Frisco ISD has joined with many other districts to adopt resolutions acknowledging that education must be a priority in this legislative session. As preliminary budgets have surfaced from the House and Senate, many of those worst case scenarios show a district like FISD facing the most devastating shortfalls. We believe the Legislature will work hard for the schoolchildren of Texas and we believe they know that districts are working hard to prepare for some reductions in revenue.

We ask that they please give strong consideration to using some reserves from what has become commonly known as the “Rainy Day Fund.” This fund is actually the result of the Economic Stabilization Act and is comprised of excess oil and gas production tax revenues which are deposited annually. A reasonable utilization of “Rainy Day Funds” would be to fund student enrollment growth, which is very important to Frisco ISD.

We also ask that legislators rework the “Business Franchise Tax” to close the loopholes that have prevented it from replacing the revenue lost from the 1/3 “buy-down” of the property tax rate for maintenance and operations. We are not advocating a new tax - just the utilization of the tax that is already in place in the way that it was intended.

We are continuing to look at all revenue scenarios and all areas of operation to determine potential cost savings/efficiency plans as we keep a close eye on discussions and actions in Austin regarding funding. (See the board highlights area and view February, March and April notes and videos to see what has been discussed so far.) At the May Board meeting, we will continue to review cost-savings and revenue generating measures, particularly those that can be implemented that have the least impact on the classroom, as we prepare a budget for adoption in late June. As we all know, schools are a people intensive business and that is where the most savings can be realized, however, because we are still growing and adding students, our hope is that if any reductions have to be made in personnel that those can be made through not replacing those who retire and resign. Because we are adding 3,200 to 4,000 students next year, we are in essence reducing our force by not hiring the 3-400 new employees we would normally hire to serve the needs of these new students. We will continue to contact our legislators regarding funding scenarios to encourage them to keep education a priority. We are among many districts that have adopted a resolution regarding making education a priority. See resolution. Please refer to Dr. Reedy’s letter he issued in January.

At this time, we are encouraging the House members to look closely at the Senate budget bill. Although there are varying models of how funds would be distributed to education, the best case scenario in the Senate’s plan of reducing education funding by 6 percent next year would mean a net loss of $3-5 million in our district. This means we would have to absorb and meet the needs of 3,500 students with $3-5 million less than we are currently spending. Cuts will be painful, but we could survive that and continue to provide a quality education for students. The House Bill of 11.63 percent less funding to education would mean a $15-16 million net reduction of our current revenue in the best scenario. Having to meet the needs of 3,500 more students makes that decrease in funding more like $32-33 million, which would be devastating. Dr. Reedy states that none of this is good news, but that the Senate Bill is preferred.

If citizens would like to follow legislation or contact their legislator, information can be found at - www.capitol.state.tx.us

Questions and Answers regarding state school finance and the current budget crisis –

We will use this question and answer format to provide background information on the school funding issues and to clarify some statements that have been made through various media outlets.

In a column written by the Speaker of the House that ran in the Dallas Morning News in June, the speaker made the following statement – “Texans may be surprised to learn that the state budget being finalized during this special session will provide $1.6 billion more dollars directly to our state’s public schools than the last budget. Though we were not able to fund growth, in a year of real and deep budget cuts in most areas, our school districts will get a 5.6 percent increase in state funding, from $27.6 billion in the current two-year budget cycle to $29.2 billion for 2012-13.
That’s because even in lean times and during one of the most difficult budget challenges our state has ever faced, legislators made Texas schoolchildren our highest priority.”

On face value it does appear, the state is appropriating $1.6 billion more in state general revenue funds (excluding recapture, the property tax relief fund, and the state fiscal stabilization fund) for the operation of the Foundation School Program.

But this does not take into account the cost needed to cover student growth (about $2 billion), replacement of the State Fiscal Stabilization Funds ($3.25 billion) and the money needed to cover the cost of declining property values (roughly $2 billion). To even get to the $1.6 billion additional funds, the state has to delay the August payment in 2013 (worth $2.3 billion) and assume faster property value growth than the Comptroller estimated ($800 million)

The other aspect of funding that no one is talking about is reductions to non-FSP grant programs. Over $1.3 billion was cut from grants, including $271 million from the technology allotment, $223 million from pre-k grants, $270 million from student success initiative, $345 million from DATE, and $50 million from New Instructional Facilities Allotment. This is less money that is coming to school districts and will mean either an increase in ISD budgets or cut programs.

Some elected officials are couching the current budget crisis as an expenditure problem and not a revenue problem. Governor Perry stated in his Feb. 8 State of the State address that, “Over the past decade, the state's share of public education spending increased from $11 billion per year, to $20 billion in '09. That's an 82% increase.”

