Superintendent's Blog

One final quick post before the break.  No post next week but I will resume the week of February 27.

Last night the First Selectman presented a “preview” of his 2012-2013 budget.  As in most towns, the largest piece of the town’s budget is the Board of Education’s operating budget.  He had some kind words for our budget.  While it is true that he “cut” our budget request by approximately $600,000, this cut was due entirely to a re-calculation of the Board of Education’s required annual contribution to the town’s pension fund.  In other words, if this budget were to stand as he proposed, there would be no cuts to the Board of Education’s budget except the line item for pensions.  It would be a classic “win-win” situation.  But there is still a road of approvals yet to come and the final answer won’t be known until the first week of May.

It is appropriate that I spend a little time on the topic of benefits, since pension is part of that category.  (The biggest item in the category is Health Insurance and needs its own entry, maybe more.)  Employees of the Board of Education who hold teacher or administrator certification are covered by the State Teachers Retirement Board pension plan.  This plan operates by taking funds for each teacher’s paycheck, along the State of Connecticut’s contribution, investing them, and paying retired teachers from the proceeds (deposits plus investment income of the fund).  No local tax dollars fund the State Teachers Retirement Board fund.

While the State covers the pension obligations for close to 1000 of our employees, the Town of Fairfield covers the rest.  These are employees who do not hold teacher or administrator certification, such as custodians, secretaries, maintenance workers, paraprofessionals and so forth (about 450 employees).  The funds needed to pay for these retirees come from the Town’s pension plan and every year actuaries contracted by the Town compute how much the Town and Board of Education need to contribute to this fund to keep it solvent.  The fluctuations in the stock market can influence this figure, as investment proceeds play a role in funding the pensions of our retirees.

Our current budget reflects a payment of approximately $1.75 million into this fund.  We had budgeted approximately $2.0 million for next year.  With new actuarial calculations we can reduce this figure to approximately $1.4 million.  The result is that, rather than showing an increase in this line of approximately $275,000, we can show a decrease in the line of approximately $325,000.  Overall, it reduces our budget from a 2.60 percent increase to a 2.18 percent increase.  The impact on educational programs and services is zero.

The new pension figures were released well after the Board of Education had approved the budget.  As a result, the Board of Education will have to amend its budget in May when the final budget figure is approved.

As you know from previous posts, the largest segment of our operating budget is staff salaries.  To be specific, in the current year, we are budgeting $96,052,358 in this category.  Next year’s budget is at $98,160,441, an increase of approximately 2.1 percent.  On page 17 of the budget document, we provide a breakdown of 16 components that, taken together, equal the Staff Salaries category.

The simplest way to think of this account is that it is made up, largely, of two pieces: 1) how many employees we have and 2) how much they get paid.  Multiply those two factors and you pretty much have the Staff Salaries account in a nutshell.

How many employees is a function of several factors.  Enrollment plays a large role.  Our staffing is based on projected enrollment for next year.  In this case, we know that overall enrollment will be going up, with the increase concentrated at the high schools and a small decrease at the elementary schools.  (Middle school enrollment is virtually unchanged.)  Given that class size is a priority, all things being equal, more students mean a need for more certified staff to teach them.  At the elementary school level, overall, we are projecting slightly fewer classroom teachers.  Overall, however, the number of classroom teachers is going up to account for an overall increase in enrollment.  Kindergarten is always the biggest unknown in this exercise.  We’re very accurate in all the other grades because those students are already in the system.  Kindergarten isn’t well-known until registration, which is concluded in late April.  We use an outside firm, MGT of America, to forecast enrollment for us and we use their figure for the upcoming kindergarten class on which to base our budget.

The other factor influencing Staff Salaries are the wages these employees earn.  Over 95 percent of our employees are unionized which means their wages and benefits are collectively bargained.  In the upcoming year, for contracts that are settled (some expire on June 30, 2012 and no successor agreeement is in place), wage increases are about 2 percent.  All things being equal, then, if we have the same number of employees next year as this year, the Staff Salaries account will rise by about 2 percent.  Where there are no settled contracts, we estimate a settlement figure and put it into an account called the Wage and Benefit Reserve.  However, we do not disclose the particulars of what figure we use so that we are not at a disadvantage during the negotiations process.

The budget is also influenced by retirements and other turnover of staff.  New hires are invariably paid less than departing staff (not always, but usually) and we figure in some turnover into the budget.  The Staff Replacement Line shows that we estimate a savings of $460,000 for staff turnover (line 133).  You also see a reduction in paraprofessional staff.  This is from a proposed change in how we staff our elementary school special education programs — more certified staff, fewer paraprofessionals.  We are also proposing an additional full-time math resource teacher at each middle school and some additional teachers in mathematics at both high schools.  We are also looking to hire a second full-time plumber.  In terms of total employees we are budgeting for slightly fewer overall employees next year, although the mix will be different — more certified employees, fewer non-certified.

