Nobody Wins In A Zero Sum Game

Written for DelawareLiberal.net:

If you have been following anything related to funding public schools in Delaware, you probably know that the system is severely broken and there are major changes being talked about. The Wilmington Education Improvement Commission is talking about needs-based funding (or weighted-student funding) and reallocation of the existing money in the system. Others are talking about changes to the equalization funding formula that’s been frozen for about 20 years. Some are talking about property reassessment. So who’s right? The short answer is: everyone, partially.
Reallocating the money already generated for public schools is a zero-sum game. It isn’t a long term solution and I’m not really sure that it’s a viable short-term solution. Although it’s better than doing nothing I suppose.

Delaware has a hybridized general ed/needs-based funding system already embedded into the current unit count system. See the following chart:

The first 3 columns are the general ed categories. For every 12.8 pre-k students in a school, that school earns 1 teaching unit from the State which amounts to approximately 55-70% of the funding for a teacher’s salary and benefits. For every 16.2 K-3 students, you get a teaching unit. Same deal for every 20 grade 4-12 students. By the way, I’ve yet to figure out how you get two-tenths of a kindergarten student.

The 3 categories on the right: Basic, Intensive, and Complex are the needs-based system. If a student’s level of need is categorized as one of those three, there is significant portion of additional funding that goes to that student. 8.4 students with “basic” level of additional needs gets them 1 basic special ed teaching unit. There are different criteria to meet to categorize a student as one of the three levels of need, but it is a needs based system. By no means is this system adequate to meet the needs of Delaware’s schoolchildren, but it is a framework to expand upon.  

As the educational landscape of our schools has changed over the last few decades it’s become clear to many that at least two additional categories of needs-based funding are needed: one weighted on the level of poverty and one weighted on the prevalence of English language learners in the school. I can only speak for the Christina School District since I deal with their finances on a regular basis, but ELL is one of the fastest growing expenses in the district and Christina currently serves some of the poorest children in the state. Make no mistake, our teachers that work with our highest needs students go all out and give everything they have and more to give these children the absolute best education possible, but they need help. 
Adding more categories of need requires more money to fund them. If we’re talking reallocation, that means taking money from something else in the education system and putting it towards the new categories. I’m not sure how our kids and teachers come out winning in that scenario. If we’re talking bringing in additional revenue, then given the current financial situation in the State we have to be talking about adding tax brackets. It’s an election year, which politician is going to take one for the team and start talking about raising taxes?

Equalization funding. Once upon a time, the equalization funding formula was created to help the school districts with smaller tax bases (Sussex County) stay competitive with the wealthier districts (New Castle County) in the state by providing additional units of funding tied to the relative size of the tax base. Fast forward a few decades and when it became apparent that the tax base was growing in Kent and Sussex Counties the formula, designed to be fluid and dynamic, was modified, modified again, and then frozen. The result is a complete mess of funding that follows no discernible pattern. Some districts with large tax bases get significantly more funding than a district with a smaller tax base. Some districts earn equalization funding that has no apparent relationship to its tax base (Appoquinimink). Equalization funding is jacked up and it needs to be completely redone.
And then property reassessment, the political hand grenade. Want to scare the crap out of our State politicians running for election/re-election next year? Ask them what they think about statewide property reassessment. 

It is true that New Castle County has not had a property reassessment since 1983 and Sussex hasn’t had one since 1974. It’s also true that reassessment would be damned expensive to do but over time, would help out our school districts. The property taxes you pay now in New Castle County are based on what your land and dwelling would have been worth in 1983. In Sussex, imagine that $2.9 million ocean front property in Fenwick sitting there, its owners paying taxes on what it would have been worth in 1974. That needs to change. 

Even after everything I’ve just written, there’s still way, WAY more that needs to be changed when it comes to funding schools in Delaware (having Charter schools funded by a line item on your property taxes like VoTechs, creating new tax brackets on incomes over $60k/yr, and more). Those will be a topic for a future post though. I’m sure this riveting foray into the public school system funding world has you all on the edge of your seats wanting more. I don’t want to scare you all with the level of insanity that our school districts have to deal with when it comes to funding, though. At least not yet.