According to the Academic Excellence Indicator System (AEIS) Report published by the Texas Education Agency, the state’s share of the total funding – compared to all sources including local, state and federal – actually decreased from 46 percent to 43 percent. A 20 percent increase in enrollment accounts for much of the increase in total spending. It has also been driven largely by state mandated increases in teacher pay and health care coverage. Increases in non-classroom staffing that state officials point to as part of the problem include librarians, counselors, nurses, instructional aides, food service workers, bus drivers, etc. Many of these positions are required due to state and federal legislation in regard to special education, testing, alternative education, technology, and child nutrition. There is some talk at the state level of relaxing some of these mandates.

In a Houston Chronicle article the Governor was quoted as saying that ISDs are sitting on $10 billion in reserves and $2 billion in stimulus funds.

Most districts try to maintain 15-20 percent of their operating budget in fund balance in order to pay bills and meet payroll obligations while waiting on funding to come in from the state and from local property tax receipts. This is what is recommended by the state - TEA recommends a minimum unrestricted fund balance of about two-and-a-half months of operating expenditures plus enough to cover anticipated cash flow deficits – and is reflected in the financial accountability rating system. It is also important in showing financial stability in order to get the best interest rate when selling bonds.

Districts with excess balances are most likely using these to offset deficit budgets. The Texas Association of School Boards (TASB) reported in a position paper on school district fund balances that 50 percent of districts had to dip into their fund balances to balance 2009-10 budgets. The AEIS report for 2009-2010 indicates that the 2008-2009 cumulative fund balance for the state was $7.2 billion, which represents 19 percent of the total expenditures within the state for 2009-10. According to TASB, two-and-a-half months of operating expenditures statewide equals approximately $6.8 billion.

The $10 billion cited by the governor may include debt service fund balances which cannot be used for operating expenditures. Any plan that penalizes districts for excessive fund balances could also penalize those who don’t, such as Frisco ISD. Our fund balance as of June 20, 2010, was $46.3 million, which represents 15.7 percent of our current operating budget.

The following quote in the Austin American Statesman was attributed to Governor Perry - "Over the course of the last decade, we have seen a rather extraordinary amount of non-classroom employees added to school rolls," Perry said. "So are the administrators and the school boards going to make a decision to reduce those, or are they going to make a decision to reduce the number of teachers in the classroom? I certainly know where I would point.”

In 1999- 2000, according to AEIS data, 48.7 percent of school employees across the state were non-teachers, which includes counselors, librarians and cafeteria workers as well as central office administrators, bus drivers, nurses and classroom aides. In 2009-2010, that number was 49.5 percent.

Here is a link to a report by Moak, Casey regarding misperceptions on staffing – [Report Link]

An elected representative from this area, citing the Financial Allocation Study for Texas (FAST) conducted by the Texas Comptroller of Public Accounts, fastexas.org has made some of the following statements in his Capitol Steps newsletter:

Since the 1998-99 school year, total school spending in Texas has increased from $28 billion to $54.7 billion per school year – which amounts to a 95 percent increase in spending. This is compared to enrollment growth of 20 percent during that time – from 3.95 to 4.73 million students.

According to the FAST report, adjusting for enrollment growth, the percentage increase would decrease to 63 percent from 95 percent, but it also states that taking inflation into account, the increase in spending should have been more like 32 percent. Much of the student growth, however, has been in harder to educate students with programmatic needs (poverty, second language learners, special education) that cost more money. Again, many of the remaining increases can be attributed to state mandates such as those involving teacher pay increases and local contributions to health care plans.

On average in Texas, school districts spent $11,978 per student in 2008-2009, which is nearly double the spending per student from 1998-1999.

This type of comparison is not instructive because of the inclusion of capital outlay and debt service. This per pupil expenditure (all funds, including capital outlay and debt service) will fluctuate greatly based on the building program in a given year in a school district. A more stable picture of what a school district spends per student would not include funds for construction. School districts like Frisco experiencing rapid growth have been hit harder with construction costs and it is unfair to include capital outlay and debt service when demonstrating increased spending because the state, in our case, contributes nothing toward construction costs. Schools are built to meet the needs of increasing student populations and renovations are needed for older schools to maintain the investment, not to mention changing and emerging needs such as technology and security.

In the 1998-99 school year payroll and operating costs were the highest expenditures in school district budgets by percentage. In 2008-2009, the highest expenditures by percentage were debt service and capital expenditures. In 2008-2009, payroll expenditures, as a percentage of total expenditures, ranked last in district spending instead of first, as they had in 1998-99.

In reviewing the FAST report, it states that salaries, wages and benefits accounted for 59.4 percent of all spending on public education in 2008-2009. It states that capital outlay was 15.9 percent and debt service 8.9 percent (24.8 combined). This indicates that payroll is still first in spending and is the highest expenditure by percentage.

Most school districts built up fund balances to offset economic downturns as property appraisals increased.

