Thursday, September 25, 2014

Budget Season Approaches

It's been over five months since I've posted.  I attended most and watched all of the seven board meetings in the interim (minutes 5/7 5/21 6/4 6/18 7/16 8/20 9/3 9/17).   Mostly the board spent money over the summer -- especially on Moh Café and the new floor in Mast Way's gym, because, you know, equity.  I don't really have the time or energy for a full report, so I'm going to mostly focus on the budget here.

Newsweek ranks ORHS 110th Best High School in USA

The 2014 Newsweek rankings came out and ORHS ranked 110th out of 16,000 high schools.   This is the second highest in NH.  (We were 753 in the 2013 Newsweek rankings.)  Somehow our graduation rate percentile, whatever that is, was 67.3, which doesn't sound like the perfect record I thought we had, so maybe there's room to move up next year.  Newsweek did a second list of Top Schools for Low Income Students, to address criticism that their lists were dominated by schools with low numbers of students in poverty.  We were 279th on that list.

Principal Allen, who normally doesn't put much stock in magazine rankings, was happy to trumpet this one.  Congratulations to all the students, staff and administrators who made it happen.

Newsweek 2014 selected high school rankings, click to enlarge


Next Board Meeting 6pm 10/1 at Moharimet

The 9/3 meeting was at Mast Way and the 9/17 meeting at ORMS.  The final stop of the tour is 10/1 at Moharimet.  Note the early start time of 6pm -- apparently there will be a dedication of the new Café/Gym before the meeting proper starts, presumably at 7pm.

It's been great getting out of the high school into the other buildings for these meetings.   Great for everyone, that is, but our crack AV guy Alexander Taylor.  Alex spends around 6 hours moving, setting up and tearing down a TV studio each time.  That's not even counting the actual meeting time or the time to reassemble everything back in the high school.   Hang in there, Alex!

ORHS junior Maegan Doody, the student member of the school board, happens to be one of the top runners in New England.  This impressive young woman was recently featured as WMUR's Hometown Hero

Budget Season Approaches

The board is getting ready to prepare and pass the FY16 budget, which covers the 2015-2016 school year.   They have set a broad goal to keep top line costs growing at 3% or below.   For the last few years the board has been keeping top line growth below inflation (currently running around 1.7% this year) but didn't think they could reach that this year.

Since the normal tendency is for the budget to grow faster than inflation (school cost inflation is generally higher than consumer price inflation, see the chart below) the board and administration have to find ways to cut to achieve zero real (inflation-adjusted) growth.  Generally, this has been done by pulling rabbits out of hats -- each cycle the board or administration has to come up with something to offset the increases.  A few years ago it was the energy audit and subsequent overhaul, which cut ORHS annual fuel costs by $90K.  There was also staff reductions through retirement incentives, which cut around 14 positions, saving $1M a year.   Last year there was a large reduction in health insurance costs.

This year's rabbit could have been the LGC fraud settlement of $500K.  But instead of passing that back to taxpayers, the board and the voters decided to spend it on Moh Café.   That $500K is almost exactly the difference between a 1.7% and a 3% hike.  With the extra extra space added, Moh Café will cost more than that, which will be paid with the liquidated capital fund and the fund balance.  The fund balance is the unspent money at fiscal year end that would normally be used to reduce next year's taxes (or go into the Reserve Fund).

It doesn't sound too bad, and it's not even quite as bad as it sounds.  The increase in tuition students (done so far without additional hiring) will bring in additional tuition revenue.   This will lower taxes, even though eventually the top line will increase.   Conversely, spending down the fund balance rather than returning it to taxpayers doesn't effect the budgeted amount.  Unfortunately the district has chosen to use what I've been calling the top line of the budget, total budgeted spending, as its measure.  This means the savings from tuition dollars won't be reflected in the measure nor will the losses from spending down the fund balance.  Perhaps a better measure would be total local tax burden, which has the various revenue streams that lower local taxes (fund balance, tuition, state and federal funds, fees, etc.) subtracted out from the top line.

A Brief History of Oyster River Budgets

I've been working on this chart that shows how our budget went awry in the 2000s.   If I can find the data, I'll extend it back in time even further.  I tried to include (for admiration or blame) the person who was Chair when the budget passed, but I wasn't sure on a few.  Note that (barring resignations, which occurred a few times) the board member who gets elected chair in March of a given year will be in charge of passing the budget for the fiscal year two years hence.  So, for example "Brackett 2013" refers to the FY13 budget passed by Henry Brackett.  Chairman Brackett was (re)elected chair in March 2011, got the board to pass the budget in January 2012 (or so) and sent it through the deliberative session in February 2012.  That budget was passed by the voters in March 2012 and was in effect July 1, 2012 through June 30, 2013, which is FY13.   The idea is to associate a name with the increases or declines, though in actuality the other board members and the voters have influence. To my knowledge the voters have not voted NO on a budget over this period.

