Everyone Likes Puppies!

You may be surprised by the number of items that are mandated to be taught, addressed, or otherwise taken care of in your local public school. A primary reason for this is that the public school system is the only sector of society where we have a captive audience. Attendance is required by law, whereas there is not a requirement that folks go to the doctor. I suppose that is the reason schools have the responsibility of monitoring whether or not children have all their immunizations prior to enrolling. So, when the new requirement came out requiring that we monitor meningococcal vaccine administration, it is, in fact, an unfunded mandate. Truthfully, tasks like this have very little overhead, because after all we employ a school nurse and she already has the responsibility of verifying a number of vaccinations. Nevertheless, it should be pointed out this adds to the workload of our personnel. At last count, we had over 50 students that were not yet immunized. Because of that Nurse Brandhorst will need to come in next week and start tracking them down. Now, don't get us wrong, this is a good idea and probably should be done. But, that is how a lot of these unfunded mandates get started. They are all good ideas. After all, most people agree vaccinations are a good idea. It's kind of like puppies. We all like puppies, right?

Now then, let's consider again the cost of unfunded mandates. Some of these costs are hidden, much like the new vaccine monitoring requirement. I'll concede the point that the cost of monitoring may be minimal, but the sum of many of these 'minimal cost' mandates can add up to a pretty large number. But let's set aside the purely financial component of unfunded mandates and consider the impact they have on other aspects of the educational program.

Take for example the requirement that all students must be taught CPR before they graduate. Who can argue that is a bad idea? Everyone should know CPR and the basics of this life-saving procedure. So, several years ago the legislature mandated that all schools teacher CPR. Of course they didn't appropriate any funding to implement the training so it was left to schools to figure out how they were going to pay for it. But again I argue the monetary implications are but one way to look at the idea of unfunded mandates.

Again, because of the fact that schools hold a captive audience, all sorts of ideas and requirements are mandated upon them. The problem is that nothing is ever taken away. Once again I concede the administration of CPR has a pretty minimal cost associated with it. But set that aside. When are schools supposed to meet this requirement? It's not like we are sitting on a block of time that isn't used for something else, just waiting for us to plug in another curriculum or content. The trouble is, nothing is ever taken away! We just seem to continually add more and more content and curriculum to our school day without adding any additional time. And time certainly does cost money!

I suppose the good news is the last couple of years, the Legislature has been sensitive to ensuring they don't burden school districts with unfunded mandates. But, I argue that some of the decisions that have been made are not always in the best interest of the school. Yes, some mandates are necessary and should be funded. During the first session of the 87th general assembly, the legislature eliminated the funding for mentoring programs that are designed to support teachers that are new to the profession. Because of their sensitivity to unfunded mandates, the requirement to provide these programs was eliminated. (It actually is still required but how it works is a bit complicated.) Now I don't know about where you work, but providing support to employees that are brand new to the profession seems like a pretty important part of the induction process. In a state where teacher attrition is part of the formula the determines a school's 'report card grade', it seems like this decision may have been a little short sighted. School districts are going to continue to provide mentoring programs not because we necessarily have to or are mandated to, but rather because they are a good idea! Yet the money is no longer provided. (This would be a great opportunity for you to review my blog article from a few weeks back: Held Harmless? Sort of...)

Again, I give credit where it is due. Our legislature is listening when it comes to unfunded mandates, but the recent move to add computer science to the scope and sequence of course offerings isn't all that helpful. There was no money appropriated for schools to implement computer science programs so they weren't mandated. But let's say money was appropriated and we were mandated? Well, then I suppose we would probably have to find room in the schedule for the course--at the expense of something else. (There's that time constraint element again.)

For those reasons, the Hudson Board of Directors advocates against unfunded mandates. But you know, I like puppies too!

Advocacy is a Year Round Job

At our regularly scheduled board meeting on July 17th, the Board of Directors completed the annual exercise of setting our legislative priorities for the upcoming session. One of those priorities includes the extension or repeal of the 2029 sunset of the statewide penny (SAVE) for school infrastructure. While 2029 seems like a long time away, when it comes to school infrastructure needs it isn't all that far into the distant future. Especially when it comes to strategic planning!

Currently three basic options exist for meeting the needs of school district infrastructure projects. We can either issue general obligation bonds, revenue bonds, or adopt a pay as you go philosophy. Since we paid off our general obligation bonds for the high school a few years back, we have adopted a pay as you go philosophy.

Issuing general obligation bonds requires a vote of the public and must be approved by 60%, or what is known as a super-majority. The super-majority creates a very high bar for passage and it is quite common for these type of funding options to take several attempts to gain voter approval. In many cases, projects tend to be scaled back in order to be passed. The reason these issues are so difficult to pass is that they usually come with a property tax increase. If you watch the news on the night of a special election, it is not uncommon to see general obligation questions fail, not because they didn't have the majority vote, but because they didn't reach that 60% majority. I have seen these referendums fail with a 59.99% approval--missing passage by only a couple of votes!

