Letter from Ferndale School Board President Jim O’Donnell on Budget

Letter from Ferndale School Board President Jim O’Donnell on Budgetdinos02sidelogo3

(Jim O’Donnell, Jan. 19, 2014)

(EDITOR’S NOTE:  This letter was submitted by School Board President Jim O’Donnell and also appeared in the Ferndale Schools e-blast.  This is in response to public questions about ongoing negotiations with district employees, discussed in this article:  http://oaklandcounty115.com/2014/01/14/proposed-pay-cuts-to-teachers-and-staff-spark-protest-at-ferndale-schools/)

Ferndale Public Schools is confronting a significant deficit of approximately $2.5-million for the 2013-14 school year. The principal causes of the deficit are lower than expected enrollment at the Digital Learning Center, University High School and in Kindergarten through 3rd grades. This year’s budget was largely based on projections from Middle Cities that have been 99% accurate over the past decade, as well as budget projections based on maintaining last year’s enrollment at UHS and DLC.

Last year, prior to the swearing in of four new board members, the 2013 School Board learned we were inheriting a $3-million deficit. In response, we worked closely with the administration to balance expense cuts and to use a large share of the fund balance so that the impact on staff would be minimized to the greatest extent possible.

This year’s deficit is the result of larger-than-expected gaps in enrollment at the early elementary level. Contrary to what some suspect, we do not believe our decision to reduce incoming Schools of Choice students impacted the decline in general enrollment at these grade levels. As many Oakland County districts have found, enrollment declines are increasing more rapidly now than in previous years. In addition, other districts have developed innovative and attractive new programs that are increasing education options and puts added pressure on our district’s essentialenrollment. That is why the new Strategic Plan focuses on improving our education programs and services and strengthening our marketing and outreach efforts to increase our enrollment.

State policy choices have lifted caps on charter schools, increased district expenses for retirement funds, and have cut more than 20% of the foundation allowance after accounting for inflation. This is a planned disinvestment in public education, coordinated in Lansing by lobbyists including the Mackinac Center. The financial crises in local school districts are specifically designed to undermine confidence in local public education, so someday schools that fail to thrive while their resources are drained could be largely turned over to for-profit education companies. This is a battle that we have to fight in Lansing, in addition to our local community-based work.

The District’s Financial Problem

So, we know what caused the deficits and what we need to do in the long run. Now we turn to the existing financial problem. This year, the board and administration eliminated an executive position in the Central Office. We have also left several other positions vacant or reduced the compensation costs of interim leaders. Our budgets have reduced costs for consulting costs, reduced goods and services expenses, reduced board-related expenses, support expenses at Harding Administration Center, and avoided cuts in the schools themselves in proportion to the lost revenue. These cuts are actually not new to this present School Board, as the previous board also cut deeply into expenses.DDAsample01

There are simply very few high-dollar budget items left to cut in the short term. The district must provide for a Central Office, which has reduced nearly 10 people over the past two years. We are staffed with the essential functions: Superintendent, Human Resources (with only three people), Budget and Finance (with only a handful of people managing $35-38-million in transactions without an audit finding in years), Enrollment, Pupil Accounting, Communications, and Curriculum and Instruction (including Special Education). As positions were reduced, or not filled, these remaining individuals have assumed those duties.

What are the Options?

Cut Programs: We’ve also examined the costs of several services and programs that bring significant value to our district: transportation, athletics, and fine arts. The School Board is not willing to eliminate the very programs that attract and keep families in the Ferndale Public Schools. Although we’ve studied the cost savings that could occur if we implemented pay-to-play athletics, it is not a viable financial strategy in a district that has a high percentage of students who are economically disadvantaged. The district’s booster organizations are already raising tens of thousands of dollars for sports, arts and nicholas-schrock-allstateacademic booster organizations, and it is doubtful they would be able to raise the funds necessary to replace the support currently provided by the district for these important enrichment activities for our students.

Use Fund Balance: The Board and Administration have carefully considered use of the fund balance. First, the fund balance is not a surplus, rainy day fund or slush fund. It would be a breach of the board’s fiduciary duty to use the entire fund balance for general operating expenses. Last year, when enrollment was lower than expected for the first time in 12 years, we authorized the use of $1.5-million and we will use up to $800,000 this year. That leaves us with about $2.3-million in fund balance, the equivalent of 14 school days. If we were to tap into that fund to cover general operating expenses, it would be a one-time fix and would take years to rebuild.  Every school district in our state that has run into serious financial trouble or had an Emergency Financial Manager appointed depleted its fund balance to pay for recurring expenses, such as wages and benefits. We do not believe in this desperate approach to school management.

Second, the state legislature is expected to pass a Financial Early Warning bill that includes triggers for school districts that will include measures such as missed payments and a fund balance dropping below 10% of operating expenses. After this year, we will be barely above 5%. Once triggered, the state will be authorized to perform stringent reviews and impose a consent agreement that would be much harsher than anything proposed by the current Board of Education.

