New Rochelle School District Offers Budget Long on Pay Increases and Short on Realistic Revenue Assumptions

Tonight (Tuesday) is Round Two of the Epic $230,000,000 School District Budget Battle. The tone-deaf district leadership has chosen the worst economic decline in three generations to propose the biggest school budget in the history of New Rochelle.

Because the District refused to provide the public with copies of the budget prior to the first meeting last Tuesday there was no opportunity for voters to to run the numbers and fact-check the budget as presented by Superintendents Richard Organisciak and John Quinn. As you will see, they have good reason to want prevent the public from getting a good look at the bloated monstrosity of a budget they are attempting to foist an apathetic public. Sadly, of the 46 people who attended the first budget meeting, 38 were District insiders. Just five members of the pubic came forward to ask a question during the paltry 3 minutes offered for public Q & A.

Despite repeated requests, the school district has so far refused to make available a scanned PDF version of the school budget. To make sure as many people as possible get a good look at what the District is proposing for the budget vote on May 19, 2009, I took the trouble of scanning my marked up version of the budget. So, please excuse all the hand-written notes, you can still get a good sense of what’s going on over at the Central Office.

This is good-sized document so you if you want to view it in your browser click on the “Optimized PDF” and give it about 10-15 seconds to open on a broadband connection. If you want a hard copy version you will be better off right-clicking on the “Print-Ready PDF” link and saving the file to your computer first and then printing it.

Optimized PDF: City School District of New Rochelle 2009-10 Proposed Budget

Print-Ready PDF: City School District of New Rochelle 2009-10 Proposed Budget

The spin on the budget from apparatchiks at City Hall is that it is a “maintenance budget” which is supposed to convince voters that they have cut spending to the bone. Don’t believe it for a minute. As you will see there are healthy salary increases for everyone, de minimus headcount reduction (7 full-time equivalent positions out of roughly 1,500 employees). Overall, salaries are going up 4.5% and benefits are going up 5.0%. The Superintendent’s salary is going up 5.4%. The fees set aside for lawyers is going up a whopping 87.5%.

At the budget meeting last week I was scrambling to listen to the presentation, fact-check the numbers and tried to rapidly digest over 100 pages of budget numbers so when the public Q & A began I was only able to prepare one meaningful question. I first outlined my understanding of what I saw as 4 Key Variables upon which the District was claiming it could raise the budget “just” 3.75% with a tax increase of “only” 4.9%. Here they are:

Variable #1 Property Assessments The biggest variable is the assumption about property assessments. Property taxes account for 74% of the total budget, about $180 mm. On Page VIII, the District assumes that the decline in assessed value of property in New Rochelle will be 1.41% which is basically the same as the figure for the year before (1.40%). It is this assumption which forms the basis for the amount of tax increase they claim will be necessary to fund the $180 mm they say they need. The assessment process begins in June when residents can file appeals and is finalized in September when the annual assessment total is released. Does anyone believe that with the collapse of stock prices, rising unemployment, bank failures, bankruptcies and the destruction of Wall Street, it is reasonable to assume that the assessed value of property in New Rochelle will decline at the same rate it declined last year?

Variable #2 Union Contracts The School District says it has until June 30th to complete labor negotiations with the unions. When a voter asked last Tuesday what sort of assumptions the City made in the budget about salaries and benefits for teachers, administrators and other employees, Quinn hedged. Cindy Babcock-Deutsch cut him off and told him not to answer. Meanwhile, Marty Daly (teachers union) and Bill Evans (principals union) sat silently and watched in a calm, relaxed manner. The District took the seemingly reasonable position that they could not disclose their assumptions while they were in the middle of negotiations but few with knowledge of how these deals get done believe anything other than that a deal is already baked into the budget. Voters are never going to be told the deal made with the unions because the District does not announce these sorts of things but certainly not until after the vote on May 19th.