View from the East end of the new ADA ramp right after
the concrete was poured.

For that reason, many school districts have elected instead to issue revenue bonds. Unlike general obligation bonds, revenue bonds can be issued following a board resolution and do not require a super-majority vote. The reason for this is that these bonds are being issued based on anticipated future sales tax revenue. In other words, there are no property tax implications. Revenue bonds are attractive to property owners and school districts because of the fact there is no property tax implications or super-majority threshold. However, in order to generate the bonding capacity to meet the need of a large scale building project, school districts have to bond against their sales tax for about 20 years. The trouble is the current sales tax law sunsets in 2029, which is a short 12 years away. This has the impact of significantly limiting bonding capacity for schools.

As I mentioned above, at this time Hudson has adopted a pay as you go philosophy. Quite simply that means the board has elected to complete projects as funds become available. But, our needs are just as significant as those of school districts who are building new buildings! This is clearly illustrated by the very significant renovations that are occurring in our elementary school this summer. Our early childhood wing classrooms are all being updated with new windows, air conditioning, lighting, and ceilings. On top of that, we are installing a new ADA accessible ramp and restroom on the South end of the competition gym. This pay as you go project is budgeted at right around $579,000. Next year the board plans to move on to phase two of what will end up being a three or four phase project over the next several years. When finished, we will essentially have remodeled and renovated our entire elementary attendance center.

When we finish our elementary project it will be time to move on to the high school building. You know, people still refer to that building as the 'new high school'? Were you aware the new high school is 20 years old this year? Like our homes need maintenance and updating, so to do our schools! We have already started to replace sections of the roof on the building, and certainly our mechanical systems will start to reach the end of their life in the next several years. That is why it is so important that we have a dependable source of revenue for our school budgets with which to address infrastructure needs.

In this photo I am reminding legislators that
our new high school is 20 years old.

Last week, school board president Karyn Finn and I had the opportunity to host two legislators in our district and advocate for an extension, or better yet a repeal of the sunset on the SAVE. I enjoyed discussing the importance of this resource with our legislators and was able to demonstrate to them how we were wisely investing our taxpayer resources. The legislative session runs from roughly January to May. The pace is very quick during the lawmaking process and our legislators are often times lobbied from multiple sources representing varied positions. This makes it incredibly difficult for them to fully understand and appreciate the complexities of the decisions they are being asked to make. That is why I think this is a great reminder to all my colleagues and school board members around the state that advocacy is a year round task. If we wait until legislators are in session, it might be too late. And when it comes to this issue, what better time than the summer when we all have building projects underway to show our legislators the impact SAVE has on our schools and community?

In the future, I am uncertain as to whether the board will continue with a pay as you go philosophy. We certainly don't want to handcuff future boards or administrations from making decisions that make the most fiscal sense at that time. The one thing I do know for certain is that our facility needs will never go away. We will finish one project and then move on to another. While I am relatively confident this board has no appetite for a general obligation bond, it is somewhat interesting that the number of school districts bringing bond referendums to voters is on the rise. According to the Cedar Rapids Gazette, the number of bond issues was 24 this last year, up from 14 in 2008-2009. The article goes on to surmise this is due to the uncertainty of the SAVE. I don't think we will ever eliminate the need for school districts to bring general obligation referendums to voters. Each school district in Iowa is unique and has its own philosophy and needs for the citizens and students it serves. But as a practical matter, one way to reduce the number of general obligation bond issues is to restore certainty that SAVE will be there in the future. It certainly will have a positive impact on property taxes.

Additional Flexibility is a Legislative Victory

On June 30, 2016 the district carried $265,529.97 in six different reserve fund categories. We are still in the process of closing out our books on fiscal year 2017, but I anticipate those reserve funds will grow as they have the last several years. Luckily this should be the last year we will have to deal with such large reserve funds, since HF 564 and 565 have been signed into law. A categorical fund is a dedicated fund that can only be used for a very specific purpose. In most cases, the rules for expending these funds are very narrowly defined. Revenue flows into these funds through our foundation formula and is typically pupil based. The point the legislature was trying to make in setting up and appropriating these funds was that they wanted to ensure that they were being expended on the intended purpose. I think we can all agree this is a noble and justifiable goal.

The question of course became, once the need is met, what happens to the remainder of the funds? Well, in Hudson and most other school districts it becomes part of a reserve fund balance like those mentioned above. Since it can only be used for a specified purpose, it has to sit until such a time the district can figure out how to use it for that specified purpose. Often times this can, and has been to the detriment of other needs in the district. It is entirely conceivable that some investments are delayed or scrapped in school districts because there isn't any money available--at the same time the district is sitting on a $265,529.97 reserve fund balance.