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Everyone Out of the (Tax) Pool!

And now for something completely not different:  The New Castle County Tax Pool.  Ahead of the WEIC town hall scheduled for this evening at Cab Calloway, here’s some information on the New Castle County Tax Pool, as it was brought up during the last WEIC town hall (and some errant information was given by WEIC regarding how each district contributes to the pool).

I’ve written and given presentations, blog posts, Facebook posts on public school financing for the last couple of years and I haven’t mentioned the tax pool hardly at all even though it does significantly affect the tax revenue (in a negative way) for both Red Clay and Christina.  So what is it?

Once upon a time, there was only the New Castle County Public School District, one district serving the entire county’s public school students (interesting concept..).  Then, the county was broken up into the 5 main public school districts we know today: Red Clay, Christina, Brandywine, Colonial and VoTech.  For the purposes of the tax pool in this post, VoTech is excluded.  For the 4 other districts, check this out:

At the time of the NCCSD dissolution, its current operating tax was $0.468 per $100 assessed value.  That tax rate still exists today, it is embedded in our current school taxes as part of the operating tax (also called current expense tax).  What does that mean?  Christina’s current operating tax is $1.42 / $100 AV.  That $1.42 is a sum of two tax rates: The NCC Tax Pool rate of $0.468 cents + Christina’s direct operating tax: $0.952 cents / $100 AV.   The operating tax revenue is actually collected in two portions.  For reference:

District	NCC Tax Pool Rate	District Operating Rate	Total Rate
Christina	$0.468	$0.952	$1.42
Red Clay (pre-referendum)	$0.468	$0.758	$1.226
Colonial	$0.468	$0.738	$1.206
Brandywine	$0.468	$0.818	$1.286

Rabbit hole alert!  The money collected with the tax pool rate gets put into a big pot.  DDOE uses wizardry to allocate the pool money out to the districts.  Ok, it isn’t really wizardry but the formula is all kinds of jacked up and outdated.    

If you’re feeling adventurous and would like to play along at home:  the “formula” is as follows and is performed for each of the 4 districts:

A) Total Div I Units – Special School Units = Net Div I Units
B) Net Div I Units / Total Net Div I units = Allocation Factor
C) Allocation Factor * Tax Pool Receipts = how much tax revenue is returned/lost for each district from the pool.

A couple of charts and graphs I threw together:

In this bar chart separated by School District, the red bars indicate the gross operating tax receipts collected by each district in millions $ (money collected via Operating Tax).  The green bars show the after-effects of the New Castle County Tax Pool. You can see that both Christina and Red Clay are net contributors to the pool (they pay in more than they get out).  Brandywine and Colonial are net beneficiaries (they receive more from the pool than they put in).  The purple bar shows the after effects of the payments each District makes to Charter and Choice schools, illustrating how much general operating revenue remains for running the Districts. Infer from these graphs what you will, but I feel it is beyond doubt that our public school funding mechanisms are woefully obsolete.  

In fiscal year 2015 (school year 2014-15) the four school districts made payments to charter schools totaling approximately $35,000,000.  50% of that was paid through Christina alone.

WEIC wants to have a conversation about public school funding.  We all need to be part of that conversation because the funding issue extends well beyond the City of Wilmington.

Declining CSD Enrollment

Comparing last year and this coming school year as far as enrollment and discretionary building budgets, the overall picture gets gloomier.  It is important to remember that projected enrollments are always lower than what the actual numbers will be come Sept. 30.  How much lower is what we really need to look at.   In this table (color scale is mine) we’re looking at decimated discretionary building budgets from 2014-15 to 2015-16.  Enrollment numbers are very surprising as well.

We’re looking at a preliminary reduction of almost $750,000 and a loss of 708 students.

Discretionary budget and enrollment changes 2014-15 to 2015-16

If we’re looking at just actual and projected enrollment numbers over the last 3 years, it’s not any better:

Enrollment changes 2013-2015

I know looking at tables and colors and numbers everywhere is confusing as all hell.  I’ll try to help.