All the data (except school board chair names) were derived from the NHDOE cost per pupil and valuation reports (see nhdoe).  This means I used cost per pupil (CPP) rather than the total budget.  The CPP is adjusted to remove transportation, debt service and tuition expense to make the various districts in the state more comparable.   It's not the best measure, but useful and easily available, and since we're looking at the year on year change, the various adjustments are less important.

click to enlarge

The chart shows the year on year change in the various items.  In blue is the change in the state CPP, the average it costs to educate a child in NH.  Change in ORCSD CPP is in red.  These are all in nominal (non-inflation adjusted) dollars.   Rather than adjusting for inflation, I included the inflation rate in orange -- it's been hovering around 2% for a while now (though it did drop to zero during the initial part of the financial crisis, FY2009 in the chart).   The green bars are the change in ADM, which what the state uses for enrollment.  I think it's calculated from the attendance on October 1 every year, so it tends to be a little lower than what we usually think of as the total enrollment.  Looking only at the year on year change makes that irrelevant.  (If I'm right, parents you can make your school district appear more frugal by sending your sick kids to school on October 1.)
The blue bars are state CPP.  You can think of it like the CPI, but for school costs.  Notice that it generally exceeds the CPI  (orange bars), often substantially.  Districts have definitely tightened their belts after the financial crisis, as the earlier numbers are all above 5% and the later numbers are all below 5%.

The red line is ORCSD CPP.  Since the CPP is determined not only by the amount of spending but also the number of students, I included the green enrollment measure.   If the district kept total spending constant, CPP would increase by the amount enrollment falls.  In the years 2003, 2004, 2005 and 2006 the increases in CPP are mitigated by enrollment decline, so the red+green (which is a proxy for change in ORCSD total spending, as it's the change in per pupil cost plus the change in enrollment) is about equal to the blue state CPP those years.  Assuming the state enrollment stayed about constant (I have to check into this) this means our boards didn't so much raise taxes faster than the state education increases as failed to cut costs in the face of declining enrollment.

Former chair Barth is responsible for last year (FY14) and the current school year (FY15).   Both years the district brought in top line spending increases at or below the inflation rate, in the face of enrollment increases.  That should continue our recent pattern of growing below the state rate, but the data isn't available yet.

In FY2001 our CPP was around 13% above the state. We got as high as 36% above the state in 2006.  Since then it's been a slow march down to 23% in FY13.  I'll guess we're now around 20% in FY15.  I'd say 5% to 10% above state CPP is where we want to be while remaining a top school in a relatively well-off community.  If we can keep our belts tight a few more years we'll get there.   The rest of the state tightening their belts makes it a slower process.

Policy IIB

The real driver of costs is staff.  The main driver of faculty size is policy IIB, which sets the number of teachers per class.  I think the current policy, irrespective of the numbers, is rather deficient.  It's short, so here it is in its entirety:

Policy IIB, click to enlarge

My main problem with policy IIB as written is that the guidelines, all of the form "not to exceed," are essentially benefits to the teachers and students.   They limit the size of classes.   The only nod to the taxpayer who has to fund all this is "classes below 12 will be brought to the attention of the Superintendent for approval."  There is very little here that attempts to limit how small classes can get, and thus, there is little limit on how large the faculty can get.

For years, I've heard from the administration and board that Policy IIB has a guideline for minimum class size of 18 (for example, here and here).  I blindly parroted this factoid until I bothered to look it up.  As anyone can see, the only mention of 18 is the maximum K guideline, and the only mention of a minimum is "below 12" requires approval.

So I would respectfully suggest guidelines of "no fewer than N students" be added to the various grades.  Or perhaps, just an ideal class size goal to aim for, neither a maximum nor minimum.  Another deficiency of the policy is it mostly silent on how small classes like shop, which have fewer than 22 workstations, can get without approval.  Furthermore, the policy also lacks guidance about what happens when the principal wants to have a class whose size is outside the bounds.  How about: the principal needs no approval for a class with one student above or below the guideline, superintendent approval is needed for a 2 student deviation and a deviation of 3 or more requires board approval.   There should be an annual report on how the actual class sizes with the guidelines.  

The policy doesn't distinguish between general and special educators, though it has been interpreted not to include special educators.  Furthermore, no mention is made for guidelines to determine the number of paraprofessionals that assist teachers.  Another thing not specified is whether the guidelines refer to each section of a multi-section class, or the average as is often assumed.  Is there a difference between required classes and electives?  These all should be clarified.

Once the form of the policy is improved, the district could have a serious discussion of the actual numbers in the policy.  Is 18 the right minimum for high school?  How will we staff up in response to enrollment growth, locally and tuition students?

We always hear that staffing is the prime driver of the budget and that the class size policy drives staffing.  I have been making the point about policy IIB not having minimum guidelines since March.  (I've had the IIB reference in the banner above since then too, as I tried to guess at the current big issues.)   So I was really disappointed by the board discussion on 9/3 which concluded that the policy IIB had been reviewed and required no changes.

It's ultimately the voters, or perhaps the board as their representatives, who should determine the tradeoff between small classes and lower taxes.   With the influx of tuition students and the surprise turn in local enrollment we will be staffing up.  This is our chance to get to our class size goals while avoiding debilitating layoffs.  If we fail to reconcile the tension between taxes and class size now it will be much more painful to do later.

Well, that's plenty for now.  Bye bye.