middle School and to enter into a five-year charter school contact with the school. We voted to delay consideration of this motion for two weeks – until our Board meeting on December 13 – in order to address some late-appearing funding questions.
In a nutshell, the Badger Rock proposal had always been presented as one that would be cost-neutral to the District. While we would incur additional staffing costs for the new school, those costs were expected to be offset by reductions in allocations at Sennett Middle School attributable to students in the Badger Rock neighborhood who would otherwise be at Sennett enrolling instead in Badger Rock. Well, it turns out that that’s not quite the way it is likely to shake out, largely as a result of a minimum staff allocation that is assigned to any new school but that was not properly accounted for somehow. Instead of the proposal being cost-neutral, it currently appears as if in its first year (2011-2012) the school will cost the District an additional amount between $200,000 and $300,000. I’m still not clear on the details of the issue.
I expressed the view at our meeting that cost-neutral would be great, but that we cannot realistically expect that we could implement new and innovative charter schools and other programs without spending some additional money. Badger Rock looks to be a great proposal on many levels. If it ends up costing us $200,000 next year, I’m okay with that in light of the many benefits to the District that the school promises. Other Board members felt differently. We agreed that it made sense under the circumstances to put off the vote for two weeks so we could sort things out. I’m sure it was a frustrating experience for the Badger Rock folks, particularly since it doesn’t appear that this funding snafu was a problem of their making.
[Update (12/1/10): Here’s more background on the Badger Rock issue. A long time ago, the District provided information to the Badger Rock folks on what school personnel would be assigned to the school under a break-even scenario. The Badger Rock folks then adjusted those specific numbers – adding an allocation here, reducing one there – to come up with a staffing plan for the school that fit within the overall break-even budget numbers. The original allocation and the Badger Rock adjustments are listed here.
It turns out that allocation numbers that Badger Rock was provided weren’t break-even after all. They included both the teacher allocations that would essentially be transferred from Sennett Middle School to Badger Rock to follow the students that would be going to Badger Rock rather than Sennett, which amount to about 3.66 positions. The numbers also included a minimum allocation of 3.9 positions that by District policy are automatically assigned to any new school. These 3.9 positions represent additional cost that would not be incurred if the school did not exist, and so prevent the proposal from being cost-neutral.
When informed of this complication, the Badger Rock folks worked to reduce the number of positions that they would need in order to reduce the budget impact of the proposal. This lowered the incremental cost of the proposal from around $300,000 to around $200,000. Ironically, these proposed reductions prompted further questions from Board members, who were concerned that under the slimmed-down proposal the school would not have any allocation for a school psychologist or social worker.
It now appears that in two weeks Board members will have to decide whether we are willing to swallow hard and agree to the additional $200,000 to $300,000 in costs for the first year of the school, or else tell the Badger Rock folks thanks but no thanks.]
Red Light for Fund 80 Contracts
From all indications, we are heading into a very challenging budget year. In recognition of this, the Board decided not to proceed with an RFP process to seek proposals from community non-profits and other entities to provide services that would serve our students and further our strategic goals. We had devoted about $300,000 to this in each of the last two years, but we’re just not in a position to commit to doing it again next year.
Fund Equity/Balance Policy
Until last night, the Board has not had a policy as to how much the District should retain in fund equity. Last night we adopted a policy to carry a balance in our operating reserve fund in an amount that falls between 10% and 15% of our General Fund expenditures.
Our General Fund expenditures last year totaled a little under $300 million. Our new policy thus calls for us to carry somewhere between roughly $30 million and $45 million in fund equity. As of June 30, 2010, we had $40,492,417 in our fund equity account. This means we have a cushion to work with and makes it possible for us to earmark $4 million in equity for use two years hence to mitigate the property tax impact of adding 4K, as discussed above.
Financial Audit Clean Bill of Health
We received our annual audit report from our accountants at Clifton, Gunderson. Everything is basically in order. No red flags were waived.
Generosity in Many Forms, Gratefully Accepted
As is the case for all our monthly meetings, there were a number of non-controversial items that we approved through a consent agenda. When I look at the list, I am struck by the extent to which we benefit from the generosity and good will of our supporters and partners in the community.
First, a very dedicated group of talented volunteers have devoted an enormous amount of time to developing the proposal for Badger Rock, and have basically presented us with a great proposal for a nearly turn-key charter middle school that will be housed in a new facility that the group is offering to us rent-free. Perhaps we could be a bit more demonstrative in our gratitude.
Next, Dr. Scott Peters of the UW-Whitewater has volunteered to assist us with an evaluation of assessment tools for identifying talented and gifted students. We have undertaken a pilot project to use a web-based differentiated literacy program known as Achieve 3000. Dr. Melinda Leko, a UW-Madison researcher, has volunteered to help us evaluate the program and explore how it might fit in to the District’s literacy strategy.
The UW School of Education supplies a number of practicum and student teachers to our schools. We voted to accept the UW School of Education’s offer to pay us $82,000 to help defray the cost of our staff providing assistance and support for the student teachers.
Plus, the City of Madison is giving us $10,000 toward the cost of installing additional bike racks at East High. Plus, through collaboration with the Wisconsin Bicycle Federation which has included the Federation loaning an employee to the District, we have been able to win a $280,000 state grant to work on our Safe Routes to School initiative. Plus, we accepted a donation from the Jefferson Middle School PTO of about $11,000 for uses at the school. Thanks all around.
Among other items, we named the Crestwood LMC the Harlan Siebrecht Memorial Library and we also decided to buy three new trucks but did not name them.