BUDGET UPDATE WITH INFO FROM TEA AND TSD


I sat down with Elizabeth Collins, the UniServ WEA Chinook representative for TEA. Elizabeth was very cordial, provided some useful information and engaged in a candid discussion about TEA’s position on a couple issues. In addition, there were some budgetary topics discussed at the most recent Board meeting on March 14, 2019.  As promised, and with the hope of creating productive dialogue, I am updating the blog with some of the information I learned during the meetings.

The positions of TEA and TSD have not changed much over the last few months.  TSD contends that it will operate at a deficit of somewhere between $4 million and $6 million over the course of the next 12 months, with a similar deficit next year absent significant cuts.  TEA believes there will likely be no deficit, and any deficit will be of a size that could be absorbed by cuts to non-essential programs. 

I have tried to provide some perspective from both TEA and TSD, along with a little bit of commentary below:

1.TEA believes TSD routinely builds in extra “budget capacity” and overplays a “the sky is falling” message. TEA’s argument is that TSD’s contention regarding a significant deficit is overstated, and likely wholly inaccurate. To support this claim, Elizabeth pointed me to the F195 and F196 documents on the OSPI website.

The F195 is a projected budget that TSD, like all other districts, provides to OSPI each year. The F196 is a report produced by OSPI which shows the actual income received, and expenses paid, during the fiscal year. Think of the F195 as TSD’s forecast of what the future holds, while the F196 is the reconciliation of TSD’s checkbook ledger at the end of the year. In simple terms, TEA thinks TSD is forecasting expenses it will not incur, thus implying that the financial peril is overstated by TSD.

TSD’s fiscal year tracks the school year(September to August). So, I pulled the F195 and F196 for the 2016/17 and 2017/18 school years to compare the budgeted(F195) and actual(196) expenditures.   Here are the links.  The documents are long(about 70 pages or so, but the pertinent information is summarized in the first 10 pages or so).  

2016-17 F195(budget).  http://www.k12.wa.us/safs/rep/fin/1617/34033195.pdf

2016-17F196(actual).  http://www.k12.wa.us/safs/rep/fin/1617/34033196.pdf

2017-18 F195(budget).   http://www.k12.wa.us/safs/rep/fin/1718/34033195.pdf

2017-18 F196(actual).  http://www.k12.wa.us/safs/rep/fin/1718/34033196.pdf


My general conclusion is that TSD does generally build in budget capacity.  The 17/18 projected expenses were about about $1.5 million greater than what was actually expended.  This is relatively consistent with the historical budgets TSD has presented.  With an $85 million dollar budget, the difference was about a 2% variance from the projections. While school district budgets are pretty predictable, which reduces the expected variance, TSD’s actual expenditures are pretty close to what it budgeted.

That being said, there are some large variances in specific categories. Notably, Regular Instruction and Support Services each had a variance of over $2 million—in opposite directions on a year to year basis. At that end of the day, the variances in those two categories pretty much offset each other, with the bottom line being a “wash.”   

It is possible there are some line items within the budget that could possibly be warrant further discussion. However, I deal with a lot of budgets, and rarely do I see a forecast budget fall within 5% of the actual year end income/expenses.  My conclusion is that there is some merit to TEA’s contention, but that TSD’s practice of building some capacity is not overly concerning in and of itself.  The pivot point on this topic is what is TSD doing with the money it budgets, but does not spend(see below).  

2.The TSD General Fund Balance has increased over the last few years.

As noted above, over the last 2 years TSD budgeted about $1-1.5 million more than it actually spent. Interestingly, TSD’s general fund balance(which is really just the savings account or rainy day fund) also increased about $1 million.  So, not surprisingly, TSD is saving some of the money, and spending some of the money.  A good analogy would be a household budget.  When unplanned income comes in the door, it is not uncommon to spend some of the money and save some of the money.  TSD is saving some of the money as the general fund balance has increased the last few years up until January, 2019. TSD is also spending some of the money.   

TSD’s contention(which I believe is correct) is that, as a result of the loss in levy funds, it will have to dip into savings to the tune of about $4 million over the next 6 months to meet the expenses in the 2018-19 budget.  TEA contends TSD will not have to do so. To date the levy payment have not changed.  However, the payments in 2019 will be significantly less.  I went through this in depth as part of a prior blog which can be reviewed by clicking here.   The truth is that we are all making educated guesses at this point and really will have no definitive answers until this summer.  

TEA contends the additional basic education funding makes up for the loss in local levy funds, and TSD has enough income to meet its expenses, and therefore should not need to access the general fund to meet budgeted items.  In the event TSD does not have sufficient funds to meet its budgeted items, TEA would point to the increased general fund balance and argue that TSD should use the funds it has saved to make up any shortfall.  TEA also points out that TSD generally finds money to cover unexpected or non-budgeted expenses.  

