School Superintendents on Financial Matters November 2012 - - PowerPoint PPT Presentation

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2nd Annual Survey of New York State School Superintendents

• n Financial Matters

November 2012

Budgeting challenges call for new directions in state policy to help schools raise student achievement

CAN’T GET THERE FROM HERE

The survey:

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• Between August 16 and September 3, 2012, the NYS Council of School

Superintendents conducted an online survey of superintendents on budgeting concerns for their districts.

• A total of 249 superintendents submitted complete responses, a response

rate of 40.4%. Incomplete submissions from 47 superintendents were also included in the results.

• Superintendents serving the Big 5 Cities (New York, Buffalo, Rochester,

Yonkers, and Syracuse) and Boards of Cooperative Educational Services were not included in the survey because their systems’ budgets are not subject to voter approval and consequently do not report some of the financial data available for small city, rural and suburban districts.

• The Council conducted a similar survey in 2011.

The report:

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• Introduction
• Overall Fiscal Condition
• Budgeting Choices
• Impact of 2012-13 Budgeting Decisions
• Adapting to the Tax Cap
• Implementing New Evaluation Procedures
• Looking Ahead

– Which is the greater concern – state aid or the tax cap? – Priorities for mandate relief – Priorities if new funding becomes available

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Introduction

(pages 3-6 in the report)

Concern about the future is widespread Why?

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1.

Districts have already endured several tough budgeting cycles:

• Average spending increase over the last 4 years = 1.7%.
• 83% of districts are receiving less state aid 4 years ago (2008-09)

2.

Some hard to control costs have been surging (e.g., pensions and health insurance):

• New TRS rate increase – like requiring districts to absorb a cost equivalent to giving employees

3.6-4.6% raises, whether or not they receive any actual raises.

• Statewide cost of TRS increase likely to approach or exceed benefit of a 3-3.5% state aid increase.

3.

Districts have relied on reserves to avoid more damaging program reductions or tax increases:

• SED estimates unrestricted fund balances have shrunk from $2.76 billion in 2009-10, to $1.21

billion this year.

• Without appropriated fund balance, districts would have needed to raise taxes by 7% more than

they did this year (9.2%, instead of 2.2%); poorest 10% of districts would have needed 21% more in local taxes.

4.

Other than Tier VI, no significant mandate relief has been enacted so far. Relief through Tier VI will happen only over the long-term. Meanwhile, new mandates have been added.

5.

92% of total school revenues (local taxes & state aid) are now subject to limits. Federal aid (most

• f the remainder) is now at risk too.

Even prior to tax cap, schools were holding down tax increases

Districts have responded to voters – have been holding down spending and taxes

8.2% 8.7% 7.5% 6.1% 4.3% 3.7% 2.1% 3.2% 3.4% 2.2% 4.8% 6.9% 6.6% 6.3% 6.1% 5.3% 2.3% 1.4% 1.3% 1.7% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Percent change over prior year

% Change in proposed tax levy % Change in proposed school spending

SOURCE: Council analysis of NYSED Property Tax Report Card data ; Big 5 Cities not included

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Districts have been using reserves to spare students and taxpayers from more dramatic changes – but reserves run out

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SOURCE: Council analysis of NYSED Property Tax Report Card data

• 31%
• 23%
• 9%
• 18%
• 22%
• 10%
• 9%
• 12%
• 4%
• 7%
• 14%

21% 17% 11% 10% 11% 8% 6% 5% 3% 3% 7%

• 40%
• 30%
• 20%
• 10%

0% 10% 20% 30% 1 (Proorest 10%) 2 3 4 5 6 7 8 9 10 NYS

Districts grouped by property wealth per pupil

Change in Unrestricted Fund Balance from 2011-12 to 2012-13 Additional tax increase which would be necessary without use of fund balance (i.e., Appropriated Fund Balance as % of Tax Levy)

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Overall fiscal condition and outlook

