Friday, February 29, 2008

Fiscal Crisis NOT Due to Growth

I've heard over and over that we are in our current fiscal position due to increased enrollment growth.

The Express-Times reported this (read the article here):
Superintendent Victor Lesky said at the board meeting Monday that a period of growth forced the construction of a new school, and the bill for a decade of expanding enrollment has come due.
And I disagree. This argument is made because it is easy to believe and it exonerates responsibility.

Past Growth
Last year the NASD provided Enrollment Projections from the Department of Education with actuals from 2001-2002 to 2005-2006 and projections from 2006-2007 to 2015-2016. Comparing the numbers for last year and this year, the enrollment was 104 and 133 higher than the projection. According to the reconfiguration document we will be 104 higher next year (2008-2009). Then in 2009-2010, when the new building opens, we will be over the projection by 326, or triple what we were the previous three years.

From 2002-03 to 2008-09 we'll have an enrollment growth of 405 students, or about 68 students per year (six year period/total students). There was a big jump from 2001-02 to 2002-03, but even during that seven year period our increase was 88 students per year, or about a 2% per year average growth (divided 88 by average enrollment during that period of 4525).

Current Growth
The handout from the meeting (now online here ) shows an increase from this year to next year of 7 students. Then when we open the new building the increase jumps to 269 new students. [note: My numbers reflect the correction to the NASD's addition (1960+1156+1617=4753), which means by the NASD's numbers we drop 13 students then gain the 269.]

Either way, we have a modest gain followed by a huge projected jump.

Recent history is indicating modest growth. We had 13 additional students during the 2006-2007 school year. Year to date we've had 52. With 4700 students in Sept 06 and 4765 in Feb 08 - I'm guessing we're in the 1% growth range.

Grade Level Enrollments
Grades 8 - 12 average 408 students per grade, grades 4-7 average 360 per grade, and k-3 average 322. So not only is growth slowing, but we also have consistently lower average number of students coming through...Unless we get the projected growth.

The Problem
Growth is not our problem. Our problem was knowing we didn't have the money to pay our expenses as they existed and then deciding to build this new building. Now we have a mess on our hands.

Already, the NASD underestimated the cost of re-orientation by 50% from last year - how much higher will it go once we know all costs?

Cost to Educate
If enrollment were the issue, it would stand to reason that the cost to educate has remained consistent, but due to more students we have a greater cost.

Determining the Cost to Educate as the budget expenses divided by the student population here is our recent history:
  • 1999-00: $35.1M/4025 students = $8721 per student
  • 2002-03: $40.0M/4339 students = $9227 per student
  • 2005-06: $48.8M/4621 students = $10,561 per student (only had projected expenses)
  • 2008-09: $60.5M/4740 students = $12,764 per student (based on docs posted by NASD)
If we had contained our cost to educate at $9000 our budget would drop from $60.5 to $42.7M, a savings of $17.8 million.

The Future
In the end the education will suffer because cuts will have to be made, class sizes increased, programs cut, etc, etc. It is going to be an ugly situation.

In order to function the NASD will require massive tax hikes (10%+) and this will require a referendum. The only chance at passing a hike like this will be for the NASD to threated without approval by the voters all events and activities you hold dear will be cut - extra-curriculars, athletics, etc. The campaign will pit the community against one another and it will be ugly and there will be no winners.

We are not in this spot because people didn't speak up, but instead because the board and administration failed in their responsibility and by doing so have lost the public trust.

How do they gain it back? Don't be scared of this situation. Address it by developing a plan to get out of the situation. And more important take demonstrated steps to show action is being taken to avert the crisis now.

14 comments:

Grunt said...

I got news for you Ross, the community is already pii\tted against one another. Neighbor already doesn't like neighbor (or neighbor's kid).

Nazareth is a trainwreck. The situation you described is only going to exacerbate an already volatile state of affairs.

justmyopinion said...

absolutely because of growth and the reaction of the powers to be

they made this mess but we will have to help mollify it

had been discussion of selling name rights to help subsidize----
some ideas: Tuskes Track/Stefaniak Studio/Andretti Athletic Facility/Essroc Pool----

or how about Lesky Library---think he'll foot the bill? we're footing his :)

RossRN said...

