Non-profit
Seventeen cents. Eighty three cents. It’s not been a fun week in the school business hereabouts. Buildings closing, classes and courses being dropped, a band that at one time marched over 200 members being eliminated, teachers losing their jobs, aides losing jobs, nurses resigning without being replaced……need I go on?
It’s all about finding ways to conserve money to keep the doors open as long as possible until more money can be brought in to the system to pay the bills.
Some have mentioned the fact that schools are not like businesses that operate to generate a profit. Which is true, but it is the only distinction that separates schools from businesses.
Marietta City Schools has in the neighborhood of 300 employees, 6 buildings for classes plus others for services, a fleet of buses, about 3,000 students and a budget of about $22 million per year. That’s a business.
At the end of the year we do not have to check the bottom line for profits and send the stockholders a dividend. But we do need to have enough money in the bank to meet the payroll and pay the bills until the next injection of money comes along.
Being not for profit does not absolve us of paying for fuel, electricity, books or any of the other things it takes to run the business. Even the employees would take a dim view of not being paid on the grounds we are not for profit. They, too, need funds to cover their expenses.
Picture one of those pie charts that divide up a dollar. In the school’s expense chart, 17cents of every dollar is non-employee related. Things like books, fuel, roof repairs, new buses, sports costs, virtually everything you can name that does not include the cost of an employee. A very thin slice of the pie.
The other 83 cents of the pie is directly tied to the cost of employees. Which only makes sense as schools are a service industry. People deliver the service. We really don’t have raw materials we buy and process to create a product. The knowledgeable student is our end product. That’s what the community invests in.
School boards are happy to learn of more efficient ways to operate. Even happier to learn of costs that can be reduced or eliminated. But the first question one must ask is, “Are we working on the 17 cents or the 83 cents?”
Admittedly sometimes it is both. As with dropping a band. You eliminate transportation and entry fees, but that’s just a tiny portion of the cost of operating a band. The associated salaries and insurances are the big costs.
Closing a building is often a savings move. But the real savings come in reducing the staff it takes to operate that building. The 83 cents. Never an easy decision.
As enrollments continue to hold steady or decline and expenses continue to rise owing to inflation, technology costs, raises, etc., it will be a challenge for schools to continue to find savings to maintain operations.
Schools have but one source of funds. The taxpayer. Whether money comes from the federal government, the state or local levies, the real source of funds to operate schools is the taxpayer. And he/she needs to feel they are getting value for the dollars they are giving.
For profit business has to deal with competition to stay in business. They have had to learn to be more efficient. Schools are not exempt. They, too, must learn how to be competitive in the marketplace and deliver the service more efficiently if they are to survive.
Tuesday, May 27, 2008
Wednesday, May 21, 2008
Changes
I’m sure sorry you guys are having to make all those changes because of the budget. “What changes?” I asked. Well, dropping all those classes and things. “What classes were dropped?” I asked.
Well I’m just glad my boys got out of school while there were still a lot of choices. “What choices don’t we now have?” I inquired.
It finally dawned on the speaker that he did not have specifics. He did not know what had changed. He was speaking in generalities from rumors he had heard.
When I reviewed with him the changes that had taken place in next year’s class offerings he was startled that they would impact relatively few students. He understood why classes showing low and declining enrollment needed to be examined especially if similar courses are available elsewhere. As a taxpayer he knew we cannot afford duplication.
The other point he grasped quickly was that students leaving the district to attend another district or to opt for full time PSEO meant that we needed fewer teachers to serve the remaining students. It has a negative impact. It behooves us to make sure our offerings are attractive enough to keep students interested in maintaining most of their class work at Marietta High School.
Therein lies the challenge. As our enrollment declines and the numbers in classes get smaller, we need fewer teachers. It may also mean fewer course offerings are affordable. As course offerings decline, some students will seek courses elsewhere. A downward spiral.
Yet if we fail to address increasing costs by effecting savings we are not being responsible to the taxpayer in using his funds wisely. A delicate balance.
At any given time in the state of Ohio roughly half the 600+ districts are in financial trouble. The other half experienced a recent tax levy passage. They will be in trouble in a few years.
It’s not a good system. It doesn’t serve the taxpayers well. It fails to serve the students equitably and is not Constitutional according to four Ohio Supreme Court rulings. But until our legislators have the courage to address it, we must do the best we can to continue to operate. And that means finding savings where we can and seeking new money when we must.
