Wednesday, April 18, 2018

Springtime! Really?

The calendar tells us that today is April 18th. But if you peak out the window it looks more like February 18. A friend of mine remarked in an email a few weeks back that yes, it's spring. But winter keeps cutting in line. So, here we are with another snow day. We are going to have to figure out how to deal with this one, because we have just crossed over into June 4th. Our summer construction season is starting to get a little more compressed than we would prefer. Originally the school year was supposed to end on May 25th, the Friday before Memorial Day. 

We had been keeping our eye on this snow event for several days. Truth be told I was convinced that it wouldn't amount to much, and hadn't really been all that concerned. I was at the track meet last night when I got a text telling me that the forecast had been upgraded. Admittedly, I thought someone was playing a cruel joke! But it was true, which meant the networking with other superintendents started around 9:00 last night.

April 18, 2018. Our fourth weather related cancellation
of the school year and fifth day of school that was missed.
Today started around 4:30 a.m., and if there is good news in that, it has to be that I didn't have to check the roads! At that time, no one had made any decisions about school for today. It was still dark out, but when I turned the outside lights on it was apparent that it wasn't doing anything yet. It was clear the trouble was going to be the timing on this storm. So with a pot of hot coffee brewing, the remote in one hand, and my phone in the other, it was time to get started. I got my first message at 4:50 a.m. from a colleague who stated, 'might be the toughest weather call of the season'. I agreed. Again, it was all about timing at this point. After that, the text and phone traffic was very heavy. Everything fell like dominoes beginning about 5:15. By 5:20, we had all thrown in the towel. 

By the way, it still wasn't doing anything at this point. But again, we had to think about timing. While our buses weren't ready to roll yet we had to contend with notifications so parents could make alternative arrangements. We also wanted to make sure that students who had morning activities didn't have to make an unnecessary trip. And yet it still wasn't doing anything outdoors yet! I found myself watching Eileen and willing it to start snowing, sleeting, anything! Finally at around 6:30 it started sleeting (or was that hail)? It hasn't really stopped yet. I ran home quick for lunch and the roads were not in very good shape, which made me feel better about this decision. 

It has been a rough spring. I feel bad for our student athletes who have had track meets, golf tournaments, and soccer games cancelled. As I mentioned, last night I was at the track meet and it was very chilly. Following that, I stopped by the girls soccer game and, quite frankly I am not too sure how much fun they were really having running around in shorts!

But if there is a silver lining, its that we haven't really had to contend much with 'spring fever'. The kids haven't been all that excited to be outdoors, although they have been good troopers with the extra snow on the ground. Today has been really quiet here in the office, allowing me to get some of the larger projects I have been working on completed. The best news of all: this snow won't last too long, and the weather is forecast to be in the mid 60's next week! Let's all just cross our fingers and hope the weather cooperates for prom this weekend!

April 9, 2018. Our elementary students made the best out
of a bad situation with this wet heavy snow that was perfect
for snowman building during recess.

Thursday, April 12, 2018

Spending Authority Explained

Spending authority is a unique concept to Iowa public schools that is designed to ensure equity in spending for public schools across the state. Largely formula driven, a primary goal is to ensure school districts don't raise taxes in an effort to provide unequal access to programming in different parts of Iowa. While there certainly are equity issues within the formula that we have seen debated in our legislature and in some parts of the state, for the most part the idea of spending authority has stood the test of time.

Essentially, what spending authority does, is limit by statue the maximum amount of money that can be spent in the general operating fund of a school district. Exceeding spending authority is a violation of state law, and in some cases can lead to a state takeover of the school district and a dissolution of that school. This most recently happened in 2015 when the state dissolved the Farragut Community School District for financial insolvency.

Spending authority is comprised of three main components: combined district cost, miscellaneous income, and unspent balance. The combined district cost is the largest component of the budget and is the most dependable of our revenue sources. Driven by pupil count, the revenue for the combined district cost is composed of a blend of property tax and state aid. We sometimes refer to the combined district cost as the 'controlled budget' because it is entirely dependent on the formula and is a known quantity. In other words, absent an across the board cut, we can count on the combined district cost annually. Miscellaneous income, on the other hand requires a bit more deliberation, consideration, and forecasting to arrive at the total for this revenue stream. In a nutshell, anything that isn't property tax or state aid lands in the miscellaneous income bucket. This includes federal title money and tuition for students who are attending a school district under open enrollment laws. In Hudson, open enrollment makes up a large component of our miscellaneous income stream so it is very important for us to be thoughtful about the calculations we use to arrive at this revenue stream. Unlike the controlled budget, if a student open enrolls and then decides not to enroll in our school district, that is an automatic loss in revenue. The third and final component of spending authority is the unspent balance, which is the districts savings account. In years where a school district's spending plan consumes only the combined district cost and miscellaneous income, the unspent balance will remain stable. In years where the district overspends these two components, it will decrease. If the district spends less, then the unspent balance will grow. Put all three together, and it resembles something that looks a bit like this:

It is important to understand the function of the unspent balance. It is helpful to think about this as a savings account to determine when and if it is appropriate to utilize these resources. In any given year, a school district may deficit spend their budget for a variety of reasons. Sometimes it is a planned deficit, while other times it may be an unplanned deficit. Whenever these deficits occur, the district uses the unspent balance, or savings account to  make up the difference. A situation where a planned deficit might be appropriate could be a case where a teacher or teachers need to be hired to address an unmet and unplanned need. An unplanned deficit could occur when utility consumption is greater than the budget or if miscellaneous income revenue projections don't materialize. Nonetheless, using the savings account or unspent balance for recurring expenses isn't good budget practice. Quite simply stated, once the savings account is depleted that resource is gone and there is no way to replenish it. Consider the following scenario:

Albeit a rudimentary example, this illustration does an adequate job of demonstrating the impact of using the unspent balance, or savings account. At the far left, our sample school district has total spending authority of $10,000,000. They execute a budget and spending plan whereas overall general fund expenditures are $9,000,000, using $1,000,000 of the unspent balance. That means the next year, their spending authority has decreased by $1,000,000 to $9,000,000. If in the next year they spend $9,000,000, their spending authority for the following year will be $8,000,000. Obviously if the district spends $9,000,000 the following year, the school district has violated Iowa statute and is in petty significant crisis.