I guess I still don't get how growth is the issue.

Divide the expenses by students and we've gone from 8700 to 12,700 a 50% increase.

This is because we have more overhead, approve all spending, and don't worry about consequences.

If the level of spending had been stabalized we wouldn't be in this situation.

RossRN said...

Forgot to mention, I also disagree that the community is a trainwreck.

I'll admit I have one neighbor I don't get along with, but that is due to a situation having nothing to do with children or personalities (its property), but other than that I get along well with our neighbors.

I also see a lot of people engaged in the community trying to make it better.

That is not to say there aren't problems. I won't argue that some people don't like their neighbors or kids, but I wouldn't say all or to the point of crisis.

I do agree this situation if not changed will have a huge, negative effect on the community that probably will do irepairable (sp?) harm.

People can complain about my seeing the better side of things, but I'm okay with that - makes my life more enjoyable.

justmyopinion said...

reaction to growth is what I said/meant---

ultimately growth required addt'l school but what type of school translated into the price tag

don't think naz is a trainwreck either and still feel it is a nice community with loads of untapped potential--- but with all the press this NASD $ crisis is getting the weak real estate market in 18064 probably will only get more diluted

why move into an area when they read about 4 years of double digit school tax increases?

RossRN said...

We were behind and getting further behind before the new school.

We knew looking ahead it wasn't a good financial situation before the vote to go with the MS with all options.

So the increase in spending we've seen to date can't be blamed on growth.

The 10%-13% tax hikes can be as then we'll be paying for the extra staff, supplies, maintenance, utilities, building, and debt, but until then this is a case of not being fiscally responsible.

We've added students, no question, but we've also had non-residential development that has been taxed and even with that we've fallen behind.

There has been growth in staff and service and spending, but I'm referring to enrollment;-)

numbersman said...

Make up your mind Ross. Last year you were rallying for lower class sizes and the need to hire additional teachers in new class rooms which would increase the cost per pupil. Now that you are getting your wish you are complaining that the cost is too high. So which do you want more available classrooms and teachers to relieve the overcrowding situation or lower cost because you can't have both. The choice needed to be made and I think admin got it right. As far as projections go they are nice but don't get too caught up with them, nothing is as sure as change and these gloom and doom number will change and we will be alright in the end. This might seam a little nieve but I've seen things like this come and go in the past and as you get older you too will see the same.

RossRN said...

I did say that Shafer should have a lower class size, but the comments should be kept in context.

The reason for my saying that was because there was and remains a clear disparity in class size between Shafer and the other two elementary schools.

I was advocating for fairness across the three schools.

And for the record, I never got my wish. Shafer did not get new teachers and shafer has higher class sizes than either Lower or Bushkill.

Regarding the projections, there is some portion that is known - debt. When you couple that with our budget process of taking last year's expenses and adding everything new we want to it, the projections become pretty reliable.

I'm glad you think I'm still young, some days I wonder myself, but I've watched this district for a long time. My concerns are two-fold, one financially and two, what happens to my kids' education.

Will these at times be at odds with one another, probably, but isn't every budget choice you or I make? I'd love to have it all, but barring a powerball win, that isn't happening. I get the feeling the NASD is looking for the powerball solution, and I guess I'm cynical enough to doubt it will happen, so in the absence of that I'd like to see a plan to dig us out.

Unknown said...

Ross,

Growth is the issue. Up until recent years, the district used standard birth/death rates to plan on growth (came from an insider), and somehow was unable to see all of the homes going up in the area.

When the construction boom started, they should have made some predictions/estimates on the number of new students coming into the district.

The NASD administration totally missed the boat here.

As for the train wreck comment, I know from what you say you are not at the root of the problem, but this area is a train wreck. We continue to build truck terminals, more strip malls, and do nothing to bring in the types of businesses/jobs that would really benefit the area.

People, and yes kids, are nasty. I have even heard that comment come directly out of school administrators mouths in private conversations.

If we really want to change the area, we need to admit what the problems are before we can address them.

Think of it as the 12 step program for the disfunctional community.

Brad Moulton said...

numbersman-

Perhaps I'm too analytical, but this is the way I currently see the situation:

1) NASD NEEDS double digit tax increases starting in 2009 for four straight years to to close the revenue/expenditure gap.