Furthermore, in my opinion it would be a complete waste of tax dollars if we were to spend down these reserves on the specified purposes outlined in the Code if they weren't really needed. That is why for the past several years, our school board has advocated for greater flexibility when it comes to utilizing these categorical funds. You may recall over this last school year we had to work incredibly hard to secure permission to use existing funding to start our preschool program. We had to jump through some pretty significant hoops and get permission to invest resources that we already had--all because of the constraints within our categorical funds.

Our request and advocacy really focused on two areas when it came to flexibility. One: we wanted to expand the menu of items that could be fit into each categorical fund. As one example, when it comes to At-Risk and Dropout prevention programs, I argued that guidance counselors should be an allowable expenditure for these funds. Interestingly enough, some school districts were allowed to do this while others may have perhaps only been able to fund fractional FTE through this fund. It didn't make sense and appeared to be inconsistent around the state. Two: we believed that if a school district had satisfied and could demonstrate that a need had been met, any remaining funds should be able to be captured and redirected to other needs in the school district.

Representative Walt Rogers, who chairs the House Education Committee provided valuable leadership during this past session, shepherding these bills through the legislative process. Because of his work, and his colleagues on both sides of the aisle,  these bills gained traction and were signed into law with the passage of HF 564 and HF 565. Interestingly enough, both bills passes on a 98-0 vote in the House and a 49-0 vote in the Senate. Since we had been advocating for several years on this issue, I wonder why they finally passed with such ease this year? Truthfully it shouldn't have been all that surprising. In the past, every legislator I talked to thought these were reasonable ideas and supported them. The final vote clearly shows these laws had broad bi-partisan support. Heck, how many  times do we EVER get a law changed [basically] unanimously? Hopefully all our legislators can hang their hats on that and agree to work in a bi-partisan manner come January. 

Held Harmless? Sort of...

Well, the legislative session has concluded and we will spend the next several months analyzing the variety of policy changes to determine the impact on programming. Whether or not this session was successful depends largely on your point of view and political affiliation, but as I stated a few weeks ago all can probably agree the major theme that emerged from the session was 'tight budget'. 

For those of you that have followed me a while know that one of my major complaints, when it has come to the legislature, has been an inability to determine state supplemental aid (SSA) in a timely manner. Prior to this year, state law required school aid to be set 18 months in advance so school districts would have ample time to make program and staffing adjustments. That law changed this session, now requiring state aid to be set within 30 days of the governor releasing his budget recommendations for the fiscal year that begins on July 1. This was followed up with the legislature setting supplemental state aid at 1.11%, which was about half of what the governor recommended. Well, if you know me (and most of you do), you understand what I think about that!

But alas, I won't complain because at the same time schools saw a 1.11% increase in state aid, many other areas of state government weren't that lucky. The math just isn't favorable: following a cut in excess of $100 Million at the onset of this legislative session, the Revenue Estimating Committee (REC) adjusted revenue projections downward by $191 Million for the fiscal year that begins on July 1. The truth is, had the legislature delayed setting SSA until the March REC provided its estimate, we would not have even received the 1.11%, so we should (and do) consider ourselves lucky. 

At the same time this happened, the revenue projections for the current fiscal year were adjusted downward once again. This time though, instead of another budget cut, the legislature opted to dip into the reserve fund to fill this gap, which I agree was the wiser course of action. However, a commitment was made to replenish this fund immediately with the new fiscal year, making an already tight budget even tighter. The fact is, I am grateful to see the increase in funding (as small as it is) and we will work hard to maintain the fiscal discipline that we have come to expect in our school district. Moving forward I will continue to advocate for adequate funding in our school district, but the point worth making is this: I get it. 

However, to suggest that school districts were held completely harmless when it comes to the budget cuts isn't entirely accurate. For starters, appropriations dedicated to mentoring and induction programs were eliminated from the budget. Now, at the same time the legislature decided to eliminate this funding, they changed the law that required mentoring and induction. Since the legislature has been sensitive to 'unfunded mandates', a mandated mentoring and induction program for new teachers is no longer required. I don't know about you, but eliminating this type of program for new teachers just doesn't seem like a good idea. Of course we will still offer this program, but the money will have to come from another source. The appropriation that was used to support the implementation of the Iowa Core Academic Standards was also eliminated, and while a smaller amount it is, nonetheless, a cut. Truthfully, these are all relatively small dollar amounts, but when you add up a lot of smaller numbers, it tends to turn into a bigger number! Another collateral loss in funding was the elimination of $2 million from the AEAs that was specifically appropriated in order to help school districts implement teacher leadership and compensation systems. 

So the big takeaway here is that although the funding isn't where we would have preferred it to be, it could have been a lot worse--so that should be considered a bright spot. And, there were some other policy areas where I believe we made some very positive gains, especially when it comes to flexibility! We'll talk more about those next week!