Not to complicate the issue any further but instead to add more clarity to how this works, it is important to understand that total spending authority does not automatically represent cash in the bank. Authority quite simply means that you have the ability to spend those funds. It is not uncommon in school districts to  have more authority than they have cash in the bank. The only way to create the revenue to fund the authority is to increase the property tax rate and fill the cash reserve. But, by Iowa law you can only fund to what you have authority for. In other words, [looking at] our example above, if we wanted to create a scenario where we had $11,000,000 in spending authority, you cannot levy for more cash. That is the beauty and the danger of the Iowa public school finance law. Cash creates cash to fund authority. Cash does not generate authority.

At some point, the question becomes: how much savings should a school district have? Well, frankly that depends on who you talk to, the wishes of the school board, and what your overall priorities for student learning are in the school. Yet at the same time, it is imperative that school districts have the ability to 'look around the corner'. For example, what does the forecast model do? In our case, if the growth in cost per pupil were to continue at a rate of 1% annually and our expenditures increased at a rate of 4% annually; we would consume over $1,500,000 of our savings account over a five year period. However, it is also worth debating whether or not the revenue is going to increase at even a 1% per pupil rate. There are signs that it may not.

Consider this: the legislature is currently debating a tax reform bill that, if enacted will reduce state revenue by over $1 billion a year. To put that in perspective, the entire state budget is roughly $7.3 billion in revenue. As the largest line item of the state budget, school aid accounts for 55% of state budget expenditures. It seems nonsensical to assume schools won't be impacted by this type of legislation. And that's not all. Last week we learned the state is considering eliminating the 'back fill' that was promised when the commercial and property tax reform legislation was signed in 2013. For Hudson, that would be a cash loss of roughly $30,000; ironically the same amount of revenue that is being generated by the cost per pupil growth rate for this year. If that weren't enough of a reason to be concerned, it is also important to consider changes in federal policy that undoubtedly will have tertiary effects for local school districts. The implementation of tariffs between China and the United States will impact our soybean and pork producer markets. A recent decision by the Administration to grant hardship waivers to oil refineries in an effort to avoid ethanol blending will have a negative impact on our corn market. We can't forget, Iowa's economy is driven by agriculture.

But there is some good news in those dark clouds. A silver lining if you will. Right now we have ample reserves to weather the storm. If we are smart about the allocation of our resources, strategic about the deployment of our capital, and mindful of the extraneous forces that are impacting our ability to do the work of educating our youth--we will be just fine.  

Wednesday, April 4, 2018

School Safety

Senate File 2364 was passed out of both the House and Senate unanimously and has subsequently been transmitted to the governor where I have little doubt she will sign the legislation into law. This bill will require all school districts in Iowa to ensure they have a high quality safety plan to address natural disasters and active shooters by the end of fiscal year 2019. I was very surprised to learn that in a recent state survey, only 9 percent of Iowa schools have what is deemed a high quality plan. I am very supportive of this legislation and look forward to collaborating with all respective state and local agencies to make certain our plan meets this high quality threshold.

Ensuring our students safety while at school is of paramount concern to us. I was happy to field the phone calls and email from many of you inquiring about our school safety plan and procedures in the wake of the school shooting in Florida a few weeks back. As a start, you are probably aware that all doors to the attendance centers are locked during the day. In order to gain entry, patrons need to buzz in at the camera by the door where the administrative assistant can grant access. While this is a very visible safety measure, there are many other components in place that are not easily seen and are unknown to the general public.

Here is what I can share with you. Our school district has in place a comprehensive school safety plan that incorporates detailed procedures for a variety of emergency scenarios. The most recent iteration of this plan was updated and communicated with our faculty and staff at the beginning of the school year. Working in concert with our local law enforcement agencies and the Black Hawk County Sheriff's office, our school district utilizes a response to an active shooter known as ALICE. This acronym stands for Alert-Lockdown-Inform-Counter-Evacuate. This type of response is different from what schools employed in the past, which was to barricade and hide, and has not been proven to be the best option. Instead, our plan relies on an approach that provides the teacher with options in ALICE to be made based on the situation. Teachers and staff are receiving training about what these options look like in the classroom.

Again, this plan was rolled out to staff at the beginning of this school year. In the interim we have had local law enforcement agencies working with our school safety officer, Mr. Bell to fine tune the plan and identify weaknesses. By the end of April, the staff will participate in additional training that will include practical demonstrations for each option and a possible tabletop exercise. It is our intention by the end of the school year to introduce age appropriate components and procedures of this plan to students. This is a challenging topic to address with students and we intend to be both timely and sensitive with our planning and implementation.

As our plan is rolled out to the students additional information will be coming. If you have questions, by all means reach out to us. But, keep in mind some portions of our plan will need to remain confidential.