The savings we addressed at the January meeting will be voted on May 19th at the 5:30 monthly board meeting. Also on the agenda will be discussions about the sale of the North Hills facility. We will not seek to move that sale ahead until we get further public input. Of further interest, it is time for the release of the newest five year forecast.
Bear in mind, it is a forecast, not a budget. As such, it is based on the best available information. It is made up of the facts at hand and the best estimates based on previous experience. It gives the board a snapshot from which to make decisions about future actions. It was this forecast from last fall that caused the board to seek the savings being acted on now to make the money we have last longer.
Our elementary class sizes range up to 25, 26 even 27. Many college bound students will shortly experience auditorium style classes. At the June meeting and beyond we will probably be examining any of next year’s classes that fall below the 20 student level. It behooves us to have good course offerings that conform to state and federal requirements. We must seek to teach those courses efficiently and effectively.
Your school board represents the interest of the public. If you have questions, feel free to ask. It is far easier to answer a question than to dispel rumors.
Well I’m just glad my boys got out of school while there were still a lot of choices. “What choices don’t we now have?” I inquired.
It finally dawned on the speaker that he did not have specifics. He did not know what had changed. He was speaking in generalities from rumors he had heard.
When I reviewed with him the changes that had taken place in next year’s class offerings he was startled that they would impact relatively few students. He understood why classes showing low and declining enrollment needed to be examined especially if similar courses are available elsewhere. As a taxpayer he knew we cannot afford duplication.
The other point he grasped quickly was that students leaving the district to attend another district or to opt for full time PSEO meant that we needed fewer teachers to serve the remaining students. It has a negative impact. It behooves us to make sure our offerings are attractive enough to keep students interested in maintaining most of their class work at Marietta High School.
Therein lies the challenge. As our enrollment declines and the numbers in classes get smaller, we need fewer teachers. It may also mean fewer course offerings are affordable. As course offerings decline, some students will seek courses elsewhere. A downward spiral.
Yet if we fail to address increasing costs by effecting savings we are not being responsible to the taxpayer in using his funds wisely. A delicate balance.
At any given time in the state of Ohio roughly half the 600+ districts are in financial trouble. The other half experienced a recent tax levy passage. They will be in trouble in a few years.
It’s not a good system. It doesn’t serve the taxpayers well. It fails to serve the students equitably and is not Constitutional according to four Ohio Supreme Court rulings. But until our legislators have the courage to address it, we must do the best we can to continue to operate. And that means finding savings where we can and seeking new money when we must.
The savings we addressed at the January meeting will be voted on May 19th at the 5:30 monthly board meeting. Also on the agenda will be discussions about the sale of the North Hills facility. We will not seek to move that sale ahead until we get further public input. Of further interest, it is time for the release of the newest five year forecast.
Bear in mind, it is a forecast, not a budget. As such, it is based on the best available information. It is made up of the facts at hand and the best estimates based on previous experience. It gives the board a snapshot from which to make decisions about future actions. It was this forecast from last fall that caused the board to seek the savings being acted on now to make the money we have last longer.
Our elementary class sizes range up to 25, 26 even 27. Many college bound students will shortly experience auditorium style classes. At the June meeting and beyond we will probably be examining any of next year’s classes that fall below the 20 student level. It behooves us to have good course offerings that conform to state and federal requirements. We must seek to teach those courses efficiently and effectively.
Your school board represents the interest of the public. If you have questions, feel free to ask. It is far easier to answer a question than to dispel rumors.
Monday, May 12, 2008
Cash Flow
Too much month left at the end of the money? Find yourself borrowing from one account to make a payment in another? You’re not alone. It happens in many places. Business, households and schools.
Only five years ago finances were so tight that shuffling the money among accounts began in February to cover the payroll. If the shuffling had not taken place there would not have been enough in the payroll account to honor the paychecks. Not a good position.
At the end of the 2003 year there was a carryover of $350,011. Which sounds like a lot of money until you consider that it was only 1.54% of the following year’s expenses. More shuffling needed to pay the bills until fresh money began coming in.
To put that in perspective, if your annual salary before taxes was $40,000 in 2003, at the end of the year you would have had only $608 in the bank to pay the bills until next month’s check arrived. The major difference being that you would know what next month’s check was to be. And when it would arrive. In school finances, those are both uncertain and varying items. Amount and time.
