We Need More Financial Expertise on the Board

By Nicole Channing

Our district, like many others in the state and around the country, is navigating treacherous financial waters. We need financial expertise on the board to help address these issues. A strong financial foundation is what supports all of our programs. So regardless of which programs you care most about, you should be sure the board has sufficient financial expertise.

WHAT ARE THE FINANCIAL CHALLENGES WE FACE?

Let me explain the financial situation our district faces:

1. Our annual per student expenditures have risen 50% over the last decade, from less than $16,000 to nearly $25,000. Local household income has been increasing at 2.5% while per student expenditures have been rising at 5%.

2. Our structural costs continue to escalate, with no apparent end in sight. While our district has attempted to control costs (and has succeeded to a greater degree than many Westchester districts), this is very difficult to do. Some 70% of our costs are for personnel. Our recent teachers' contract, negotiated at a time of roughly 0% inflation, 10% unemployment, a collapse in the value of private-sector retirement accounts, and general economic malaise, calls for an 11%+ salary increase over the next 3 years. Meanwhile, benefit costs as reported in the budget have been growing at nearly 12% per year over the last decade and are likely to continue growing even faster than salaries.

3. We are reaching a limit on property taxes. Between school, town, village, and county property taxes, residents of our district are already paying nearly 3% and in some cases more than 3% of the market value of their property each year in taxes. This is equivalent to a mortgage (at 6%) on half of the value of one's home. It is also a considerable portion of local household income and is making our area, which was once a relatively affordable community, unaffordable. Further, we are reaching a point of diminishing returns: high taxes drive empty-nesters, senior citizens, and the like out of this area, along with the implicit subsidy that they provide to families with children in the schools. The district cannot afford to let these people vote with their feet.

4. With New York State pondering declaring a fiscal emergency, state aid is more likely to decrease substantially than increase.

5. Our programs are at risk. It is a simple mathematical truth that if we continue to raise 70% of the cost or our current programs at well over the rate of inflation, either our revenues also have to go up at well over the rate of inflation, we have to find ways to become much more efficient in delivering services, or programs will have to be cut.

6. The district has held the tax increases down in the last two years not only by cutting discretionary expenditures drastically, but by drawing down excess reserves (fund balance etc.), and reducing the creation of new reserves. These means of reducing the tax levy, while appropriate, are not sustainable.

To face these issues, we will have to be increasingly creative in delivering services, increasingly vigilant when signing multi-year, multi-million dollar contracts, and increasingly aggressive in our advocacy efforts in Albany.

To analyze what we can do and to advocate effectively for our positions, the board would benefit from more financial expertise.

HOW WE CAN ADDRESS THESE CHALLENGES

Among the initiatives that I would pursue are:

1. A thorough analysis of the entire budget in terms of standard units of cost--for example, the cost of each program per student served, the cost per teaching hour, cost per square foot maintained, and the like. We also might benefit from a thorough analysis of all overtime costs, if that has not yet been done. We also need a better understanding of the actuarial cost of the pension benefits we are responsible for funding, so that we can take those into account in contract negotiations, as well as the drivers of long-term inflation in our healthcare costs.

2. We need more information about and metrics to measure the benefits of our expenditures. How effective is our teaching? How effective are our programs? If we do not measure outcomes in any way, we cannot improve. To the degree that prior practice or state law represent barriers to assessment, we need to communicate that to parents and other residents of the district and to advocate for change. I would be interested in considering the merits of measuring the performance of our students against international standards.

3. We need to engage in a thorough analysis of state laws that restrict our district's flexibility and creativity and create inefficiencies. We need to work with nonprofits and other school districts to draft and propose legislative changes that would give control back to the districts. Among the problems created by state law are excess paperwork, unhelpful tests, inefficiently structured unfunded mandates, and the perpetuation of outdated and inefficient employment practices through what are effectively perpetual employment contracts.

4. And finally, and very importantly, we need to explain clearly to the citizens of our district how state laws reduce our effectiveness and how crucial the proposed changes are--and to ask parents and other community members, who ultimately are the people who vote, for their help in advocating aggressively in Albany.

Our district can do these things more effectively with greater financial expertise on the School Board. With years of experience analyzing financial statements and complex legal documents, I can help.