At the School Budget Hearing on May 1st, I read from prepared remarks which I was not quite able to finish. The complete remarks are published below. I will admit I was surprised to find my remarks well received by a diverse group of people: the head of the school district union, board members, an Assistant Superintendent, parents, PTA members, building principals, long-time budget skeptics and members of the Citizens Advisory Committee on the School Budget. Long-time readers will remark on the change from the days when board members literally walked out of the meeting room while I was speaking and shut off the lights, leaving me to speak to an empty room in the dark. [yes, that really happened]
One senior school official recently said that there was yet hope of “mainstreaming” me. In reply, I suggested that I was mainstreaming the district, that most people in New Rochelle agree with me — that the district is not well-administered, that spending is out of control and that the taxes are a crushing burden for many residents. I noted that it is not me who is being “mainstreamed” but that the ideas I have been pushing since 2008 — the need for greater transparency and accountability from a more activist school board — are now more widely understood and accepted. I am less critical and even supportive of the school board of late not because I am being “mainstreamed” but because the board is moving in the right direction. As the target of my criticism, the board was often easily convinced that I was critical of them for the sake of being critical. In fact, I was critical of them because they deserved to be criticized. Conversely, when they do the right thing they deserve to be praised. That is not “mainstreaming” but rather have a consistent approach that any good parent would recognize in a raising their children. It is sometimes called “giving credit where credit is due”.
My purpose at the Public Hearing was two fold.
1. To remind those agitating on the CAC report — suggesting the budget should be voted down because the report was not implemented immediately and in full — of the context in which this report was delivered, the time line and ask them for a little patience.
2. To raise for the first time an issue I intend to address over the course of the next year — tax stabilization.
The final few lines of my remarks contain what I see as the major logical tension between the CAC recommendations, the board’s statements of support for them and what Mr. Quinn had to say last week about tax stabilization. I see this as the key issue to be addressed first by the board BEFORE the CAC recommendations can be considered.
My remarks Tuesday follow:
I look at this issue along a continuum. Where we were 5 years ago, where we are today and where we would like to be 5 years from now.
I recognize that there are some who have been involved in the school budget process for many years, some who are entirely new to it and some, like me, somewhere in the middle.
I have been regularly attending board meetings since the 2007-2008 school year and in that time I can say that where we are today is a much better place than where we were 5 years ago. The people on this board are largely responsible for that although I would include former board president Sara Richmond as well.
For those like me who have been engaged in the annual budget process for the past few years, I trust you will agree that the process has been steadily improved from to year with improvements such as offering a series of budget review meetings, televising the meetings live, webcasting and archiving the meetings, taking online surveys, and putting the budget document online. These and other initiatives are still relatively new for the board. None of this existed in May 2008.
In 2012, for the first time, we have a Citizen Advisory Committee, a group of individuals, most of them anyway, who have very strong financial backgrounds, joined by the district treasurer and Mr. Lacher, the chair, and Mr. Hastie.
This committee, in 4 weeks, put together a well-crafted, highly detailed set of recommendations. They are to be applauded for that as is the board which created the committee and specifically Chrisanne Petrone for brining the idea forward, making it happen and supporting the work at every step.
Over the past month or so I have listened to a wide range of views on the work of the Citizen Advisory Committee. I have yet to hear anyone say they do not agree with the conclusions that drove the recommendations of the committee or that they oppose any of them. Mostly what I have heard is that the Committee did an excellent job in a short period of time and that the board has been supportive of the entire idea from conception to realization.
Mostly what I hear is WHEN not IF.
And what I have heard from the board is a commitment to this idea of a pilot program — and let’s recall that this was a test program — and a commitment to working in good faith to implement all feasible ideas.
In listening carefully to all sides in this discussion what has struck me is that any tensions that exist is not about whether the recommendations of the committee have merit – they do — or whether the ideas should be implemented or whether the committee should continue beyond this budget cycle.
Last week when Mr. Quinn spoke about the fund balance and reserves for tax appeals. He said that he first he takes money out of the operating budget and then, if that is still not enough, he takes money out of the designated fund balance set aside for that purpose. He said that this was done to achieve what he referred to as “tax stabilization”.
Ms. Petrone added that the alternative to tax stabilization was that taxes would gyrate up and down from year to year.
I am pretty sure she meant the level of tax increases would gyrate from year to year because, as we all know, school taxes have all gone one way for decades — UP!
The construct I understood from last week is that there is a priority given to tax stabilization and a statement was made that to do otherwise would be irresponsible. In this construct the tension is then between financial transparency and tax stabilization as described by Mr. Quinn which entails setting aside a cushion of funds within the various line items in the budget so that when necessary he can pull money out of those line items and apply as needed to whatever financial exigency occurs.
I think this is a false choice. Tax stabilization is not a financial strategy or an accounting method or a budget tool — it is a goal. Just as financial transparency is a goal.
The problem as I see it is that the board is giving Mr. Quinn a conflicting set of instructions — hide money in the budget in case we need it and be transparent with the budget.
The path towards resolving this tension is to understand tax stabilization as a goal. Once that is clear, a discussion of how best to achieve that goal can take place. The question is whether hiding money in the budget is the only way to have money set aside for the purpose of tax stabilization.
