Saturday, June 26, 2004

No fat, plenty of beef

South Orange/Maplewood Board of Education member David Frazer, in response to an off-the-cuff and ill-informed comment on Maplewood Online, wrote the following comments about the school district's budget and the strong upward pressure on tax rates. It describes where the cost increases are coming from and the limited ability we have to ameliorate them. If you have complaints about the size of your property tax bill (and who in SO/M, after all, does not?) , be sure to read it carefully before you start pointing fingers.
Our comparative per pupil spending rate is $578 below the State average [$9464 vs. $10,042]. See http://education.state.nj.us/rc/rc03/dataselect.php?datasection%5B4%5D=financial &c=13&d=4900&s=030 Given an enrollment of 6400, this means we are spending about $3.7 mil. less than the average district would be.

We have enormous budget detail posted on the website; I challenge you to find the fat. See http://www.somsd.k12.nj.us/finance/financehome.htm. In the past four years we have cut over 36 full time equivalent positions [exclusive of the custodial outsourcing] plus program, service and supply cuts representing over $8 mil in resources. This figure is more than 10% of our current operational budget of $79.2 mil. With the 2.5% CAP being imposed by the State, we are looking at additional cuts of $3.5-4.4 mil., depending on certain cost factors. To put this in perspective, $3.5 mil. represents 47 teachers.

Take a look at the Budget 101 presentations on the District website. See http://www.somsd.k12.nj.us/finance/budget101home.htm. The 6-8% increases are the organic rate of increase, almost all from cost drivers outside our control. A few examples:

Health Insurance: Last year health insurance increased 29%; this year it is down to a reasonable 15% increase; next year promises more of the same. Health insurance is now 10% of our budget. We are in a double-bind on health insurance. It is subject to collective bargaining and we are in the State Health Plan, which severely restricts cost saving measures [e.g., we cannot do "spousal opt out" or employee co-pay, even if we could get SOMEA to go along with them]. If we opt out of the plan [a decision subject to bargaining], we are at the mercy of the insurance market place. We have done this twice since the late 80's and both times we got clobbered on rates because we are a relatively small group [about 855] with a terrible experience rating. So, after sucking us in with an attractive rate for the first year, we get whacked the second year, with no guarantee that the State Health Plan will let us back in.

Wage Rates: Based upon a painstakingly detailed market analysis done at the time of the last SOMEA negotiation, we were at about the 66th percentile of wage rates in Essex County after the contract settled. This is just about where you want to be: high enough to attract and retain good teachers, but not out of the ballpark. Since then, market rates for teachers have continued to climb. Millburn settled for a 24% increase over three years. Just a few weeks ago the State settled the Newark contract for 5% increases in each of the next three years with no give backs on health care. Newark represents 50% of the teacher market in the county. And this contract was settled by the State ñ the very same entity that is now telling us we must live with a 2.5% increase. If we pay less then market we will stop attracting good teachers and we will lose the ones we have.

Energy. In each of the last two years, energy costs have increased by double digits. Next year, we have projected a 15% increase. Are we supposed to stop heating the schools? Should we turn off the lights?

General Insurance. Our liability insurance rates have more than doubled in the last two years. Thank you Osama.

Special Ed. This expense is out of control. Tuition for out of district special ed placements ñ kids whose needs cannot be met in district ñ is increasing by 23% for next year. For the about 120 kids we place out of district, we are spending almost $5 mil. out of a $79 mil. budget. Costs for in-district services, which require us to contract out for many specialists, are also rapidly increasing. In the last ten years, special ed has gone from about 13% of the budget to 20%. It is taking money away from other kids. But, itís a federal mandate; we have no choice. Itís also the right thing to do; itís just that no one gives us the money to do it. We have tried to increase the number of kids kept in district, but we have limited space and it costs a lot of money to retrofit the space we do have to accommodate their special needs.

Finally, I note that central administration ñ commonly cited as the biggest source of waste ñ is not excessive. We cut four central administrators this year. We are well under the Stateís new maximum administrative cost threshold. The total salaries and benefits for central office [support staff included] is $2.42 mil. This includes two positions [super & bus. adm.] that by law we cannot cut and two positions that are self-funding from program revenue [food service & tech center]. Removing these positions leaves about $1.9 mil. Thus, we could eliminate all non-mandated central office positions [e.g., assist supers; network manager; in-house counsel; planning director; communications coordinator; custodial director; facilities manager; payroll manager; confidential secretaries] and still have $1.6 mil to cut under the best-case scenario for next year. Of course, we would have a district in chaos because there is no way you can run a 6400-student, 13-building, 850-employee district with only a super and a business administrator.

So, exactly what and how are we mismanaging? Inquiring minds want to know. If you could tell me, it would make my job ñ and life ñ a hell of a lot easier.

David E. Frazer
Member, SO/M BoE

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