From 2013-14 to 2014-15 the District initially was projected to lose about 798 students, they actually lost 530. (Shown as Student Recovery: 268).  From 2014-15 to 2015-16 CSD projects a loss of 976 students.  Obviously we’re not at September 30 yet, so we don’t know what the actual numbers will be.  But assuming CSD recovers the same number of students, it’s still down around 700 students.

You can see the District consistently projects losses greater than what they actually turn out to be which, for budgeting purposes, makes some sense.  But the hard truth of the matter is that CSD continues to hemorrhage students and continues to operate the same number of buildings.  Some big, drastic changes are in order.

The final piece of the financial mess is factoring in the Charter growth and cost.  I’m writing that now.

Please keep in mind, all of this is preliminary.  We have no idea what things will look like in September.  And the budget is still a proposal at this point in time, subject to CSD Board of Ed approval tomorrow night at August General Business meeting.

Budget Season: Raise Taxes!, No! Cut Spending, No! Raise Taxes!

Those of you following along with the State’s budget woes understand what has to happen in order for the $80+ million gap to be closed.  Pretty much the same thing that Christina went through, either you raise revenue somehow or you obliterate your spending.  So we have lawmakers scrambling to find money without overtly saying they’re going to raise your taxes (like public school districts are forced to do every 3-5 years).

The latest maneuver is to adjust the realty transfer tax.   It’s currently 3% on all home sales in the State, split evenly between the State and the County or municipality the home is located in.  The new proposal is to make that 2% to the State, 1% to the county/municipality.  Kent and Sussex counties stand to lose the most from that deal as their smaller towns rely more heavily on the 1.5% the transfer tax affords them when a home is sold.  I get that the State needs to find money, but what puzzles me is a quote from State Senator Karen Peterson, D-Stanton.  She said

counties need to take more responsibility for reassessing their properties, claiming that some hadn’t done that for decades. “If they need a kick in the seat of the pants to get moving then let’s do this.

She’s right about the last time assessments were done.  New Castle County did it in 1983, Kent and Sussex in the 70s.  But if I follow correctly, she’s insinuating that counties should rely less on the State for their revenue (via taxes/fees like the transfer tax) and reassessing their properties would address that.

The State is $83 million short right now, presumably because they are not collecting enough taxes to meet their spending needs.  There would be open revolt if the State attempted to directly raise taxes (see Markell’s gas tax, or eliminating the Senior Property Tax Credit).  County reassessments would likely result in increased property taxes in all 3 counties.  Kent and Sussex residents would get hit HARD.  Think of all that new development happening down there.

And then Representative Melanie George Smith, D-Bear:

“We’ve assumed a lot of responsibilities back from the counties without charging them for it and so given that, this is the year we finally need to make those equal,”

Again, the State is $83 million short.  Rep. George Smith is echoing Sen. Peterson.  Both want to essentially pass the State’s budget shortfall onto the Counties which will, in turn, pass them on to their residents.  In theory, the Counties would rely less on State funds and the State would reclaim some of its expenses.  The State is positioning to indirectly raise taxes by having the Counties do the dirty work for them.  They’re afraid to say these words: “We need to raise taxes.” and even more afraid to say who they really need to raise taxes on.  Strike that, not everyone is afraid to say it.  Rep. John Kowalko said it.

Keep kicking that can, Delaware.

http://delawarepublic.org/post/state-lawmakers-grab-bigger-share-realty-transfer-tax

Ask For What You Seek

I was kinda proud of this response I posted to Facebook, so I thought I’d share it here. It relates to the Operating Referendum for Christina School District on May 27th.

A question was asked about where the money goes and why there isn’t an understandable budget for people to see, etc.  This was my response:

I’m a Dad of 2 boys at Keene Elementary, I’m working with our all-volunteer Referendum Committee and for the last year and a half, I have served on the all-volunteer Citizen’s Budget Oversight Committee (CBOC) for the Christina School District and its Board of Education, as of Wednesday I also serve on the new Expense Reduction Committee (ERC) for the District and its Board.   CBOC is a legally required entity charged with ensuring the District is expending its Board approved budget appropriately.