Interestingly, the amount, or lack thereof, of TSD’s deficit the next 6 months will be a pretty good indicator of the deficit likely to occur in 2019-20.  

3. 2018-19 is in the rear view mirror, so any corrections really involve the 2019-20 budget. 

At the most recent Board Meeting, Superintendent Bash indicated the Board has directed him to present a balanced budget, meaning the projected expenses can be no more than the projected income during 2019-20.  It is too late to take any substantive action for 2018-19(where TSD projects at least a $4 million deficit), so, due to the mandate to develop a balanced budget, TSD is looking at all options for 2019-20.

A complicating component is that it is possible the legislature will bridge the gap, and provide additional funding.  However, TSD is required as part of the collective bargaining agreement to notify affected employees of any cuts no later than May 15th.   It is quite possible that on May 15th we will not know if the legislature is going to provide relief.  Accordingly, TSD feels compelled to put together a “worst case” scenario(which assumes no additional funding) coupled with a restoration plan(in the event some additional funding comes to fruition.

Understandably, TEA is concerned about providing notice of cuts to staff absent an actual need to make the cuts.  Doing so certainly hurts morale.  In addition, staff who are unsure of their position with TSD may find another job over the course of the summer when TSD may actually end up having a spot available.  It is clear to me that TSD would much prefer not to provide notice of cuts unless the cuts actually have to be made, especially given the strained relations resulting from the events of last summer and fall. However, TSD is in somewhat of a “Catch 22” as the notices have to go out by May 15th.  If TSD fails to provide notice of the staff reductions, then those expenses will be part of the actual expenses in 2019-20, which would create a huge deficit if TSD’s projections are even close to what actually happens.    

4.How does the worst case scenario compare to the present?

It appears everything is up for discussion except Core Education(English, Math, etc), which is pretty much untouchable.  Among other steps, Superintendent Bash indicated that TSD is meeting with administrative staff to discuss possible reductions across the board(excluding Core Education), trying to come up with some prioritization, depending on how deep the cuts need to go.  

There have been very few details provided publicly about the cuts.  TSD has indicated that it projects significant administrative cuts, and has unequivocally stated that staff cuts will be necessary.   As noted in the most recent Board meeting, proposed position reductions will need to occur.  These will include administration, operations and school staff.  Once again, in most cases, notifications must be sent out by May 15th.    

Notably, the most recent Board meeting(3/14/2018–a recap of which can be linked here) was unusually well attended, primarily as a result of TSD recently notifying some library and technology certified specialist staff that they may be moved back to the classroom, with non certified staff filling the library and technology positions.   The Board meeting was standing room only, with several people showing up to provide public comment.   

At present, it is difficult to determine the cuts TSD intends to project.  My impression is that most of the “cuts” discussion has occurred at the TSD administration level, including principals and building representatives.  I imagine once word gets out about the proposed cuts, individuals in the community will then be able to really state their priorities.  In an ideal world, the stakeholders would meet together to discuss priorities, and potential cuts.  I suggested this concept at the most recent Board meeting, which appeared to be well received by the Board and community members.  However, when I have pitched the idea to TSD and TEA, for varying reasons, each appear unwilling to engage in such a discussion.  In any event, I am hopeful the TSD Board will allow for in depth community input after any proposals become known.  

5.Some good news, TSD and TEA actually are working hard to try and come up with some funding

TEA and TSD, along with many members of the community, have been actively involved in lobbying legislators to mitigate the fiscal problems to some degree.  There are a couple proposals before the legislature that would provide relief.  The “Levy Fix” would provide an additional $6-8 million to TSD without any additional cost to local taxpayers.  in addition, there were a couple proposals that would increase the basic education funding.  At last check the bills were having a tough time getting out of committee.  I would encourage individuals to contact legislators and have your voice heard.  

Lastly, the TSD Board is a volunteer group of leaders who serve our community, and devote countless hours each year to the Tumwater community.  The TSD Board is charged with the final say in budgetary decisions.  I know they want to hear from all those interested before undertaking the task of coming up with a budget, especially one that is likely to involve undesirable cuts.  If you want your voice heard, I would encourage you to contact the TSD School Board–emails below.  

khalia.davis@tumwater.k12.wa.us

melissa.beard@tumwater.k12.wa.us

jay.wood@tumwater.k12.wa.us

kim.reykdal@tumwater.k12.wa.us

rita.luce@tumwater.k12.wa.us

As always, we welcome comments and input from the community.  We are also looking for guest bloggers.  You can contact me at scottkee@citizensfortumwaterschools.com

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