Third, repeated deficits result in state-mandated financial scorecard reports that undermine confidence in the district, Jim Shaffer ad EDITEDparticularly among the parents who are considering enrolling or remaining in Ferndale Public Schools. That leads to further declines in enrollment, bigger deficits, and a downward spiral ensues.

Address Staff Salaries and Benefits: Staff compensation is by far the greatest district expense. This can only be lowered by eliminating staff jobs or by negotiating broad-based compensation cuts that we expect will be temporary. We will use the collective bargaining process with all of our unions. Every non-union employee will also share in the sacrifice our unions are facing. The cuts that we are requesting are broad and fairly shared according to the share of compensation for each employee group. Our goals in bargaining include solving the current budget problem and preserving our ability to execute the Strategic Plan to develop and support what is great about Ferndale Public Schools.

The public should understand that the board does not and cannot negotiate in public. Our employees are represented by unions that have specific legal rights to represent employees at the bargaining table. We would risk a serious breach of legal responsibility to our unionized employees if we publicly aired specifics discussed at the bargaining table. We would be breaching our oaths of office and the law if we disclosed our closed sessions on collective bargaining. The superintendent is acting on the board’s behalf and within the board’s established bargaining parameters and he has our support in doing that.

As Board President, I believe the test of the commitment of the board to the bargaining process with employees is in the sharon chess thank youagreement just ratified by our UAW local and approved by the board. Yes, they took a pay cut this year, held positions vacant, and took a smaller cut next year. But, we also provided step increases next year, so that those employees will return their 2013 pay rate by 2015. They will increase wages even more quickly because the board and union agreed to triggers that increase wages as enrollment and state aid increase. Under this agreement, a 300-student increase in enrollment in current programs and a $100-increase in the state foundation allowance would result in a more than 4% increase in wages, above those levels mentioned in the step increases above.

We appreciate the courage our UAW employees had in ratifying a contract that asked for significant sacrifices from them this year, and to which we are sensitive. We are grateful that we will work together to realize the increases and other commitments that we made in the contract. If we act together, the situation will improve. The sacrifice of employees will turn into greater gains for them and our students.

Acting Together to Make a Difference: We must all call on Lansing to increase funding for K-12 schools. We must advocate for better public policies for our local schools. Go to http://cqrcengage.com/tca4edu and sign up for updates and an easy way to contact your legislators. Get your friends and family who live outside our district to do the same. That is the single most important action you can take as an gallowaycollens1individual.

Finally, please join the School Board and members of our district bargaining units when we travel to Lansing on Wednesday, February 19 to meet with legislators. Stay tuned for more information. 

Background Information on the Budget Shortfall in the Ferndale Schools:

~The District is facing a shortfall for the second year in a row related to a combination of factors, including the failure of the state to fund schools adequately and lower-than-anticipated enrollment.

~In tough economic times like these, choices are limited.

~Last year, the Board approved the use of nearly $1.5-million of fund balance to support part of the shortfall and made deep staff, administrative, and materials and supplies reductions to accommodate the remainder of the $3-million shortfall, leaving the fund balance with approximately $3.1-million.

~This year, the shortfall is nearly $2.5-million, requiring serious and thoughtful consideration of some Street-Eatzz-Advery difficult options so that we can continue to provide the students and school families of this district’s high quality programming. One of those options is asking all employees of the district to invest in the district by helping offset the shortfall through wage and benefit modifications. Similarly, the Board is willing to share in the shortfall by make additional budget reductions and using a modest portion of the remaining fund balance.

~The Board does not negotiate directly with employees. However, the Board does establish the parameters for negotiations and the Superintendent and negotiations team have full authority to negotiate within those parameters.

~The Board is sensitive to the impact wages and benefit concessions will have on our employees, but we are hoping they will understand the short-term need to make these concessions in order to achieve long-term benefit.

~Our district has avoided until now asking employees to share in the difficult economic times that many school districts previously faced. We have little choice now, but to ask for their help.

~The Board has a fiduciary responsibility to the citizens and children of the school district to ensure a balanced budget. Part of that responsibility is making difficult choices as we have done over the past two years. We do not want to lose local control over our schools through poor management decisions.moderntax

~As employees and community members, we need to lobby our state heavily for fair and adequate funding. Our employees deserve better from the state. Together, we have an ability to make a difference. Divided, we will only make our ability to ensure long-term financial viability more difficult.

We hope the school community will
come together on
Wednesday, February 19 to lobby in Lansing
for the fair and adequate funding
our students, staff and schools deserve.

~We have a new Strategic Plan that focuses, among other things, on increasing enrollment and retention in all district programs. We need the support of our community and employees to make this a reality. Every member of our school community can be a marketing asset if we all pull together and support our district by telling our positive stories, including this one: how we are committed to standing together and sharing a sacrifice in order to benefit our district in the long run.

EDITOR’S NOTE:  For a previous story on picketing union workers and their views,  see:  http://oaklandcounty115.com/2014/01/14/proposed-pay-cuts-to-teachers-and-staff-spark-protest-at-ferndale-schools/

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