The current State required funding process for all 19 public school districts mandates that an Operating Tax increase of any amount requires a public vote.  This sets *every* District up to hold referenda every 3-5 years to generate additional Operating revenue to pay for rising costs that Districts largely have no  control over.  Costs like energy, water, bus transportation to get students from home to school and school to home, supplies that go into the classrooms (paper, pencils, etc).  The District does have control over another area Operating Tax revenue is spent: portions of staff employment costs like salary, medical, prescription, vision and dental benefits, and the ENTIRE cost for staff and supplies in programs the State does not feel are worth funding on their part: Art, Music, Drama, and Phys Ed instructors, Librarians, School Nurses, textbooks.  83% of the funds generated via the Operating Tax are spent on student service personnel.  The remaining 17% largely goes to supply (including electricity, water, internet, transportation, classroom supplies, etc) needs at the individual school level.

“Fixing” the funding issue is a very high-priority item and I 100% agree it must be done.  Problem is, all Districts are required to follow State funding requirements.  The broken process is owned by the State of Delaware and any fixing has to come out of Dover with legislation.  For this referendum we are working within the severely complicated and restrictive confines of current public education funding regulations.  Would it be great to just cut things here and there that we all feel provide no value and use that money to fix the looming deficit?  Heck yeah it would.  But we can’t do that.  The only revenue the District has to spend on things that are not required by the State or Federal Gov’ts are the Unrestricted Local Funds generated by Property Taxes.  That is where our shortfall is and we are unable to move other money around to cover it.  For the last 3 years, the District has been using operating cash reserves to compensate for the inadequate operating revenue coming in.  Next year, what remains in reserve will not be enough to cover the operating expenses listed above; it will be short by approximately $9.5 million.  We are at a breaking point where we have to ask the public to raise revenue to keep things going as they are (tried in Feb with Option 1), make spending cuts and ask for a smaller tax increase (happening now, $2 million in cuts ant $0.37 increase) or eliminate the shortfall entirely by cutting operating expenditures by $9.5 million.

For the last 3 years, CBOC in its monthly meetings and reports to the Board of Education has consistently been noting this snowballing budget shortfall and that it is not due to mismanagement of funds, but largely uncontrollable rising costs.  We have indicated, consistently, that without increasing funding reductions an operating referendum will be needed prior to the start of School Year 2015-2016.  The authorization for referendum did not come from the Board until late last year.  February failed, and there is a mandatory 60 day wait until another vote.  Board authorization for this vote came in February, and the absolute last time we could hold a vote and still have it impact the school year starting this fall, is next week.

As far as an understandable budget, with the way public education funding is done in Delaware it’s 99.999% impossible to condense a District budget to the point where it still accurately shows very, very detailed spending (what you are asking for) and isn’t 250 pages long.  However, CBOC exists for this very purpose.  We serve as the ‘translators’ for the ridiculous process Districts have to go through for funding to aid in the general public and Board of Education’s understanding of what is spent where and why.

To that end, I’m offering my service to you and ANY member of the public to help you gain a better understanding of the funding process, why things are done the way they’re done and where the money comes from and goes to.  It took me a good 8-10 months to really grasp why things are the way they are, and I am more than willing to help you and anyone else grasp it like I, and the rest of CBOC has.  I’ll meet for coffee, just to talk, or email/text back and forth.

CBOC’s next meeting, which is and always has been open to the public, is 6:30pm on either Wednesday June 17th or June 24th at Gauger-Cobbs Middle.  Schedule is announced on CSD’s webpage.  If you friend me on Facebook, I talk about it all the time.

ERC’s next meeting is next Thursday, May 28th 6:30pm at Gauger-Cobbs in the Professional Development Room.  Open to the public.  Questions welcome.

Our volunteer committee is running a website that focuses on info surrounding the referendum CSDWeAllWin.org, and a Facebook page: facebook.com/CSDWeAllWin

*ALL* district financial data is and has been available on CSD’s website, including CBOC reports, http://www.christinak12.org/apps/pages/index.jsp?uREC_ID=195038&type=d&termREC_ID=&pREC_ID=393370

brianstephan@gmail.com or 302.419.5276.  If I miss your call or if you text me just let me know who you are in the voicemail or text and I will return your call or messages/emails.

