Rainy Day Fund, Budget Revenue Estimate, Business Tax

This report is being supported by Lockwood, Andrews & Newnam, Inc.  LAN has the employees and expertise to assist in the review of your operational costs and develop plans to reduce costs.  LAN is the leader in Program Management for facility planning, construction, and renovation.  www.lan-inc.com

Rainy Day Fund, Budget Revenue Estimate, Business Tax

Discussions of use of the Rainy Day Fund to relieve the current Texas State Budget crisis have begun at the legislative level.  The Rainy Day Fund was first established for use at the state level when revenue for a state budget was lower than needed to fund basic programs for Texans.  Basically, the state has established a “savings” account for Texas.  Now is the time to use some, if not all, of the Rainy Day Fund. Some Legislators are calling for use of 100% of the amount in the Fund as revenue for the next biennium while others are calling for use of 50% of the fund as revenue.  If the state is not going to us the Rainy Day Fund for the next biennium, then return the money to Texans who have paid taxes to build the fund to its current level.

The Comptroller’s first estimate of revenue for the next biennium was a dismal view of the economic picture of Texas future.  Prior to the serious discussion of revenue for the State Budget, the Comptroller will release another revenue forecast for lawmakers.  If history repeats itself, the “next” revenue forecast will show higher revenue estimates and a much smaller deficit between expenditures and revenue.  Then, Texas Public Schools will have a real sense of the State’s reduction in spending.

Since the Business Tax was created to replace revenue lost in the reduction of local school taxes, the Legislature must address the self-inflicted wound they created.  Instead of an estimated $7 Billion in revenue for the State Budget, the Business Tax has generated $400-$500 million.  Prior to a review of Funding Formulas for public schools, the Legislature should review the Business Tax formula to determine deficiencies in this structure.

Control Costs –Maintain Quality

Since Public Education is labor intensive, controlling costs for materials, supplies, contract services, benefits, utilities, reimbursable expenses, etc. is more important than ever.  There is a very real perception by some people in business and industry that all school districts need to “cut the fat”, “lean their operations”, “learn to operate on less”, and “tighten their belt”.  In fact, since many businesses have downsized, there is a belief that “laying people off” is the only way to send a message of reducing expenses.  A good business does not downsize at the expense of a quality product.  If the quality of a business is diminished during downsizing then the business will collapse.

The production of public education is a participating citizen for society.  Quality is determined by the output of a well-educated community of people.  There is probably some room in every school budget for reductions; however, the quality of the “output” cannot be sacrificed or minimized while the “witch hunt” for escalating cost continues.  Leaner operations can only be achieved through thoughtful consideration, and review, of expenses.

Thought

An organization will survive and thrive through the leadership of well-intended people who serve others.

Legislators Need to Move on Public School Funding

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Legislators Must Move Faster on the Issue of Public Education Funding

More and more individuals, school employees, and Legislators are calling for more work on the state budget to identify areas that will minimize the “depletion” of state funds for public schools.  While school districts scramble to develop plans to handle the reduction of state funds, it is apparent that the range of “reduction” is so great that there may not be enough scenarios to prepare properly.   The Texas Legislative Branch must put public school funding as a priority so that the approximately 1100 school districts can plan and prepare for the more than 5.1 million students that will attend public schools in August 2011.  The “unknown” in the amount of reduction is worse than the actual amount of reduction itself.  The sooner school districts know the state’s appropriation for public education, the sooner school districts can plan accordingly, improve efficiency, maximize current operations, identify additional funding sources, and move ahead with direction and clarity. 

While school administrators and school organizations raise the awareness of expected reductions in state aid, there must also be a sense of urgency to finalize the amount of reductions quickly.  School District budgets take time to develop, review, and adopt.  Delayed Legislative action will only create additional uncertainty.

The State must move Legislative discussions and action on Public Education Funding to the priority list!

Utility Costs

School districts have large utility costs that are associated with the daily operations of school buildings.  Now is the time to review your energy saving procedures and policies to determine if energy efficient renovations need to be performed on school owned structures.  While there is a cost associated with renovations, the potential savings in energy costs will be needed in the future. 

Before a Reduction in Staff

Instead of furloughs, cuts, and/or changing contracts for public school employees, some school districts are reviewing options to reduce obligations to employee salary and benefits:

School districts are identifying savings:

Through a reduction in their portion of health insurance payments

Through reductions and/or elimination of stipends

Through reductions in reimbursed meals and travel

Through limits in approved overtime hours

Through reducing “Contracted Services” budgets

Through refinancing Debt

Thought

The Power of One is amazing.  One thought can lead to one action which can change the world.

Public Education Funding

This report is being supported by Lockwood, Andrews & Newnam, Inc. (A Leo A. Daly Company).  With 75 years of experience, Lan, Inc. is a leader in Program Management for planning, construction, and renovation of facilities.  With over 400 employees, Lan, Inc. has the personnel to start, oversee, and complete projects within budget.

State Budget----School Budgets

Once again, the Legislative Session has begun with discussions of reducing funds for Public Education.  For School Superintendents, this is nothing new.  However, the amount of reduction for public education is the highest I have ever witnessed.   While I served as Superintendent of Schools for 16 years, most Legislative sessions, focused on spending and/or higher accountability standards for public education.  No one is surprised that this session is destined to “trim the perceived fat and then some” from public education funds.  But, everyone is shocked at the size of the proposed reduction.

The State will have less revenue for the State Budget.  While the amount of the “shortfall” is debatable, the fact that there will be less money for public schools is real.

Presentation

Perhaps school districts could present layoffs in economic terms which business and community leaders seem to understand.  What is the economic impact of a reduction in force of 100 employees with an average salary of $50,000?  Economic Development Groups and Chambers of Commerce know that people spend their money close to home and local income travels through restaurants, businesses, car dealers, shopping malls, grocery stores, non-profit organizations, local taxes, etc.  Local communities must know the economic result of less revenue for public schools.

What others are doing?

Asking their Contracted Services to reduce their budgets

Asking Contracted Services to show the district the services that would and could be reduced if their budget was reduced by 1%, 2%, 3%, 4%, or 5%

Furloughs for non-exempt employees (i.e. reduction in days/hours of work and reduction in pay)

Asking private citizens to speak up regarding the proposed reductions in public education

Cutting Special Education staff to become more in line with their Federal Funds

Looking at refinancing old debt

Looking at creative ways to obtain additional revenue from private sources

Looking at grant opportunities

Contacting their Legislators, with real numbers, to emphasize the effects of cuts this large

Thought

Today, don’t look for someone that can help you, instead look for someone you can help!