Consider Our Priorities

The last three weeks we have discussed priorities the Board of Directors have identified for the upcoming legislative session. To recap, we have covered a lot of ground, including the importance of removing the sunset on the one cent sales tax, the benefit of operational sharing and ensuring those incentives continue, and the unintended consequences of unfunded mandates. Today we save the best for last, and if you have been following me for awhile, you probably know what is coming next.

Timely and adequate supplemental state aid. Specifically speaking, we are interested in the amount of inflationary increase associated with per pupil funding for the fiscal year that will begin on July 1, 2018. During the 2016-2017 school year, the state 'cost per pupil' was $6,591. Supplemental state aid increased the state cost per pupil by 1.11%, so for the 2017-2018 school year, the state cost per pupil increased by $73 to $6,664. To put that in perspective, CPI for the month of August is 2.4% and for the last year has averaged 1.48%. 

I think it is also important to note that then Governor Branstad recommended an increase of about 2.45% in his Condition of the State address in January of 2017. At the time, we all lamented the fact that it was low, but now with the benefit of hindsight, we are thankful we saw an increase at all. As the year continued to unfold, the Revenue Estimating Conference downgraded revenue projections at each meeting. We are in a situation now where it seems very likely that a special session of the Legislature will be called in October to deal with an even greater shortfall. We will undoubtedly have an opportunity to debate the reasons for those shortfalls in future articles, but for the meantime, I'll focus on the need for adequate and timely supplemental state aid. My point is that, yes we get it and understand, but wonder if the larger issue is one of priority. 

Nevertheless, and thankfully this issue was settled relatively early in this past session. Although it is worth pointing out that we should have been discussing supplemental state aid for the fiscal year that begins on July 1, 2018. You see, the law as previously written required the legislature to set supplemental state aid 18 months in advance of the new fiscal year. This was designed to give school districts ample time to make changes to personnel and programming decisions.  But when they set the new funding levels, they also changed the law that removed the 18 month lead time. Now we have a mere 6 months. 

Indeed the budget is going to be tight this next year and I recognize that. I further realize that there are many, many competing priorities that we have as a state. But perhaps as a state it would be wise to consider our priorities. Many of our politicians talk about their support of education as a priority and the fact that Iowa has traditionally found itself recognized as a leader in education. They talk about how important it is to retain (or regain depending on who you talk to) that coveted status.

But at 1.11% supplemental state aid, it makes it incredibly difficult to maintain our standing as a leader. At 1.11%, Hudson schools will see an increase in revenue of $45,955. With a general fund budget of $8.4 Million and an overall budget of $10.7 Million, that hardly seems adequate. Consider this: It's August and we have already invested $33,275 in a new science curriculum. School doesn't start for two more weeks. 

Operational Incentives

Over the last several years Iowa school districts have endured very small increases in supplemental state aid year over year. We'll talk more about that next week, but the impact of a low growth rate has a pretty significant negative impact on schools over time. This issue is further challenging in school districts where enrollment is decreasing, and in fact, often times this has a compounding effect. The consequences of this are obvious and lead to school districts cutting positions, and unfortunately in some cases eliminating programs. But as a general rule of thumb, when considering budget cuts in schools, the idea is to keep the cuts as far away from students as possible. That means creating efficiencies wherever we can find them.

One common way to create efficiencies in Iowa public school districts is through operational sharing. This type of arrangement allows school districts to share the services of some employees with other school districts. Basically, one school district serves as the district of employment for a particular employee and 'sub contracts' out the employee to a neighboring school. In Hudson, we share two positions with other school districts: business manager and transportation director. With our business manager, we share the cost of employment 50/50 with Grundy Center. Hudson holds the contract so the business manager is employed by the Hudson Community School District. In the case of transportation director, we share the cost of employment 75/25 with North Tama. In this arrangement, North Tama is the agency of employment and holds that contract. (If you have ever wondered or noticed a Hudson bus in the North Tama garage, now you know the reason why.)

The benefit of this type of arrangement is probably pretty obvious. The cost of employment is split between the two school districts per the agreement. The downside is that the employee can't be in two places at once, and as a result organizational changes in operation are necessary. This might mean that other operational employees have to pick up some of the extra work, or work that is the primary responsibility of the shared employee has to wait until that employee is in the school district. Needless to say, operational sharing does mean that people aren't always readily available to handle issues and some tasks take a little longer to complete. (Admittedly advances in technology make this less burdensome, but there are tasks that need to be completed onsite.) We've been sharing our business manager for several years now, so pretty much have the organizational aspects of this ironed out nicely at this point. Sure, it is not without challenges from time to time, and everyone has to take on a few more responsibilities....

But the state has made it worth it. School districts are incentivized to create these efficiencies by sharing key operational positions. It works like this: you share a business manager, each school district receives the equivalent of five students for funding. If you share a transportation director, each school district receives the equivalent of five students for funding. To keep it from getting out of hand, districts are limited in both the number of operational positions that can be shared and the equivalent amount of funding they can receive. Nevertheless, this funding can go quite a long way to fill the gap created by inadequate funding. So, the equivalent of ten students we receive for operational sharing generates $67,766 in revenue for the school district. Pretty neat deal! But here is the problem: when the law was enacted it had a sunset of five years. That was three years ago. We, and numerous school districts around the state have come to rely on that revenue to keep programs running and afloat. For that reason, the board has set removing the sunset on operational sharing as a legislative priority during the second session of the 87th general assembly, set to commence in January.