So the Staff Salaries category is where most of the budget resides.  Of that category, about two-thirds of it are teacher salaries.  When you include certified support staff (psychologists, social workers, etc) it’s closer to three-quarters of the account.  We employ approximately 1475 workers (not all of them full-time).  This is a labor-intensive business and our budget reflects that reality.

Next:  Benefits!

Yesterday the governor made some interesting comments in his speech at teacher tenure.  I am taking a break from the budget series (brief, I promise), to reprint for you exactly what he said about this issue.  The transcript is courtesy of the Connecticut Association of Public School Superintendents (www.capss.org):

But we must do one more thing.

I’m a Democrat.  I’ve been told that I can’t, or shouldn’t, touch teacher tenure.  It’s been said by some that I won’t take on the issue because it will damage my relationship with teachers.

If the people in this chamber — and those watching on TV or online, or listening on the radio – if you’ve learned nothing else about me in the past 13 months, I hope you’ve learned this: I do what I say I’m going to do, and I do what I think is right for Connecticut, irrespective of the political consequences.

        And so when I say it’s time we reform teacher tenure, I mean it. 

        And when I say I’m committed to doing it in the right way, I mean it. 

Since 2009, 31 states have enacted tenure reform, including our neighboring states of New York, Massachusetts, and Rhode Island.  It’s time for Connecticut to act.

        For those watching or listening who don’t know what tenure is, it’s basically job security.  Let me explain.

Right now, if you’re a teacher and you have tenure, your performance in the classroom has to be rated “incompetent” before a dismissal process can even begin.  Even then – even if you’re rated “incompetent” – it can take more than a year to dismiss you.

And to earn that tenure – that job security – in today’s system basically the only thing you have to do is show up for four years.  Do that, and tenure is yours.

        The bottom line?  Today tenure is too easy to get and too hard to take away.

        I propose we do it a different way.  I propose we hold every teacher to a standard of excellence.

Under my proposal, tenure will have to be earned and re-earned.  Not earned simply by showing up for work – earned by meeting certain objective performance standards, including student performance, school performance, and parent and peer reviews.

And my proposal says, you should not only have to prove your effectiveness once, after just a few years in the classroom.  My proposal says that if you want to keep that tenure, you should have to continue to prove your effectiveness in the classroom as your career progresses.

I’m trying to be careful in explaining this tenure reform proposal because I know there are those who will deliberately mischaracterize it in order to scare teachers.  So let me be very clear: we are not talking about taking away teachers’ rights to a fair process if an objective, data-driven decision is made to remove them from the classroom.

        I believe deeply in due process.

I believe just as deeply that we need to ensure that our children are being taught only by very good teachers.

So for those teachers who earn tenure – by proving that they are effective teachers – it’s the job of the local school district to make sure that you have every chance to continue to succeed.  That means that if you start to struggle at any point after you’ve earned tenure, the district will provide support and professional development to help get you back on track.

And finally, my proposal says that we need to do a better job of recognizing our great teachers.  That’s why I’m proposing to allow local school districts, if they so choose, to provide career advancement opportunities and financial incentives as a way of rewarding teachers who consistently receive high performance ratings.

Over the next few weeks, we’ll continue to have this discussion about tenure and I’m confident we can put in place a system that best serves our students, and their teachers.

Now let me be clear: in having that discussion, Connecticut will not join the states trying to demonize and antagonize their way to better results. 

        And we won’t get drawn into making a false choice between being pro-reform or pro-teacher. 

        I’ve said this before and I’ll say it again, I am both. 

I’m pro-teacher, as long as that doesn’t mean defending the status quo, and I’m pro-reform, as long as that isn’t simply an excuse to bash teachers.

There are 45,000 public school teachers in this state.  Most of them are good teachers.  Many of them are great.

Listen, I know teachers can be great because as a young student, many years ago, I had some great teachers.  They took a boy born with severe learning disabilities – a boy who had great difficulty reading and writing, a boy who struggled to process information – and they worked with him.

        Patiently.  Hard.

        And over a long period of time they helped me overcome those disabilities. 

Those teachers, and the support of my mother, are responsible for me standing here today as your Governor.

No, we cannot and will not fix what’s broken in our schools by scapegoating teachers.  But nor can we fix it if we do not have the ability to remove teachers who don’t perform well in the classroom in a timely fashion.

In this new system, tenure will be a privilege, not a right.  It will be earned and retained through effective teaching, not by counting years of service. 

        This is the year to reform teacher tenure.  Let’s get it done.

This issue must be dealt with in legislation.  Stay tuned as changes must happen quickly — this legislative session lasts only 3 months.

We’ve designed our budget book so that readers can access the information at various levels of detail — starting with a one-page Executive Summary, then moving to a more detailed summary, then moving into the actual line-by-line budget.  If you really want to understand the budget, the best place to start is the Executive Summary.  Once you understand the “big picture” of what comprises our budget, then the rest of the detail makes more sense.  We’ve even color-coded the Executive Summary so that it corresponds to colors in the detailed part of the budget document.