(pages 7-12 in the report)

Alarm over the future:

Insolvency – financial & educational

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Financial

9% foresee financial insolvency within 2 years 41% within 4 years 77% at some point

Educational

19% foresee educational insolvency within 2 years 51% within 4 years 84% at some point

5% 5% 9% 32% 33% 12% 4% 0% 5% 10% 15% 20% 25% 30% 35% Yes, we are currently unable Yes, within 1 year Yes, between 1 and 2 years Yes, between 2 and 4 years Yes, beyond 4 years No, I do not foresee that time Unsure

Do you foresee a point at which your district would be unable to fund all the instructional and other student service requirements established by laws or regulations approved by the state and federal governments?

1% 2% 6% 32% 36% 15% 9% 0% 10% 20% 30% 40% Yes, we are currently unable Yes, within 1 year Yes, between 1 and 2 years Yes, between 2 and 4 years Yes, beyond 4 years No, I do not foresee that time Unsure

Do you foresee a point at which your district would be unable to ensure that some of its financial obligations will EVER be paid?

Insolvency – by region

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Financial Educational

19% 11% 17% 14% 22% 14% 12% 50% 8% 15% 21% 0% 10% 20% 30% 40% 50% 60% Total Long Island Lower Hudson … Mid-Hudson Valley Capital Region Mohawk Valley Central New York North Country Southern Tier Finger Lakes Western New York

% of districts foreseeing educationalinsolvency within 2 years

9% 0% 6% 0% 15% 7% 6% 25% 8% 6% 12% 0% 5% 10% 15% 20% 25% 30% Total Long Island Lower Hudson Valley Mid-Hudson Valley Capital Region Mohawk Valley Central New York North Country Southern Tier Finger Lakes Western New York

% of districts foreseeing financialinsolvency within 2 years

43% of small city superintendents now describe their districts’ financial condition as poor or very poor

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24% 12% 20% 17%

43% 10% 18% 17% 0% 10% 20% 30% 40% 50% City Suburb Rural Total % Responding Poor or Very Poor

How would you describe the current financial condition of your school district, in terms of its ability to fund services meeting the expectations of parents in your community?

2011 2012

Reliance on reserves is a widespread concern

(83% of superintendents somewhat or very concerned)

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49% 34% 11% 6% 0% 10% 20% 30% 40% 50% 60% Very concerned Somewhat concerned Not concerned, our use of reserves is limited Our district is not drawing upon reserves to pay for recurring operating expenses

To what extent, if at all, are you concerned that your district is drawing upon reserves to pay for recurring

• perating costs?

Other financial condition measures…

13 Various measures of fiscal condition, by region

Region Financial condition poor/very poor Financial condition worse than 1 year ago Reserves less than adequately funded Concerned about reliance on reserves Total 17% 52% 31% 82% Long Island 2% 43% 21% 75% Lower Hudson Valley 13% 34% 32% 77% Mid-Hudson Valley 7% 53% 33% 73% Capital Region 27% 59% 42% 81% Mohawk Valley 18% 56% 30% 89% Central New York 20% 35% 25% 70% North Country 39% 54% 39% 94% Southern Tier 27% 65% 49% 87% Finger Lakes 6% 48% 13% 87% Western New York 17% 64% 29% 88%

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Budgeting choices and impact

(pages 13-20)

Where school spending goes…

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Source: Council analysis of 2009-10 NYSED School District Fiscal Profiles Source: Council analysis of 2009-10 U.S. Census Bureau data

Implication: If 3/4ths of school spending goes for instruction or personnel, then about 3/4ths of cuts will come from those areas – especially since this is the third year of austerity and districts have already made “easier” cuts.