Of course, if the goal was to keep the budgeted increases secret then the district failed because anyone with a #2 pencil can calculate the changes in salary and benefits in the proposed budget. The amount requested is about $130 mm or 54% of the budget but the District refuses to answer any questions about it. And why might that be? As noted above, salaries are going up 4.5% and benefits are going up 5.0% and the superintendent’s salary is going up 5.4%. But there is more — much more. The District Clerk is going up 8.9%. The Finance Department is going up 15.6%. The Treasurer up 8.8%. The Public Information Officer is going up 10.0%. The two Superintendents with responsibility for curriculum development are combined in one salary line item which is going up 9.4%. Principals are going up 6.5%. Page 52 of the budget lists the amounts for teachers at each school. Columbus, Trinity and Webster are all seeing double-digit growth in salaries with Webster getting an astonishing 34% increase over last year. Setting aside Webster, the other nine schools are getting salary increases of no less than 4.6% and up to 14.5%.

We are in a historic period of DEFLATION – the real value of assets is declining and the Consumer Price Index is the lowest it has been in decades. To help folks better understand this, if inflation is running at 4% and you get a 4% pay increase your real wage has not changed because although you have more money in your pocket, your are spending that extra money on higher priced groceries. In a negative inflation environment, a pay freeze – zero percent increase – INCREASES your real wage because although you have the same money your groceries cost less. In fact, school district bargaining units throughout the county have been agreeing to unilateral pay freezes in order to preserve jobs. In New Rochelle, they want both – everyone keeps their job, and they get pay increases and increases in benefits packages. With this in mind, take a look at the most recent chart of government inflation data — inflation has turned negative:

Of course there are some cuts: librarians (-20.5%), music (-13.8%), ESL (-9.3%) and reading (-7.2%) are all getting cut. Given that 50% of hispanic students at New Rochelle High School failed to graduate within four years, is this really a time to be cutting ESL support for these students?

Variable #3 Restoration of Cut in State Aid New York State cut $4.2 mm in funding for New Rochelle schools. Governor Patterson has mentioned the possibility that some or all of this money will be restored under the stimulus plan. This remains to be seen and so for now this money is not part of the budget.

Variable #4 Direct Requests for Stimulus Funds by the School District The school district declined to provide any information about any requests for stimulus money they may or may not have made.

After laying out these four very large variables, I asked Quinn to explain the basis for the District’s certitude that “only” a 4.9% tax increase would be needed to fund the $230,000,000 budget. Before he could give an answer, School Board member David Lacher interrupted and chewed up the remainder of my three minutes and about another five minutes on top of that. His answer, however, was well worth the wait. It was the most honest, refreshing answer to a question I have ever seen provided by anyone associated with the school district. There is a video tape of the meeting so when the District releases that video (ha!) you can see his exact answer but basically he said that the reason they tell people there is going to be a 4.9% tax increase is because “that is what people want to know”. He then elaborated saying that when the newspapers calls that’s what they want to know and we have to give them a number so we give them one but that he agreed with the premise of my question and acknowledged that there was no way to know what the actual increase was going to need to be to support a $180 mm in revenue.

In other words — they admit to making up the 4.9% figure. It could be twice that or more.

I am sure we have readers who are better at math and budget economics than I am so perhaps someone can do the calculations to prepare a table to explain what the impact would be on the tax increase if, for example, the decline in assessments is MORE THAN 1.41%. I do know this, on $300,000,000 a single basis point is worth $30,000. So every little tick that Mr. Quinn is off in his assumption is more of a tax increase needed to get to the $180 mm figure in the budget coming from property tax. The trick for the District is locking in voters with a $230 mm budget in May then figuring out how they are going to reach into people’s pockets to harvest the $180 mm in tax revenue that a gullible public had already approved. And for those who don’t own a home, do not be fooled by the “class warfare” rhetoric, increased on property taxes means that higher costs for commercial property meaning stores will charge more to cover increased premises costs and landlords will raise rent. A falling tide sinks all boats.

The problem is that the District approaches budgeting by starting with how much of an increase they want and sorting out the rest of the “details” later. It obviously never occurs to anyone running the District to start with how much a tax increase residents can afford and then develop a budget based on living within their means. I would venture to guess that in the current economic climate many voters would argue that the District should start by determining how much money they get assuming a zero percent tax increase and back into spending plans. It might even help some over there to develop a back bone and start to push back on the never-ending demands for massive, annual pay increases for district employees.