2) Act 1 Legislation prohibits school boards from raising taxes above the index level (without going to referendum) in any given year. This year's index level is 5.4% and it will be somewhere around that number in future years. So as it stands RIGHT NOW, we will need 4 straight years with referendums starting in 2009.

3) Most school referendums fail. Even if we could get it passed in the first year, I think the public's willingness to pass subsequent referendums will not be there.

4) When the referendum fails, the board is required to make cuts to get down to the index level. Considering the index will be somewhere between 4-6% and NASD needs 10-15% increases each year, we are talking about MILLIONS of dollars in cuts in any one year. What cuts do you suppose they'll suggest?

You have suggested these doom and gloom projections will change and we'll be "aright in the end". I disagree.

Already, NASD is counting on 2.0, 3.0, 3.0 and 4.0% increases in real estate revenue. When I last heard the number for 2007 in November, it was somewhere around 1%. In other words, the housing crunch and curtailment of construction is hurting us (and my continue to do so).

In addition, the teacher's contract will expire in 2011 and electricity rate caps expire in 2009. Estimates for electricity increases are 30-40% over current rates.

Everything is kind of lining up poorly right now.

I just want to know what the plan is. We cannot go all "pollyanna" and expect everything to work itself out. We need a plan.

Karen Petersen Pasquel said...

Concerning class sizes..what are they at Shafer and why is it a problem? I know there was a problem with specials at one time. My children attend Shafer, my son has a class size of 21 (a dream) and last year he was in a class of 26-not great, but welcome to my world....-yes a smaller class size is wonderful, but the average class size in area districts are 21-26. Yes, high class sizes are very difficult-I remember when I 30, it was a real challenge , but I did it, and in a separate garage building too. No, I am not an older teacher either, please don't misunderstand me, I am not asking for sympathy. I am speaking as both a teacher and a parent. The average class is about 24-25. Nazareth is a good school district and I am proud of the education my children are getting. I have been in other districts-there are pros & cons to many things districts do. I think it is important consider why the decisions are being made without jumping to conclusions.

Karen Petersen Pasquel said...

I also agree that our community is open minded. when we moved into a local development form another are of Nazareth, our neighbors were friendly and open their doors to us.

Brad Moulton said...

We're losing focus here....

Class room sizes are NOT the issue. Yes, there is inequities amongst the elementary schools with Shafer having higher classroom numbers, but that is NOT the point nor the reason for our ever burgeoning revenue/expenditure deficit.

It should be pointed out that the re-orientation plan ONLY adds 8 teachers, yet the cost for the new MS went from $2.1M to $3.2M. Teachers (or their numbers) are not the problem.

NO, the problem has been the board/admins willingness to accept extra projects and adders on current projects which have caused the debt expenditure to increase. The bulk of future revenue deficits is due debt expenditure. We had several opportunities to cut costs (Terrazzo flooring anyone?) yet we chose not to.

Sometimes I wonder where our focus is...

Chris Miller said...

Anonymous 11AM
You are correct when you say where were they when the homes were being built. On top of that we all knew that is was only a matter of time before Route 33 hooked up with
I-78. The lack of vision among the politicos is astounding.
Keep in mind that it is not going to be easy to rectify this. I would expect growth to be down because of what is going on in the housing market and it may be another year before it clears up. Housing prices in the Valley are going down and will continue to do so. On top of this, I had the opportunity to speak to a gentleman this past weekend who is involved in the investigation of fraud in the sub prime mortgage business. It is a mess and people are going to go to jail. He belives that like the S&L mess, we will end up bailing a lot of people out of the hole despite the protestations of Sec. Paulson.
That said, I suggest we look at some solutions here. Eliminate unnecessary courses particularly the electives. Sports will need to become self sufficient. Open up the teachers contract, difficult to do, and change the terms on salary and medical. All the frills need to be eliminated. Get rid of half full busses or all kids ride the bus and cars stay home. Administrative salaries need to be slashed and all the little golden parachutes need to come to a screaming halt. Then we recall the entire board and fire Lesky who is at the head of this mess. Lesky peaked as a principal. He is building himslelf another memorial. He needs to be held accountable for his actions.