Salaries & wages, 54.5% Employee benefits, 20.2% Everything else, 25.2%

Where school spending goes -- by commodity

Two ways schools save on personnel costs:

(1) Spend less per employee; (2) Employ fewer people

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PERSONNEL

2012-13 2011-12 2010-11 At least

• nce in last

3 years Salary freeze or other cost reduction in salary or benefits for superintendent 45% 59% 34% 79% Cost-reduction concession in salaries

• r benefits for other central office

administrators 36% 50% 22% 69% Cost-reduction concession in salaries

• r benefits for building level

administrators 35% 45% 20% 66% Cost-reduction concession in salaries

• r benefits agreed to by teacher

union 35% 31% 15% 54% Cost-reduction concession in salaries

• r benefits agreed to by any other

union 30% 28% 13% 48% Reduction in central office administration positions 22% 25% 22% 47% Reduction in building-level administration positions 18% 25% 20% 43% Reduction in teaching positions 67% 72% 62% 87% Reduction in other instructional support or student services positions 56% 60% 46% 76% Reduction in other positions 59% 60% 47% 79% Other reduction in personnel costs 38% 33% 27% 47% Layoffs Attrition Total Positions Eliminated Classroom teachers 2.2% 1.4% 3.6% Other instructional

• r student support

personnel 3.9% 2.0% 5.9% Administrators 3.1% 2.1% 5.2% Other Employees 1.7% 1.0% 2.7% TOTAL 2.4% 1.5% 3.9%

Percentage of positions eliminated by type, 2012-13

Key point: Many budget actions are cumulative in impact Example: Position reductions

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4.3% 8.0% 7.5% 3.6% 4.9% 3.6% 5.9% 5.2% 2.7% 3.9% 0% 2% 4% 6% 8% 10% 12% 14% Teachers Other Student Support Administrators Other Total

Percent reduction in positions by category, 2011-12 and 2012-13

2011-12 2012-13

Position reductions by district type – this year vs. last year

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Total positions eliminated, by category and type, 2012-13

City Rural Suburb Total Teachers 4.8% 4.2% 3.1% 3.6% Other Student Support 7.7% 6.0% 5.4% 5.9% Administrators 4.0% 6.1% 5.0% 5.2% Other 3.5% 3.5% 2.1% 2.7% Total 5.2% 4.4% 3.3% 3.9% Total position reductions, by category and district type, 2011-12 City Rural Suburb Total Teachers 6.1% 5.8% 3.4% 4.3% Other Student Support 8.7% 10.8% 6.6% 8.0% Administrators 9.3% 9.8% 6.0% 7.5% Other 4.3% 4.9% 3.0% 3.6% Total 6.4% 6.7% 3.9% 4.9%

This year… Last year…

Actions affecting instruction

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INSTRUCTION

2012-13 2011-12 2010-11 At least

• nce in last

3 years Increased class size 59% 48% 30% 67% Reduced non-mandated art classes 16% 18% 11% 31% Reduced non-mandated music classes 20% 19% 9% 33% Reduced advanced or honors classes 17% 13% 7% 24% Reduced summer school 31% 27% 20% 44% Reduced extra help for students during the regular school day or year 22% 23% 14% 32% Reduced student enrollment in career and technical programs 18% 12% 7% 23% Reduced/deferred purchase of instructional technology 31% 26% 20% 42% Reduced/deferred purchase of textbooks 18% 13% 8% 21% Reduced/deferred purchase of library materials 17% 13% 9% 22% Eliminated prekindergarten 1% 0% 1% 3% Reduced prekindergarten 5% 2% 1% 8% Eliminated kindergarten 0% 0% 0% 1% Moved from full-day to half-day kindergarten 0% 0% 0% 2% Other reduction in kindergarten 0% 1% 0% 3% Combined grade two levels in a single classroom 4% 2% 1% 7% Other reduction in instruction 34% 23% 14% 38%

Survey also asked about actions affecting other direct student services, operations and maintenance, and other activities

Some highlights:

• 34% of districts cut sports and other extracurricular activities this year;
• ver 50% cut them last year
• 40% deferred maintenance; over half did last year
• Over 40% of districts cut professional development for all employees – at

a time when the state is moving ahead with new standards, assessments, and evaluation requirements

