October 10th TSD Workshop update

TSD held another Work Session on October 10th.  There were three main topics (1) Filling the vacancy on the Board, (2)Revising the Superintendent evaluation process and (3) Discussion about the amount and type(s) of levies and bonds that will be on the February ballot. 

I gave an overview of levies and bonds in my prior blog, so I am just going to stick with the discussion points brought up at the meeting.  I am really loving these Workshops.  The TSD Board and Administration talk about pressing topics, exchange ideas, assign out tasks, and makes decisions.  Very informative.  


CURRENT VACANCY—Khalia Davis resigned on September 25th, leaving her position vacant.  Khalia is unopposed on the upcoming November ballot, but has indicated she will not accept the position if elected(which is almost a certainty) since nobody else is on the ballot.  As some of you may know, Khalia has endorsed me, and I have agreed to put my name in as a write in candidate.   Assuming Khalia gets the most votes, the position will remain vacant until the Board appoints a successor.  The Board indicated that it will likely start interviews shortly after the election.  If you are interested in applying, the announcement and application process should be outlined fairly soon.  The Board suggested the public may be involved in the interview process to some degree, which would be a great change.  

SUPERINTENDENT EVALUATION PROCESS—It appears as if the TSD Board is in the process of developing an evaluation for the Superintendent. I have not been involved with process in the past, but it appears there was a system used on prior occasions, with the Board hoping for some improvements.  I will be candid, this seemed like much ado about nothing from my perspective.  Coming from the private sector, I am used to evaluations being comprised of occasional sitdowns with employees to see how things are going.  Spending hours discussing, and conducting, an evaluation is a foreign concept to me.  I do not want to minimize the importance, I am just admitting this is not an area with which I am familiar or have much interest.  I will leave any real discussion for others who are passionate about the topic.  

BONDS AND LEVIES—As a refresher, there are 3 potential propositions TSD can put up for taxpayer consideration with the February election:(1) CONSTRUCTION BOND–to build a new school, (2) CAPITAL LEVY–to fund maintenance, technology, repairs and building improvements; and (3) EP&O LEVY–to fund gaps between what the state provides and what it actually cost to educate students.

CONSTRUCTION BOND—Superintendent Dotson started the discussion by encouraging the Board to hold off on asking for a Construction Bond.  He indicated this would be a “big ask” of taxpayers, and is the least pressing of the concerns.  There has been some discussion in prior meetings about possibly needing a new elementary school.  Dotson said he has worked with the facilities group and there is a high level of confidence that we have sufficient capacity for the next 4 or 5 years.   The Board appeared to accept Dotson’s recommendation as there was no substantive discussion about a Construction Bond.  

CAPITAL PROJECTS LEVY—TSD has a list of “needs” regarding repairs, retrofitting, maintenance, etc. of facilities.  The list also includes a few million dollars in technology upgrades/maintenance(chromebooks) and about $1.8MM for the preliminary planning of a new school–which Dotson indicated may not be needed for several years.  The wish list is about $6.3MM per year for the next two years.    Here is the chart:

TSD needs to get voter approval to fund this work.  The TSD Admin pitched proposals between $5MM and $7.5MM per year, for the next two years.  An “ask” of $6MM would equate to about $1 per $1000 for a taxpayer, or about $300 for a $300,000 piece of property.  TSD voters have routinely approved levies of this nature in the past.  


As the discussion progressed, Rita Luce and Andrea McGhee expressed reservation about tax increases being experienced throughout the county, and suggested that $.75 per $1000 might be a more appropriate ask.  Kim Reykdal seemed on board with this.  That would result in about $10MM being collected, with the cost on a $300,000 property being around $225 to the property owner.  Melissa Beard appeared to agree, while pointing out that Mel Murray(Director of Facilities and Capital Projects) and his crew do a great job with what they have.  For what its worth, I agree with Melissa.  I deal with a lot of construction projects.  There are many moving parts that need to be managed.  Mel does a great job in leading a team that serves the citizens of Tumwater well, especially given the constraints of a pretty fixed budget.  

I am pretty confident TSD will ask the citizens of to kick in about $5MM per year over the next two years as a Capital Projects Levy.   

EP&O LEVY

The EP&O Levy(formerly known as M&O) is the biggest decision point as far as I am concerned.  TSD intends to ask for $2.50 per $1,000, which is the maximum allowed under current law.  Once again, TSD voters have consistently approved the M&O(now EP&O) levies in this range.  There was little discussion on this topic and everyone appeared to be in agreement.  The focus of most of the discussion centered on a campaign to get the word out, and educate voters.      

As noted previously, the EP&O funds have become a necessity in TSD.  Failure to pass an EP&O levy during 2020 would have dire consequences and result in drastic cuts.  

