First, since my last post the Legislature has approved a budget.  Based on the information we currently have, we will be cut the following amounts if the sales tax increase passes on May 18th: $52,673 for teacher experience index; $41,750 for tuition; $204,512 for loss of enrollment; $152,527 for soft capital; and $177,138 for full-day kindergarten.  This is a total cut of $628,600, of which $476,073 is M&O.  These cuts are in addition to the continued suspension of building renewal money and excess utility money.  Building renewal money is a $420,000 loss to us.  (Remember, $210,000 of the building renewal money was first suspended in the 2007-08 school year, with the full $420,000 suspended each year since.  This is the money that was designated for maintenance and repair of our buildings.)  Excess utility money has also been suspended since the 2007-08 school year when it totaled $193,000 to us.  (Remember, excess utilities represent the difference between what we currently spend on utilities compared to what we spent in 1985.)  In addition to these cuts to our budget, we will lose another $100,875 in state grant dollars that pay for gifted education and preschool programming.  Finally, the state is delaying their financial payment to us for April, May, and June, totaling $1,459,659.  This will cause a cash flow problem and will require us to borrow from and pay interest to a bank until the state releases our funds (expected in July).

If the sales tax increase fails on May 18th, we have all of the cuts listed above plus: an additional $82,125 in soft capital; $274,909 in hard capital; and $137,171 in our base level support.  These additional cuts, combined with those listed above, make the grand total $1,122,805.

I will be sending out a letter with more information regarding what these cuts mean to us and describing the specific categories, but wanted to give you an idea of the enormous challenge we face.

Regarding the more immediate issue within our district, the Governing Board will be holding a meeting tomorrow night, March 30th, at 6:30 in the District Auditorium to discuss and possibly take action on financial savings for the District.  Options to provide financial savings to the District will be considered, including designating Mammoth Elementary School (one wing) as a STEM School and First Avenue Elementary School to serve students throughout the District; salary reduction; reduction in force; reorganization of school resources; and reduction of school programs.  I encourage anyone who has an opinion on this topic to address the Board in “Call to the Public.”  In order to do so, any individual wishing to address the Board must fill out a request prior to the beginning of the Board meeting.  Requests can be obtained in my office and will also be available at the front door prior to the beginning of the meeting.

Finally, separate from the issue to be discussed tomorrow night, we must prepare for the event that the sales tax does not pass on May 18th.  In order to do so, the Board voted to hold a public hearing on April 13th, 2010 in order to hear public comment on the possible closing of a school or schools next year.  THIS PUBLIC HEARING WILL NOT TAKE PLACE ON APRIL 13TH.  At the April 8, 2010 Governing Board meeting, it will be rescheduled for a later date.  Once the new date for the Public Hearing has been sent I will post it in this blog, on our web site, in each school, and will send home a written announcement with each student so that everyone is clear about the revised date.

The legislature was supposed to come out with two budgets last week: one if the sales tax passes on May 18th and one if it fails.  They didn’t have the votes necessary to get the proposals passed, so they will try again this week.  They have suspended all committee work until a budget is proposed.  Last week I received information from two different sources that say they are close, so hopefully this week we will hear something.  Once we hear what the legislative proposal is I will post what the impact to us is.  I can tell you that the Governor’s proposed budget assumes the sales tax will pass on May 18th.  In her budget proposal, she eliminates funding for full day K ($177,141 to us); she eliminates all soft capital funding ($238,883 to us); and she proposes to reduce CORL funding (approx $245,000 to us).  These reductions are in addition to our loss of $227,322 due to decreased enrollment.  Remember her budget assumes the sales tax will pass.  I am posting below some information about the sales tax vote that was sent out by the Arizona School Administrator’s Association.  Once the legislature announces their proposed budget, I will post what the impact to us will be if the sales tax fails (preliminary figures look like we would have to cut over $2 million).