Going back a few years it was even more challenging. At the end of school year 1998, a mere 10 years ago, the carry over balance was $164,528. A mere .84% of the following year’s expenses. And yes, money had to be borrowed to meet payroll.
Previous boards challenged the administration to achieve a more comfortable and financially sound year-end balance. From the .84% carryover of 1998 to today’s projected carry over of 10.96% much progress has been made. But not without changes.
Local readers need not be reminded of the hard decisions that were made and unpopular actions taken to more closely match expenses to income while taking into account falling enrollment. Neighboring districts are making similar difficult choices currently.
We are not alone. Nor is our area unique in its problems. I met and visited with Dr. Joel Herbst last weekend. He is an area manager with the Broward School District in Florida. He is responsible for 69 buildings and 72,000 students. Total budget for the district, $5.2 billion. The size of a Fortune 500 company.
As we discussed our challenges we found they are very similar. Of course his have more digits but the concepts are the same. Rising costs. Steady to falling income. The need to be fiscally responsible while at the same time achieving academic progress.
One thing we can be thankful for; we do not have a drug infested gang riddled culture like the high school where Dr. Herbst was Principal before advancing to his current position. We have our problems but they pale by comparison.
Florida attempted to address their education challenges by constitutional amendment. Class size was the issue and voters approved a reduction. After spending $10 billion gearing up to make the change they face the reality that schools cannot afford the stipulated numbers or timeline. They are on hold.
The decisions and actions that brought us from 1998, having to borrow money in February to meet the payroll; to having enough money at the end of June 2008 to meet the payroll in July were good ones. We must stay the course and continue to operate with sound fiscal policy.
Readers might find Florida’s class size issue interesting. Search the phrase: Florida education class size. Dr. Herbst’s bio can also be found on the web.
This and other articles in the series are available at: http://mariettacityschoolboard.blogspot.com
Only five years ago finances were so tight that shuffling the money among accounts began in February to cover the payroll. If the shuffling had not taken place there would not have been enough in the payroll account to honor the paychecks. Not a good position.
At the end of the 2003 year there was a carryover of $350,011. Which sounds like a lot of money until you consider that it was only 1.54% of the following year’s expenses. More shuffling needed to pay the bills until fresh money began coming in.
To put that in perspective, if your annual salary before taxes was $40,000 in 2003, at the end of the year you would have had only $608 in the bank to pay the bills until next month’s check arrived. The major difference being that you would know what next month’s check was to be. And when it would arrive. In school finances, those are both uncertain and varying items. Amount and time.
Going back a few years it was even more challenging. At the end of school year 1998, a mere 10 years ago, the carry over balance was $164,528. A mere .84% of the following year’s expenses. And yes, money had to be borrowed to meet payroll.
Previous boards challenged the administration to achieve a more comfortable and financially sound year-end balance. From the .84% carryover of 1998 to today’s projected carry over of 10.96% much progress has been made. But not without changes.
Local readers need not be reminded of the hard decisions that were made and unpopular actions taken to more closely match expenses to income while taking into account falling enrollment. Neighboring districts are making similar difficult choices currently.
We are not alone. Nor is our area unique in its problems. I met and visited with Dr. Joel Herbst last weekend. He is an area manager with the Broward School District in Florida. He is responsible for 69 buildings and 72,000 students. Total budget for the district, $5.2 billion. The size of a Fortune 500 company.
As we discussed our challenges we found they are very similar. Of course his have more digits but the concepts are the same. Rising costs. Steady to falling income. The need to be fiscally responsible while at the same time achieving academic progress.
One thing we can be thankful for; we do not have a drug infested gang riddled culture like the high school where Dr. Herbst was Principal before advancing to his current position. We have our problems but they pale by comparison.
Florida attempted to address their education challenges by constitutional amendment. Class size was the issue and voters approved a reduction. After spending $10 billion gearing up to make the change they face the reality that schools cannot afford the stipulated numbers or timeline. They are on hold.
The decisions and actions that brought us from 1998, having to borrow money in February to meet the payroll; to having enough money at the end of June 2008 to meet the payroll in July were good ones. We must stay the course and continue to operate with sound fiscal policy.
Readers might find Florida’s class size issue interesting. Search the phrase: Florida education class size. Dr. Herbst’s bio can also be found on the web.
This and other articles in the series are available at: http://mariettacityschoolboard.blogspot.com
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