SOME COMMENTARY

The Board, as we all do, clearly understands that the climate is a little different this go around.  None of us knows if the bargaining issues will result in a different temperament amongst the voters. From my perspective, there are some basic budgeting priorities that also need to be addressed, chief among them the out of district transfer student policy.  As a taxpayer, it would be hard for me to support a levy unless TSD changes its practice of failing to follow its own out of district transfer policy. 

As I have outlined in previous blogs, I also have concerns about many of TSD’s budgeting practices.  The upside, at least as far as I can tell, is that the new Superintendent seems intent on addressing those issues head on,  and is willing to make some tough decisions.  Further, the Board engaging in thoughtful discussion during recent Board meetings is encouraging.  

As always, we welcome feedback and also encourage you to contact the TSD Board members with your thoughts.  

Bonds, Levies and Budgets

DECISIONS, DECISIONS, DECISIONS

The TSD Board must decide relatively quickly(within the next 60 days) as to whether or not it is going run a levy, multiple levies and/or bonds.  I figured I would provide a brief outline of the difference between levies and bonds, and also lay out some of the options TSD has been discussing.  Most of this information was gathered from the September 12th budget workshop(which was after the scheduled Board meeting) and can be viewed here.  The budget workshop starts about 1 hour and 2 minutes into the meeting.  

WHAT IS THE DIFFERENCE BETWEEN A LEVY AND A BOND?  

While a little oversimplified, here are the basic differences:  

——–Levies require 50% approval while Bonds require 60% approval. 

——–Levies take care of short term operational needs(think salaries, extra-curricular activities, maintenance, technology, etc) and bonds are used to fund long term projects(construction of schools).   

With the current Levy expiring in 2020, and some pretty significant Capital Projects that need to be funded, the TSD Board is currently engaged in a debate about what it should ask the citizens to kick in as levy/bond funds over the next few years.  

WHAT IS THE TIMELINE?

TSD’s current Education Programs and Operations(EP&O) levy has been voted approved through 2020.  So, in order to extend the levy in 2021 and beyond, there must be voter approval before 2021, so a vote needs to happen in 2020.   Most school levies/bond are run in the spring, and not in the November general election.  Any levy/bond must be approved by the Board, and the submitted for filing with the County Auditor.  Here is the timeline proposed by the Superintendent at the September 12th meeting.  

October 24th meeting—TSD Board approves levy/bond request 

December 13th filing date—Last day for TSD to file to be on the February ballot

February  11th—-Vote by TSD taxpayers in Special Election

There is not much time between now and the time the decision will be made so I would encourage you to contact the Board members and/or Superintendent if you want to provide any input.  

REFRESHER ON SCHOOL FUNDING AFTER THE MCCLEARY FIX.  

The McCleary case determined that basic education should be funded at the State level.  In theory, the State Legislature has determined it will provide funds for basic ed, and the local districts should not have to contribute funds for basic ed. 

The State provides funding based upon the prototypical school model.  The state model funds on a per student, not a per building, model.  TSD receives funds based upon how many employees are needed(as determined by the Legislature) in the prototypical school model.  As an example, at the elementary level, the state funds 1 librarian for every 603 students, 1 nurse for every 5,263 students and 1 custodian for every 241 students, and so on.  If a school has 300 students, TSD gets funding for one-half of a librarian.  If it has 1200 students, TSD gets funding for two librarians.  TSD must use levy funds to pay for all employees in addition to that which is funded in basic ed. 

roto

The same funding model is used for teachers, administrative staff and almost all other school employees.   I did a prior blog on this topic which can be found here.    

LEVY MONEY USED TO FILL THE GAP

I doubt the State is providing adequate funding in most districts.  There is no dispute the funding provided to TSD is wholly inadequate, at least in relation to historical practice.   TSD employs more people, and pays those employees more, than the state funding model suggests.  TSD taxpayers support additional funding, which results in higher quality staff, and better student/teacher/administrator ratios. 

TSD has traditionally used levy funds to fill the gap.  This was the practice even prior to the McCLeary fix and contract negotations in 2018, even though those factors resulted in much larger use of the levy funds.  

However, the current TSD levy expires in 2020.   Accordingly, TSD must pass a levy prior to the fall of 2020 or face the proposition of having no levy funds in 2021, which would result in drastic cuts.  Remember that TSD used to be able to collect about $3.00, then the Legislature restricted the amount that could be collected in 2019 to $1.50, and upped the amount to $2.50 for 2020 moving forward.  The amount of EP&O(previously Maintenance & Operations)levy money received by TSD is as follows(future years projected based upon an assumption voters will approve $2.50 rate):

evy

As noted above, 2019 presents a difficult year, much of that was due to a gap that created, and fixed, by the legislature which is discussed in a prior blog here.  The result is that, if voters approve the $2.50 rate, TSD will receive pretty historically comparable levy revenue.  The Board must decide if it will ask for the same, less or more.  If the voters opt not to approve the levy, TSD is in serious financial peril. 