As for this year, on Tuesday, March 2nd, we were informed that they cut us $144,555.79 from this year’s soft capital allocation.  We were also told that they are probably going to withhold our last three payments until after July 1st.  This amounts to $1.4 million to us and will obviously cause a cash flow issue.  This will not directly impact employees at this time because we took out a line of credit in case this happened.  To date we have not used the line of credit, but if they truly withhold three payments we will almost certainly have to.  The problem with this is just like if you personally take out a loan: you pay back what you borrow plus interest.

Important Information on the May 18^th

1% Sales Tax Vote – Proposition 100

Read below for a Q and A about the Sales Tax ballot measure on May 18, 2010.

Q.       What is the One Cent Sales Tax proposal?

A.       The temporary sales tax would be one percent or one cent per dollar.

• It would be in effect for three years, from June 1, 2010, to May 31, 2013.
• The sales tax is expected to generate $2.9 billion in revenues over three years.
• Two-thirds of that sales tax revenue – or $1.9 billion – would go to K-12 public education.

Q.       Will the Sales Tax initiative solve the States’ deficit?

A.       The sales tax does not solve the state’s deficit, but is a critically important part of the solution.

Q.       How much of the Sales Tax Initiative will go for education?

A.       The May 18^th election requires that two-thirds of the revenue generated by the sales tax increase to go to support “PUBLIC PRIMARY AND SECONDARY EDUCATION.”  Based on the expenditures proposed in the Governor’s 2011 budget, the projected $898 million in revenue would be allocated as follows:

Primary education             $695 million

Secondary education         $203 million

Q.       Why is the One Cent Sales Tax important to Arizonans?

A.       The Governor’s budget assumes the passage of the one cent sales tax. The total proposed expenditures in the Governor’s budget are $8.6 billion, of which $898 million is supported from the revenues generated by the sales tax increase.

Q.       What happens if the sales tax initiative fails?

A.       K-12 education would be looking at a 20% reduction in state support for school district operating budgets. This will mean devastating cuts to public education including fewer resources, loss of jobs and programs, higher class sizes and students who will not be prepared to compete in the global economy of the future.

Q.       What else do I need to know about the sales tax proposal?

A.       To register to VOTE and or apply to receive a permanent early ballot, visit your county board of elections.  The last day to register to vote is April 19, 2010.  Early voting begins on April 22, 2010; the last day to request an early ballot is May 7, 2010.

Q.       How can I stay informed?

A.       The Arizona Education Network will post current information at – www.arizonaeducationnetwork.com

RUMOR: The school district is paying for Ms. Barajas’s doctorate program.

FACT: The school district has not paid one penny towards her doctorate program, nor intends to.

RUMOR: The only reason MES is going to have a STEM wing is that it is a thesis project for Ms. Barajas.

FACT: Having a STEM wing in MES has nothing to do with a thesis.  All doctoral students are required to do a dissertation.  Ms. Barajas is working on a doctorate in Educational Leadership.  When she is at the stage of writing her dissertation (2 or more years from now) by requirement it will be about educational leadership theory, not about a STEM school.  The STEM initiative in our district was publicly discussed for over a year – long before it could be predicted that Ms. Barajas would be working on a superintendent internship.  I delegated this project to her because she will be the only elementary principal left in our district next year, because she has had the opportunity to visit elementary STEM schools in several states, because she has read and understands the empirical research behind the success of the STEM initiative, and because she has the dedication, competence, and skills necessary to work with staff to make this successful.  Is it counting towards her superintendent internship? Yes.  Is it a requirement for her doctorate? No.

RUMOR: We would violate fire code by exceeding capacities as set by the Schools Facility Board.

FACT: Exceeding capacities set by the Schools Facility Board is not a fire code violation.  We have our schools regularly inspected to ensure the safety of our students, parents, and employees – and will continue to do so.  I explained that I use those capacities because that is what the State recognizes.  They represent capacity as determined by everything under a roof.  This includes things like offices, gyms, and cafeterias.  The purpose of those capacities is for funding purposes, not to determine fire code standards.  Before funding was cut, you had to demonstrate that you exceeded those capacities in all schools in the district before you were eligible to build a new school.   In the forums I also explained that when you look at functional capacities (i.e. the number of classrooms), both First Ave and MES would be able to accomodate our kids – and still maintain our target ratio of 18 in K; 21 in grades 1-3; and 24 in grades 4-6.