On pages 14 and 15 the entire budget can be viewed as a pie chart (page 14) and as a set of numbers (page 15).  Both show the same main theme — the overwhelming portion of our budget is for salaries and benefits.  These two items total 77.6 percent of the proposed budget (pie chart, page 14).  In dollars, for example, the current budget for staff salaries alone is approximately $96 million (we employ approximately 1475 people, not all of whom are full-time).  We are a labor-intensive business and our budget reflects that.

On page 15 you can see that increased costs for salaries and benefits also make up the lion’s share of the requested increase.  For example, we are requesting approximately $98 million in salaries for next year, an increase of 2.19 percent.  This is almost all due to contracted salary increases across most of our employee groups of 2 percent.  More than half of our requested increase of 2.60 percent is for staff salaries (1.45 of the 2.60).  Employee benefit increases, mostly for pension and health insurance cost increases, account for about $950,000 of the increase, or another .65 of the 2.60.

In summary, of the 2.60 percent increase, 2.20 of it is for salaries and benefits for our employees.

The rest of the categories, represented in lines 3 through 11 on page 15, show increases or decreases but not nearly to the scale that the first two lines do.  Student transportation is going up approximately $560,000.  Our bus contract has a cost escalator of 3 percent built in and we needed buses to do more runs than anticipated this year and next.  There is little to nothing we can do to reduce this cost (last year, changing the high school start times to 7:30 am saved quite a bit of money, but no such change is available this year).  Add the transportation costs to the staff salaries and benefit increases and you basically have our 2.60 percent increase.  Everything else is basically a wash.

In the Executive Summary, the increase in a particular category is shown in two ways.  The first shows the percentage increase for that category.  A large percentage increase (or decrease) in a given category may not have that big of an effect on the overall budget if the category itself is a small expenditure (relatively speaking).  The next column shows the impact of the change on the overall percentage increase.  For example, there is a 7.6 percent increase requested in the Supplies/Materials/Texts category, but this increase only impacts the bottom line by .13 of a percent.

For each category in the Executive Summary, there is a detailed page with text explaining what is included in each category and, in most cases, why particular components of the category have changed.  This begins on page 17.  We’ll tackle a couple of those detail pages in the next installment.

This installment of “Budget 101″ deals with income.  While most of the focus in any budget review is on the expenses, revenue is an important component of our budget.  In total, we realize approximately $10 million per year in revenue related to providing education to the children of Fairfield.  Revenue is important because it helps to offset costs that otherwise would be carried in our operating budget (if the BOE receives it) or to offset the tax burden (if the Town receives it).

Of the $10 million, approximately $3.7 million goes directly to the Town.  The other $6.3 million goes directly to the Board of Education.  The sources of revenue could be Federal, State or local funds.  In our budget book, we detail the revenue by source and by whether it goes to the Town or to the Board of Education.

On the Town side, it’s pretty easy.  Virtually all of the revenue comes from the Education Cost Sharing (ECS) grant (just a bit more  than $3.6 million).  This grant is the largest transfer of state funds to local governments.  The idea is that this is the State’s way of helping towns pay for their education systems.  The whole way that ECS is calculated is antiquated and a virtual impossibility to figure out; it is also being reviewed by the legislature this year.  While the Board of Education does not receive this money directly, it has an indirect benefit because the Town does not need to raise the $3.6 million in taxes.

On the Board of Education side, we receive revenue from multiple sources.  Our largest State source of revenue is the Special Education Excess Cost Provision ($2.4 milllion).  This revenue is provided by the State to offset the cost of providing education to children with disabilities whose costs exceed 4.5 times the average per-pupil cost.  The State has not raised this funding in quite some time, so the amount we should receive by the formula is reduced to fit into the appropriated amount in the State budget.  This year, for example, we are estimating that we will receive 77 percent of our entitlement.

Our largest Federal revenue stream is also related to special education costs.  This is the so-called IDEA Grant.  “Part B” of IDEA is estimated at approximately $2 million.  This is the federal government’s contribution to our special education costs.  (The theory, at both the State and Federal levels, is that because the requirements to provide special education services result from State and Federal law, those entities should share in the cost.)   In addition, we receive revenue from No Child Left Behind (Title I of the Elementary and Secondary Education Act) in the amount of approximately $240,000.  Pages 6 and 7 of our budget book detail all of the funding we expect to receive.  As state and federal governments set their budgets after ours, revenue estimates can be notoriously volatile and can have an adverse impact on our operations in the following year if there are large deviations from our estimates.

All of the revenue received  by the Board of Education directly reduces our budget request to the Town.  Pages 8 through 11 detail exactly where we plan to spend this money.  For example, if we received no money for special education funding through the State’s Excess Cost Provision, then we would need to increase our budget by $2.4 million.  It’s not like we can cut those expenses if the grant doesn’t come through.  Fortunately, grant funding has been pretty stable through the years and large deviations are rare.  However, the unpredictability of the State and Federal government’s finances always makes revenue forecasting an inexact science.

Next:  Looking at the Big Picture via the Executive Summary