On May 13, 2014, the Iowa City Community School District Board will meet to discuss budget cuts that will result in, among other reductions, eliminating fourth grade orchestra, phasing out all German instruction over the next several years and ending seventh grade football.
Parents have been asking why these cuts are necessary, especially given that the district’s Facilities Master Plan is slated to spend almost $260 million to renovate and expand older buildings while opening four new ones. Others are asking whether there are other programs that should be cut instead of those selected by the administration. My biggest concern is whether the budget cuts will actually address the long-term root cause of the deficit, that, if left unaddressed, may result in history repeating itself.
How can we make budget cuts while spending millions of dollars on the Facilities Master Plan?
To clarify the budget cuts and their relationship to the Facilities Master Plan, it is helpful to understand how school funding works in Iowa. The State of Iowa limits the amount of money per student—called spending authority—that school districts can use to fund annual operations and programming. The purpose of the limit on spending authority is noble: It ensures a wealthier area does not have more educational opportunities than a poorer area simply because of its flush tax base.
Spending authority is the pot of funds used for annual programming and operations. The almost $260 million for the Facilities Master Plan comes from a different pot of funds and doesn’t count against spending authority. The state does not limit one-time funds used for new buildings, athletic fields or maintenance. Thus, the funds allocated for the Facilities Master Plan have no bearing on the proposed budget cuts.
In addition to spending authority, most years, the state will give a supplemental state allocation, called allowable growth, as a percentage increase on the amount allocated the prior year. Unfortunately, the average allowable growth over the past five years was 2.1 percent.
The reason behind the budget cuts
Still, it does not explain how we got into this mess. That story is a bit more complicated.
By December 2013, the board and administration were aware of coming financial challenges. Based on our current programming levels, including the annual cost-of-living raises already contractually agreed upon for the 2014-2015 school year and beyond, and the expiration of almost $5.6 million in federal funding from stimulus education funding, the district was slated to use all of its accrued spending authority and have a shortfall of almost $1.4 million dollars by June 2016. To prevent this and establish better sustainability, in early April the administration presented a series of budget cuts to the school board totaling approximately $3.5 million.
The financial situation we find ourselves in has two root causes: First, the district has consistently been giving raises to administrators, teachers and staff that significantly exceed allowable growth. Let’s call this the allowable growth deficit.
As indicated in the budget blueprint—a document explaining the budget predicament found on the district website—$0.81 of every ICCSD dollar goes to employees of the school district. When you increase the pay of personnel at a rate exceeding increases in revenue, you will eventually have to pay up. Personally, I believe teachers, staff and our administrators deserve raises at least as generous of what we’d expect in the private sector. Unfortunately, the State of Iowa has not seen fit to increase allowable growth by the same percentage.
The second root cause is we have relied on grants to protect us from the allowable growth deficit. So, as long as we had federal stimulus funds, this solution worked effectively. Unfortunately, those grants have expired and there are no grants to replace them this year. Other school districts such as Des Moines and Cedar Rapids are using the State of Iowa’s Teacher Leadership Grant to offset some of the cuts they would have had to make otherwise. Our district is planning to apply for the grant next year, since the administration was overtaxed this year because of a state accreditation site visit and an investigation by the U.S. Department of Education’s Office of Civil Rights with regard to our special education program. In light of the uncertain nature of grants, is it good practice for the district to rely on them to fund basic academic programming?
So, what now?
Like many of you, I believe mismanagement by the board and administration and the low allowable growth rate are to blame for our current predicament. But I also recognize casting blame will not make our budget better. Should we put off making the cuts now in hopes that the state legislature will see the light next year and give a higher allowable growth rate? That may work, but given the unwillingness of the state legislature to consistently set higher allowable growth rates, I certainly wouldn’t count on it. If we make cuts now, how should we go about doing it? Do we let the loudest and most powerful voices protect their interests?
Personally, I hate that these cuts are financially necessary, but I simply don’t see a strong alternative suggestion that could save $3.5 million. In fact, I worry the cuts will only delay even greater cuts. The school district’s budget blueprint assumes a 3 percent across-the-board increase in costs. But if personnel raises are set at 4.5 percent as they are for the next year, then the assumed 3 percent increase may be too small. We need to recognize that even if there is a temporary stay for one or more of these programs, they will all, along with many other programs, be cut if something more fundamental isn’t done.
I believe the only way to sustainably address the budget problems in the long-term is to tie annual raises to the allowable growth rate. Doing so would erase the allowable growth deficit, and it would prevent us from the uncertain situation of basing key academic programming on grant funding. We can be creative in how we go about this so that teachers and staff receive a greater percentage raise than high-level central administrators, but we need to think seriously about what it will take to grow in a sustainable fashion.
Michael Tilley is a philosopher, test writer and the father of four current and future ICCSD students.