The main purpose of the forums is to explain how we will implement the plan of MES having a wing designated as a STEM (Science, Technology, Engineering, Math) School and First Ave designated as a more traditional school with a STEM emphasis.

Why Mammoth? You will see in that PowerPoint many of the same things that have been repeated in this blog.  As the financial challenges get more and more difficult, we have to stay focused on providing the best education possible for our students.  The framework to make these difficult decisions has remained constant: protect student academics, student programs, disrupt as few as possible, and impact the staff as little as possible.

Why Mammoth?  All of the reasons are given in the PowerPoint slides titled “Benefits”.  Those benefits include addressing our financial situation; maintaining class sizes; disrupting as few kids as possible; and not just maintaining academics, but actually improving them.  Why Mammoth?  Maybe the most important reason is because from the very inception of the STEM concept it was presented as an opportunity to have Mammoth Elementary be the showcase of our district (stated in the PowerPoint slide as a model school for the State).    This is an opportunity to have Mammoth Elementary be the first elementary STEM school in all of Arizona.  This is an opportunity for the students lucky enough to attend Mammoth to receive a world-class education from some of our best and brightest teachers.  This is not about taking resources away from Mammoth.  It is exactly the opposite – it provides an opportunity for Mammoth Elementary to raise the academic bar for our entire district.

You are correct in stating that the specific option of keeping a wing open at Mammoth was never mentioned, but that closing an entire school has been discussed.  But what has been consistently stated is the overall philosophy of stretching what we have for as long as possible – no drastic ups and downs.  Once we determined the amount of money that we know we will lose and what we are fairly certain we will lose (amounts given in a previous post), then we were able to put together this plan that keeps both schools open and allows us to absorb the cuts we face.  That recommendation is consistent with the philosophy of no drastic ups and downs, and I honestly thought all would agree that it is a better option than closing a school entirely.  (I appreciate that you personally noted that in your post.)  When you talk of “underutilizing” MES by keeping only one wing open, that is exactly the strategy behind the plan.  We are currently operating MES at 33% capacity and yet running utilities for the entire campus.  We simply can no longer afford to operate a school at that low of a capacity.  We don’t have enough K-6 students in the district to operate two schools with both of them at a reasonable capacity, thus the recommendation to the Board to either close a school entirely (whether it be First Ave or MES), or be more efficient and reduce the utility costs by consolidating students to one wing.  Yes, it is a plus that MES has a cafeteria and a gym.  But at the same time that is a negative because those are the two largest consumers of electricity and gas.

Dr. Wiseley’s post did explain how we could make Mammoth Elementary work as the more traditional school and put STEM at First Avenue; and also pointed out that some of the options he suggests would cost money to implement.  These decisions are being made because the cuts I’ve previously listed are real and severe, and we are not in a position to be spending additional money when we believe we have another building that can work without additional costs.

We recognize that there are many parents, staff, and students that are anxious about the changes that are taking place next year in our elementary schools.  Those changes include Mammoth Elementary School being designated as a STEM (Science, Technology, Engineering, Math) School and First Avenue Elementary School remaining a more traditional school with a STEM emphasis.

In order to share the information we currently have, we are going to hold a public forum on Tuesday, February 23^rd in the Mammoth Elementary School cafeteria and one on Wednesday, February 24th in the San Manuel auditorium.  Both forums will begin at 6:00 p.m.  The purpose of the forums is to help people understand what the vision for the STEM school is; and to discuss topics such as how students will be selected, how staff will be selected, transportation concerns, etc.

The Governor’s proposal included the following things that would directly impact us: funding a 0.9% increase in students and provide a 1.3% inflation factor for FY2011; suspend the new utility funding formula again for FY2011; reduce soft capital by $180 million for FY2011  (a 25% increase in the soft capital cut from FY2010); eliminate funding for full-day kindergarten; continue the suspension of funding for the Building Renewal Formula for FY2011; withhold 3 months of payments to us until after July 1; and eliminate state grant programs for AIMS Intervention, Adult Education and GED, Chemical Abuse, Disabled Pupil Scholarships, Compensatory Instruction Fund, Gifted Support, State Early Education Block Grant and teacher training.