 

3 Months Later

Hey, where did those last 3 months go?  Let’s see, what’s transpired since my last post.  Red Clay and Christina went out for referendums in February.  Red Clay’s passed, Christina’s was mauled by a bear.  Red Clay did a FANTASTIC job of marketing, advertising and selling their referendum to their residents, students and staff.  Christina…did not.  Red Clay celebrated on Feb 24th.  Christina did not. Christina inked a deal with DDoE to retain control of their three “priority” schools through 2015-16 keeping all staff and leadership but adding assistant principals to each school who will *not* report to the principal they work under.  Instead they will report directly to DDoE.  Can’t see that causing any problems.  Plans to redistrict Christina out of Wilmington are moving forward but they still hinge on the General Assembly to rewrite the laws.  If that does happen, Red Clay gets 3 new inner-city schools from Christina.  Get your popcorn, I’m sure this is far from done.

Christina’s Board of Education passed a resolution submitted by Board Member Paige last night (5-2) protecting students from “retaliation” if their parents opt them out of State assessments.  Colonial’s Board followed suit, too.  From Exceptional Delaware:

“If this board can’t stand for parents, what the hell can it stand for?” -John Young

After fiery debate by board member George Evans, the Christina Board of Education passed a parent opt out resolution by a vote of 5-2.  The no votes came from President Fred Polaski and eternal board member George Evans.  The amended resolution was scaled back to focus on parental right to opt out of the standardized assessment, which in Delaware is the Smarter Balanced Assessment.

Christina School District Board of Education Resolution on Parent Opt-Out of Standardized Testing

Be it resolved that the Christina School District Board of Education will support a parent’s decision to opt their child(ren) out of standardized state testing without any repercussions from the ChristinaSchool District; and, therefore,

Be it further resolved that the Christina School District Board of Education will support the Superintendent to provide direction to all affected schools to provide meaningful, educational activities to replace testing time for those students who will not be participating in standardized testing.

Christina’s Board of Ed also approved May 27th as the next try for an operating referendum and let me tell you the proverbial mud is already being slung on social media by residents of the district who appear to be less than informed about how a public school district operates and is financed.  During “Referendum: Part I” in February, I spent a LOT of time on social media trying to share information about this very subject.  Some welcomed that effort.  Others did…not.   I’m at it again though, with Part II.  I refuse to sit down and shut up because people don’t know what they’re talking about.  I’m not a teacher but I’m gonna play one for this referendum.

Other news about the referendum: CSD is asking for volunteers to be part of committees that will be formed to work on the referendum process.  If you are interested and want to volunteer some time, from CSD’s Facebook post:

Post by Christina School District.

 CHRISTINA SEEKS VOLUNTEERS TO SERVE ON REFERENDUM COMMITTEE AND SUBCOMMITTEES

The Christina School District seeks volunteers to serve on a Referendum Committee for the District’s Operating Referendum scheduled for Wednesday, May 27. The Operating Referendum seeks funding to support increased costs and to help the District address an anticipated $9 million budget deficit.

All are welcome to serve on the Referendum Committee, and there are no requirements for serving other than an interest in contributing to a successful campaign. Interested individuals are asked to send an email with name, address, phone number, and email address to: info@christina.k12.de.us, or to call 302-552-2610. Information may also be faxed to 302-429-5857 or mailed to Christina School District Referendum Committee, C/O Public Information Office, 600 North Lombard Street, Wilmington, DE 19801.

Please send information by March 23 in order to receive all future notifications. A Kick-Off meeting of the Referendum Committee is tentatively scheduled for Thursday, March 26 at 6:00 p.m. at the Eden Support Services Center in Bear.

I’m in.  Are you?

Next CBOC meeting is March 18.  6:30pm at Gauger-Cobbs Middle in the professional library.  I can say we’ll have some new attendees for this one.  It’ll be good to (finally) see some new faces!