• 29% of districts with at least 5,000 students report closing a school in the

last three years

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Impact of 2011-12 and 2012-13 district budgets on instruction

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0% 20% 40% 60% 80% 100%

2011 Instruction in English, mathematics, science, and soc. studies 2012 Core instruction in elementary grades 2012 Middle level instruction in English, math, science, and soc. studies 2012 High school instruction in English, math, science, and soc. studies 2011 Extra help for students who need it 2012 Extra help for students who need it 2011 Advanced or enrichment classes 2012 Advanced or enrichment classes

Severe negative impact Some negative impact No change from prior year Positive impact

Some or severe negative impacts anticipated on specific services by district type

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Total City Rural Suburb Core instruction in elementary grades 41% 33% 43% 39% Instruction in English, math, science, and social studies in the middle level grades 33% 33% 36% 29% Instruction in English, math, science, and social studies in high school 37% 40% 42% 28% Extra help for students who need it -- any level 48% 73% 52% 37% Instruction in art -- any level 27% 23% 27% 26% Student transportation 33% 57% 34% 27% Advanced or enrichment classes 35% 50% 39% 28% Special education 20% 14% 23% 15% Athletics 44% 43% 47% 40% Other extracurricular activities 48% 62% 53% 39% Instruction in music -- any level 26% 23% 32% 19% Other student services 34% 15% 39% 31% Operations and maintenance 49% 80% 48% 46% Administration 46% 69% 40% 49% Other district operations and services 43% 57% 43% 43%

Percentage of superintendents anticipating some or severe negative impact from 2012-13 budget decisions on various school operations -- by district type:

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Adapting to the tax cap

(pages 20-23)

Tax Cap:

Impact on spending levels & programs

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50% 47% 57% 45% 17% 13% 15% 19%

0% 20% 40% 60% 80% Total City Suburb Rural

Impact of tax cap on budgeted spending levels

Somewhat lower Significantly lower 50% 36% 49% 52% 10% 14% 6% 11%

0% 10% 20% 30% 40% 50% 60% 70% Total City Suburb Rural

Impact of tax cap on programs and services

Somewhat negative Significantly negative

Tax Cap:

Higher need districts more cautious with tax increases

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2012-13 Tax levy decisions by SED Need/Resource Category Need/Resource Capacity Category Proposed Tax Increase Proposed Tax Levy as % of Levy Limit % Attempting Tax Cap Over-Rides High Need Small Cities and Suburbs 2.2% 99.4% 6.5% High Need Rural 1.8% 97.9% 5.8% Average Need 2.1% 99.4% 8.6% Low Need 2.4% 99.7% 7.5% TOTAL STATE 2.2% 99.4% 7.6%

SOURCE: Council analysis of NYSED Property Tax Report Card and budget vote data

1) They raise fewer dollars with same % tax increase as wealthier districts (over 20% of districts raise less than $50,000 with a 1% tax increase). 2) Anecdotally, rural superintendents seem more likely to say residents see “2%” as a benchmark to be followed.

Tax Cap: Possible impact on collective bargaining

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31% 10% 40% 5% 15% 0% 10% 20% 30% 40% 50% No impact Negotiating savings not a priority now Somewhat more likely Significantly more likely Already contributed to negotiating savings

Perceived impact of tax cap on chances of negotiating cost-savings with teacher union

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Implementing evaluation reforms

(pages 24-27)

98% of superintendents say new evaluation requirements will require additional spending

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70% 28% 2% 0% 0% 20% 40% 60% 80% Significantly increase spending Somewhat increase spending No signicant effect Reduce spending

To what extent did complying with the new APPR requirements require your district to increase what it expects to spend on teacher and principal evaluationbeyond what it would have traditionally spent?