As the budget battle plays out, it will be good for newcomers to disabuse themselves now of any ideas about independence among the various stakeholders feeding at the public school trough. Checks and balances do not exist in New Rochelle — the school board, the Superintendent, the bureaucracy, the no-bid lawyers at Kehl,Katize, the unions and the PTA are all part of the same military-industrial complex that have ruled over annual budget increases and generous union contracts for decades. Sadly, so long as just 10 people are willing to show up and challenge what they are doing they are going to continue to get away with it. Obviously they are counting on that because tonight’s meeting is being held in the tiny Carew Room at City Hall which is easily filled for regular school board meetings by board members, department heads and other district bureaucrats.

QUESTIONS I WOULD LIKE TO SEE ANSWERED

[Please add your own in the comments section; for those planning on attending the budget meetings consider taking one of our questions with you and asking it of the district so we can get them on the record]

If there is an 11% cut in the supplies budget, how do you expect the difference will be made up next fall? How much will teachers be expected to reach into their own pocket? How much will parents be expected to provide? Last year, for example, Barnard parents were asked to provide $85 worth of supplies per child including items like Windex and photo copy paper — not exactly crayons and glue sticks.

Why are you willing to provide details — and spend so much time talking about — an 11% decrease in the supplies budget when supplies represent just 1.91% of the budget? An 11% decrease in 1.91% of the budget represents 0.21% of the budget whereas salaries and benefits are 54% of the budget and you will not talk about them at all.

The budget document does explain anything about the cost of the proposed full-day Kindergarten program as described by Mr. Quinn on March 3rd. This is the program that Richard Organisciak, Jeffrey Kortsoff and others have been using to scare parents of younger children into getting out to vote for the budget. At that meeting Quinn presented the following accounting of what it will cost to have full-day Kindergarten for all students starting next year:

Construction – $240,000 (1 time expense)
Transportation – $225,000 (ongoing expense)
Teachers – Zero
Aides – $110,000 (ongoing expense)
Furniture, Fixtures, Supplies – $414,375 (1 time expense)

TOTAL – $989,375

He reported that the State, in order to encourage districts to make the conversion to full-day Kindergarten, provides for a special one-time payment to cover the cost of conversion (Construction, Furniture, Fixtures, Supplies) so the District will be reimbursed for $654,375 in the 2009-10 school year. Also, the amount of state aid will increase for students who were half-time and are now full-time under the new program which will further off-set the cost. What he did not acknowledge is that the student/teacher ratio will be roughly doubled so the educational experience will be significantly diluted.

What is also not made clear is what is going on with that $414,375 for Furniture, Fixtures, Supplies. Is that part of the remaining 89% budget for supplies or is this being treated as a separate line item? If so, that would mean that the “cut” of 11% of supplies budget ($517,000 out of $4.7mm) is not really an 11% cut but more like a 2% cut in the supplies budget.

I am looking at Page 37 of the budget and do not see any indication that insurance premiums have been reduced by $200,000. I see that insurance for general and legal liability, automative, building and contents and pupil accident insurance is going UP $500,000 (Unallocated Insurance). So, where is the $200,000? If it is there, what coverage did the District give up in order to get a $200,000 reduction in insurance premiums? What risks are involved in not having certain coverages? If there is no risk then why did the District have the coverage in the first place?

How do you effectively negotiate with the unions when you hand them a copy of the budget with all of the assumptions about salaries and benefits included in the budget document? Even though the District has until June 30th to complete negotiations why not create a self-imposted deadline to complete negotiation before March so that that agreed upon salary and benefit figures can be incorporated into the budget document before it is distributed and long before the budget is put up for a vote so people can have greater certainty on the 54% of the budget represented by salaries and benefits?

Do you intend to put an electronic/PDF version of the budget up on the school district’s web site? Will you put up the Word documents and Excel spreadsheets that were used to prepare the document so that voters can run their own financial scenarios? If the District really wants to save money, why have you not uploaded a PDF version of the budget so that voters can print their own copies or simply read them online without printing them at all?

Will the video made of the March 3rd budget meeting be made available on the District’s web site? Will the slide show presented by Mr. Quinn at the March 3rd budget meeting be made available on the District’s web site?