It is my sense that until the board frames the issue correctly, as I see it, and directs Mr. Quinn to develop alternatives to the current approach it will be impossible to reconcile the twin goals of financial transparency and tax stabilization.
I do not have an answer yet. As I spent six months last year giving speeches about the Fund Balance I will take time between now and next October to address the current notion of “tax stabilization”. I intend to do some research and determine if there are ways within SED policy in which the district can have some sort of “tax stabilization fund” or something that serves that function. If that’s possible then the size of that “fund” could be disclosed as a line item in the budget and the twin goals of transparency and tax stabilization can co-exist.
This idea that tax stabilization as currently achieved in New Rochelle was the major impediment to implementing the CAC report only occurred to me last week and I do not know what I will find when I began to do my research. I still have a lot to learn on this topic.
In the meantime, I will tell you that I am absolutely convinced that what Mr. Quinn has been doing is not proper. These two links on a recent OSC report on the Monroe-Woodbury school district, one very much like our own, which does very much what Mr. Quinn does in New Rochelle, largely justify those concerns.
Monroe-Woodbury School District slammed by state comptroller
How is Monroe-Woodbury CSD Different Than New Rochelle School System? Hint, they’re not.
The goal may be right but the means to the end are almost certainly not right. They are absolutely not consistent with the goal of financial transparency.
District Budgeting Process
I read Bob Cox’s report with great interest and I am particularly pleased to see that he will continue his search for balance while looking at alternatives to current accounting and reporting practices.
I will not contribute directly to the debate having little knowledge of the work of the CAC. But I am familiar with Comptroller DiNapoli’s modus operandi on such matter as well as the tendency seen especially in non-profits of creating reserve funds that are actually no more than contingency funds in the event of issues in budgets, projected income, expenses and the like and these are often tapped to bolster problems found in the expense budgets.
But, that said, Bob reports more optimistic news for the community and it is about time that the silent readership recognize what I feel the reconstituted school board is seeing, that this man is a great and enduring asset to New Rochelle. He deserves our thanks and with respect, he is not being “mainstreamed” at all. He is providing, along with others, myself included, with open and fair technique and analysis of a critical issue we have been facing for many years; the funding of our school district and its issues relative to performance.
He is absolutely correct in singling out the noted improvement in the school board in terms of their acceptance of their traditional role of oversight and policy. I too believe it started with Sara Richmond and has been amplified by Chrissane with promising results. I am particularly happy to see David Lacher and Jeffrey Hastie coming forward and we owe them support and appreciation.
This issue, while troublesome, can be addressed. Two critical context factors are transparency and city administration participation. The former should not be at issue especially in these times. Transparency is critical to the support of the community and we are seeing examples in related areas that did not exist before. There is a recent decision, for example, that is going to be landmark in opening up the records of cooperatives and condominiums on the very point of all facets, operating or capital funding, on shareholder equity. The school board should actually adopt the position intellectually that they too, are dealing with shareholder equity in terms of all facets of their financial budget and oversight process.
Reserve funding has a traditional use in standard accounting and often can be see in funds for capital improvement, bad debts, etc. It is difficult to associate a fund to protect the budget process in the event of exceeding or falling short on other oeprating expsnse forecasting. It is better to create a form of contingency expense line per annum that draws upon it if needed, or if overstated, applies to the next fiscal year budget to address a specific area.
We must also realize the close relationship between the city and the district, which sadly, exists mostly in a vacuum. A formal arrangement, such as a city liaision with trustee powers, should be appointed by the city council and placed on the school board. This open up many areas of mutual interest and concern… for example, it is foolish to ignore the impact of a school districts performance or reputation on a city’s ability to attract new commercial or residential tax payers. It is one of the two traditional areas investment bankers, venture capitalists, or just plain homebuyers look at. In addition, the board needs to feel somewhat buffeted by having a voice in Certiorari which, if not addressed more directly, will continue mostly as a back-door method of property assessment.
Of course we cannot avoid straightforward issues around capital improvements, securtiy, and the community should expect to be able to work with their council members on school issues as they would with other areas of concern.
Let me let it rest here and repeat my personal feelings of respect and admiration for Bob Cox, Chrissane Petrone, her colleagues, and wish Mr.Quinn every success in working out this issue.
warren gross
Democracy “Will Out”
Agree thoroughly with regard to improvements on school board.
The enhancements in transparency are plain and real. Just the creation of the citizens’ group is a good sign. I do not know if the city council version symbolizes the same thing, but as their reporting period is somewhat longer, we will have to wait.
Regardless of the efficacy of such formalized citizen input, the council needs to learn a lesson from the board in terms of hospitality and “user friendliness.” It just seems a bit easier to address the board and bring issues up for consideration. At City Council, members’ faces are drawn and inhospitable. Before the School Board, with a few notable exceptions, one gets the feeling that your patriotism and probity will not be questioned even if your questioning is pointed and direct.
That can only have come after some “D-Day-like” rhetorical and statistical “softening up” by this site and a handful of economic and managerial critics over the years. Thanks to these, representative democracy has gotten messier, nastier and a great deal more productive of philosophical and statistical truths. The debates have gotten more emphatic, but the end product has become more useful also.
There is a lesson in all this; democracy “will out,” but a bit of tempering by the latest in informational technology; web sites and blogs, will always help.