Staff training and new student assessments are seen as the primary cost- drivers

Requirements will pose significant demands on principals

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0% 8% 19% 32% 41% 0% 10% 20% 30% 40% 50% Under 10% More than 10%, up to 20% More than 20%, up to 30% More than 30%, up to 40% More than 40%

Approximately what percentage of a typical principal or

• ther administrator's timedo you anticipate will be spent on

conducting teacher evaluations in compliance with the new APPR requirements?

41% of superintendents believe new teacher evaluation requirements will demand more than 40% of a principal’s time. Proportion might be appropriate – but districts have been cutting administrators and the state has been adding responsibilities (e.g., preventing/ stopping bullying).

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Looking ahead

(pages 22-24)

Which is of more concern – the tax cap or possible state aid levels

There has been about a 20 point shift toward state aid since last year’s survey

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25% 13% 54% 37% 23% 12% 16% 5% 52% 43% 39% 53% 60% 49% 54% 37% 23% 44% 7% 11% 18% 39% 31% 58% 0% 20% 40% 60% 80% 100% Total 2011 Total 2012 Downstate 2011 Downstate 2012 Mid-Hudson Valley/Capital Region 2011 Mid-Hudson Valley/Capital Region 2011 "Upper Upstate" 2011 "Upper Upstate" 2012

Tax Cap Equal Concern State Aid

Priorities for state help on mandate relief/ cost containment/ productivity (top 12 of 25 listed options)

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Options 1 2 3 4 5 1 Amend the Triborough law to eliminate automatic salary increments if a collective bargaining agreement has expired 107 30 20 9 14 747 73% 2 Establish mandatory minimum employee and retiree contributions for health insurance 48 69 20 13 7 609 64% 3 No new unfunded mandates 30 22 22 19 43 385 55% 4 Reduce the role of seniority in layoff decisions (i.e., modify "last in, first out") 9 27 19 17 12 256 34% 5 Require all public employees in a region to belong to a single health insurance program 11 22 20 3 3 212 24% 6 Authorize the State Education Department to order school district mergers, without voter approval, based on considerations including local financial capacity and inability to maintain comprehensive educational services, following a review with local input 9 5 15 10 9 139 20% 7 Revise middle school requirements 3 5 11 18 13 117 20% 8 Authorize regional high schools to serve students from multiple school districts 6 8 10 8 5 113 15% 9 Other change in health insurance 2 6 14 8 8 100 15% 10 Revise special education class size requirements 4 3 12 10 11 99 16% 11 Streamline procedures for tenured teacher hearings ("3020a reform") 1 6 12 12 8 97 16% 12 Reduce reliance on "seat time" requirements in high school by allowing students to earn credit by demonstrating proficiency in a subject instead 7 6 13 21 93 19%

Looking at the list below, what would be your top five priorities for actions the state could take to help your district reduce or control costs, or gain more impact from its spending?

Rank Weighted Score % Citing as a Prioriity

Priorities if new funding became available – 2011 vs. 2012

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2011 2012 Increase extra help for struggling students 64% 66% Reduce property tax levy 57% 38% Increase enrichment/advanced classes 23% 37% Reduce class sizes 30% 26% Increase funding of reserves 29% 27% Expand professional development 28% 28% Increase other student support services 24% 21% Strengthen administration (district or building level) 9% 17% Purchase technology 12% 16% Improve maintenance 10% 8% Purchase other instruction-related materials 10% 7% Expand extracurricular activities or athletics 3% 5% Other 2% 3% Purchase other equipment 0% 2% If your district were to receive an increase in funding beyond what would be needed to fund state mandates and your current level of services, what would be your top three priorities for the use of that funding? % of superintendents choosing as a priority

Extra help for students #1 both years. Reducing property tax levy declined, increasing advanced classes rose.

NEW YORK STATE COUNCIL OF SCHOOL SUPERINTENDENTS 7 Elk Street, 3rd Floor Albany, NY 12207 (518)449-1063

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