The administrative unions in three of the 27 local districts — Ossining, Armonk/Byram Hills and Katonah — have already agreed to a unilateral pay freeze in order to show support for their community in these tough economic times. What sacrifices are being made by administrators in New Rochelle? Or anyone else working for the District for that matter?

Mr. Quinn announced that the District is planning on “budget efficiencies” totaling $924,000 coming primarily from turning out the lights at the schools, turning off all 4,000 computers each night, and reducing insurance premiums. As these things were all possible prior to the 2009-2010 school year, doesn’t this imply that the District has been throwing close to a million dollars a year on wasteful electricity consumption and inflated insurance premiums? As the “green” initiatives are already in place this year, what is the District doing with the $700,000 it “unexpectedly” saved this year by turning off lights and computers. Was that money used to reduce property taxes in 2008-09 or was it set aside to reduce property taxes in 2009-10?

If New York State adds back the $4,183,000 that has been cut from State aid, how will that money be applied? Will be it used to increase spending from $230 mm to $234 mm? Are there some hidden holes in the budget where that money will be shoved into? Will the District reduce the $180 mm it is seeking from property taxes and so require a small tax increase from property owners? What guarantee do voters have that this money will be used as you now say?

The budget documents projects an increase of 1.74% in student enrollment (185 students) for 2009-10. This would be the largest increase in more than a decade.. Missing from the enrollment analysis is the broader context — the total number of school age children in New Rochelle including students in the public school, private schools, parochial schools and home-schooled. Have you considered that due to financial considerations many families may be forced to pull their kids from private/parochial schools and place them in the public schools? How do assumptions about student enrollment impact the cost assumptions? If you are planning on this many students why are FTE teachers only going up 2.6? What is the basis for these assumptions?

The budget talks about $2mm for intratransfers for construction aid. Does this mean that you have submitted requests to New York State for “shovel ready” projects in order to get some of the stimulus money? If so, what projects have been proposed, how much are they and what is the cost/benefit analysis?

Why is Special Education spending $40,000 on culinary cooking classes?

On page I of the budget, “community services” is broken out separately even thought it is a tiny fraction of the other three line items General Support, Instruction, Transportation, Undistributed? Why does it get its own line item?

On page I of the budget, “Undistributed” accounts for $62 mm; what does “Undistributed” mean?

At Mr. Organisciak’s request, the school board recently voted to decline to participate in a national Newsweek survey of high schools in the United States on the grounds that the analysis was unfair to New Rochelle because it compared New Rochelle High School with schools with far less diverse student populations. This argument is often made by the district that it is unfair to compare New Rochelle to school districts like Rye, Scarsdale and Irvington. The argument is made that New Rochelle should be compared to schools like White Plains, Yonkers and Mount Vernon. Yet, in the budget the school district does exactly what it often complains about — the cost per pupil in New Rochelle is compared against every other district in Westchester and Putnam County including Rye, Scarsdale and Irvington in order to “prove” that New Rochelle cost per pupil is among the lowest in the county (presumable matched by White Plains, Yonkers and Mount Vernon in that order). Isn’t the District trying to have it both ways here — make comparisons to all school districts when it is seen as to the district’s advantage and railing against the exact same comparisons when it is seen as to the district’s disadvantage? If you are going to include a comprehensive analysis like this for spending per pupil why not include a similarly comprehensive analysis New York State Report Card data like standardized test scores and violent incidents so voters can evaluate what sort of “bang for the buck” they are getting for the $1 billion spent by the District over the past 4 years.

On Page VII, why is “legal services” listed under staff? Why is there a 43% increase of $139,000.

Mr. Organisciak has 2 FTE administrative assistants to help him run the entire school district so why do 3 department heads (Special Education, Pupil Services, Health Services), that are two levels below him on the organization chart, share among them 18.5 FTE administrative assistants. Special Education alone has 12 FTE administrative assistants, 7 of whom are listed as holding “data entry” positions. Why is there a need for ANY “data entry” administrative assistants at all since the district moved to the IEP Direct computer system more than five years ago and all of the data entry for filing IEPs and 504s is done by instructional personnel (social workers, psychologist, nurses, teachers, special educators, etc.).