The Legislature proposal for this year includes the following things that would directly impact us: not paying us for 3 months until after July 1; sweep any cash balances; and suspend all soft capital funding for this year.  For next year, the Legislature proposal includes: a lump sum reduction (no specifics given); provide no base level increase; suspend soft capital funding; eliminate funding for full-day kindergarten; reduce the school year by 5 days; and phase out the teacher experience index funding.

Again, let me emphasize that these are ideas being presented at this time and nothing has been approved.  One area that is gaining a lot of attention right now is the Governor’s recommendation to eliminate the state grants.  The proposal is to eliminate funding for these programs effective January 1, 2010.  This means that if the Legislature approves, we would lose 50% of our funding for these programs for this year (FY2010) and all of the funding for next year (FY2011).  You might have read where districts are in the negative if they make these cuts retroactive to January 1st.  In our district we manage those grant monies such that we are not in the negative and will make it through the remainder of this year without interruption to services or cuts to people.  We do this by spending only the money we actually receive; and remember, by spending our cash last year, we positioned ourselves to take unexpected cuts like these.

In my last post I talked about the possibility of the “Maintenance of Effort” (MOE) not having to be adhered to because the stimulus money was already spent.  Just recently a correction was sent out stating that the stimulus money has NOT all been spent – therefore it appears that ignoring the MOE is not an option at this time.

What does this all mean to us?  We won’t know until they start approving some of these proposals.  But based on what is being discussed, I am still confident that we will be able to get through this year without reducing staff or salaries.  As for next year, I am working on presenting some options to the Governing Board at the February 9th meeting.  Once I get some guidance from them I will post an update here and also meet with district employees.

On another note, there has been talk in the media about the State issuing IOU’s to state employees. School employees are not considered state employees and therefore would not be impacted if the State does start issuing IOU’s.

While nationally, the economic recovery is happening, albeit at a slower rate than first believed, Arizona’s October was a particularly poor revenue collection month with the economy continuing to contract. There were some positive indicators such as the increase in private sector employment.  They were focused in three industries: employment services, retail trade, and food service. At the same time, persons on AHCCCS increased by nearly 26,000 in the month of November alone.

Arizona Revenues:

• October collections were down 23.8% from October of last year; 15th consecutive month of double-digit declines in General Fund revenue collections; and $142 million BELOW the budget forecast for FY10
• Sales Tax collections were down 17.6% from October of last year; 9.1% year-to-date (four months) below forecast
• Income Tax collections were down 34.6% from October of last year; 18.8% year-to-date (four months) below forecast
• Corporate Income tax collections were down 11.1% from October of last year; 35.2% year-to-date below forecast

• With the action of the 4th Special Session that included $144 million in soft capital cuts, JLBC is estimating that Arizona will still face a $1.6 billion shortfall IN THIS CURRENT FISCAL YEAR with the possibility of this estimate to rise by January.

Other Key Arizona Indicators:

• The most recent release of economic indicators suggests that while the state’s economy is still contracting it is doing so at a slower rate than in recent months
• 13,200 jobs were added in October; however, Arizona has lost 10.7% of its workforce since the recession began in December 2007
• Private sector jobs have expanded for the first time since February 2008, while government jobs are contracting
• Unemployment rate increased from 9.1% to 9.3% in October – the highest reading in more than 26 years
• Initial claims for unemployment insurance has moderated over the past few months, with October’s year-over-year increase of 2% being the lowest in 3 years
• AHCCCS (Arizona’s Medicaid Program) caseloads have increased 1.9% from the previous month; 19.2% caseload increase from November 2008
• There are now 354,798 more Arizonans on AHCCCS than there are children in Arizona public schools

For those MSM employees reading this, below are the results of the surveys that were returned on or before November 20th. I continue to remain hopeful that we will not need to implement mid-year cuts, but will not know for sure until the Legislature convenes in January and we see if there will be more cuts to K-12.