WHAT IS THE LEVY MONEY USED FOR?

The majority of the Levy money fills the gap between what State allocates and what TSD pays its employees.  In addition, as Superintendent Dotson pointed out during his presentation, the State does not fund many other line items that TSD provides, and I imagine families expect.  The below table shows just a few examples highlighted by TSD at the Sept 12th meeting:

asic-Ed

WHAT WILL/SHOULD TSD ASK OF ITS TAXPAYERS?

The below table shows the levy and bond funds TSD has collected, and projects to collect, in the future.  Assuming a total of $5.00 tax rate(the green is the EP&O level and the tan is the Capital Projects bond), the taxpayer pays $5.00 for every $1,000 in assessed value.  So, if you have a house worth $300,000, you would pay about $1500.  Notably, this is about what taxpayers have been paying.  Superintendent Dotson pointed out that taxpayers like to see stability, so it appears TSD will ask for something around the $5.00 threshold taxpayers have become accustomed to paying. 

uture-tax-rate

WHAT IS THE VOTING HISTORY IN TSD

Bonds require 60% approval, while a levy(EPO, M&O) requires 50% approval.  Since 2003, TSD voters have approved each bond and levy put before them, usually by a pretty healthy margin(even though 2003 passed with just .04% to spare).  

oting

WHAT ARE THE OPTIONS

Run an EPO levy OF $2.50 now.  TSD must run an EPO levy.  The voters not approving an EPO would result in at least $10,000,000 in cuts.  TSD has already burned through its savings and has to educate the students.  TSD not passing an EPO levy would necessitate renegotiation of all employee contracts, drastic cuts to all programs, reduction in staff, etc.   I am sure we will be talking about this in future blogs, but proposing an EPO levy at the maximum rate($2.50) is a no-brainer.  

The big question is if TSD asks for more than an EPO levy.     

Capital Facilities/Safety levy.   One of the objectives of the planning, which makes a lot of sense, is that, given the generosity of TSD taxpayers, TSD does not want to leave any money on the table.  If TSD just asks for an EPO levy, Tumwater taxpayers may end up paying less than $5.00(even though they may be willing to pay more).  If TSD taxpayers are willing to contribute, TSD certainly wants to pitch the need for other projects which could utilize those funds through a Capital Facilities levy.   Below is a list of “needs” as expressed by TSD at the last board meeting.  Keep in mind this would cover a 2 year time period.  

PO

One flashpoint is the student devices line items.  The 2014 Bond approved Chromebooks for TSD students.  That 2014 bond was a one time shot and does not cover replacement or repair of the Chromebooks.  If TSD wants the students to have Chromebooks, it needs more money.  Similarly, the $500K line item for Pre-Planning a new elementary school is also included.  The theory being that we will need a school at some point, and the planning cost could be incurred now. 

While I imagine people will have varying opinions about what money should be spent on, in my view, this is pretty good foresight.    My guess is that TSD will run a Capital Projects Levy that results in a total levy rate of around $5.00.   

Asking voters to approve a Bond for a New Elementary School.  The TSD Board appears to believe it might need a new elementary school sometime in the near future(3-4 years).  There is about a 3 year lag time between when funds are approved and when the school opens.  

The conclusion that a school is needed is primarily driven by projections that appear, at least to me, to be based on some flawed assumptions.  The gist of it is that the projectors(Gassaway—an outside demographer that is pretty good at what it does), assumed TSD’s enrollment for 2019 would be about 7,000.  We know that TSD’s enrollment is around 6100 in 2019.  This is no fault of the projectors as TSD had about 6600 students a few years ago, and was experiencing a growth of 200 or so kids a year when the projections were made.  However, the last 2 years have brought a decrease in students. 

The result is that the projections are flawed as almost all of the 2019 “projections” have not come to fruition–TSD just does not have that many students enrolled at present.  To highlight the example, when it did the analysis back in 2017, Gassaway projected TSD would have about 2900 elementary school students in 2019.  Presently, we actually have 2780, about 120 less than Gassaway projected.  

According to the capacity provided by the schools(even without portables) the schools have room for growth.  Absent a significant increase in enrollment, I do not see any need for another school within the forseeable future(5 years).  I would suggest asking for money for a new school is unwise at this moments.  

CONCLUSION

Given some of the “open wounds” in the community as a result of the bargaining negotiations in 2018, the TSD community may have to work hard to educate the public about any possible levies/bonds that are placed on the ballot.  Along that line, the Board needs to find the sweet spot with respect to the “ask” of the community.  Once that decision is made, or maybe even before depending on what information comes out, I am sure Tami and/or I will offer some updated information.  As always, we welcome your comments and encourage you to reach out to your Board members directly.