This statement implies that when property appraisals increased that districts put surplus revenues in their fund balances for a “rainy day” when the economy was in a downturn. Most districts are like us, they try to maintain enough money in the fund balance to pay the equivalent of two months payroll, which is within what is recommended in the state’s financial accountability system and for bond rating purposes. This balance fluctuates and is normally what wasn’t spent in the budget for the fiscal year. These funds will not be replenished, unlike the Economic Stabilization Act fund, which has a designated funding source. Once these funds are gone, they are gone. If there are districts with balances of more than 15-20 percent of their operating budget, they are utilizing those funds to meet their budget in a time when the state’s funding structure for education is not meeting the needs of their students. To take this thinking further, if legislators think that is what a fund balance is for, we hope they are willing to look at the “Rainy Day Fund” during this economic downturn.

Where does Texas rank in comparison to other states in education spending?

In a Dallas Morning News article – the following was cited in regard to education spending in Texas:

The comparison by the National Education Association, a teachers group — based on figures furnished by state education agencies — indicated that in the 2009-10 school year, Texas spent $9,227 per student, a figure that’s $1,359 below the national average.

That places Texas 37th in spending among the states and the District of Columbia. Ten years ago, Texas ranked 25th and was $281 below the national average.

In an article in Texas Tribune, a senator was quoted as naming the 58,575 people employed in non-teaching support positions by Texas public schools —”your math department supervisors, your curriculum experts” — a "soft target" for budget cutters. Those positions “must be seriously addressed,” he said. “That number is not based on reality.” According to the senator, the ratio of teachers to non-teachers in school districts, which includes those employed in administrative and support capacities, has grown to nearly 1 to 1 today from 4 to 1 in the 1970s.

According to Texas Education Agency (TEA) data from the Public Education Information Management System (PEIMS) and Steve West, a former school district financial officer living in Round Rock, it is true that the ratio of teachers to non-teachers is 1 to 1, which has remained virtually the same since 1991-92 when it was 1 to .9. In 2001-2002 it was 1 to .98, the same as it was in 2009-2010. Staffing data comparable to today’s employee statistics was not gathered by TEA until the advent of the PEIMS in the 1980s. West speculates that the data being quoted from the 1970s comes from the Texas Conservative Coalition Research Institute (TCCRI), which stated in their publication Blueprint for a Balanced Budget, that in the early 1970s the teacher to non-teacher staffing ratio was 5 to 1 and that by the mid-1970s it went to 2.5 to 1.

“Since the TEA did not gather information regarding all non-teaching positions in the 1970s, I am perplexed by their ‘research’ that arrived at the above ratio numbers and how they can make credible claims about the wastefulness of public education by using this data,” West stated in his letter he shared with superintendents. Later in his letter, he takes issue with the assertion that if we could educate students in the 1970s with fewer non teachers, we can certainly do it today. “To make the assumption that education in the 1970s is the same as today, one would have to assume that society as a whole is not different then and now. You would also have to assume that there was no change in student demographics since the 1970s and that there were no new legislative mandates and no labor-intensive accountability requirements added since that time.”

Much information has also been published regarding student enrollment growth as compared to non-teaching staff increases. According to the Protect the Classroom website (sponsored by Texans for Fiscal Responsibility), the number of students in public schools has increased 7 percent since 2004 while the number of support and administrative personnel has increased 20 percent.

According to TEA data and stated in the letter from West, in 2004-05 there were 4,317,798 students in Texas; in 2009-10 there were 4,705,641 – an increase of over 387,000 or 9 percent. (These enrollments do not reflect charter school students.) Total counts for non-teaching staff for the same years were 285,885 and 320,884, respectively. That’s a change of 12.2 percent. Total staff, including teachers, also grew by 12.2 percent for the same time period.

The TEA tracks school district positions by role codes; staff positions are summarized into broader categories- teachers, principals, central administrators, professional support staff, educational aides and auxiliary staff. Auxiliary is the aggregate of positions such as bus drivers, clerks, secretaries, custodians, food service workers, maintenance workers and other non-degreed positions. West averaged the percent of each category of staffing from 2001-2002 to 2009-10 relative to the total staffing and found the same basic percentages for each group even going back to the early 1990s. He states that the total staffing may have grown slightly faster than the total student enrollment, but the proportionate share of each category to total staff is relatively unchanged. For example the percentage of central administrators from 2001-02 to 2009-10 stayed at a constant one percent of all staff. Professional support staff (i.e., counselors, librarians, nurses, special education specialists, and curriculum specialists) averaged 8.2 percent with a high of 8.9 percent in 2001-02 and a low of 7.5 percent in 2002-03. The average percent of school administration is 2.7 percent; educational aides 10.1 percent; auxiliary 27.5 percent and teachers 50.5 percent.

In closing his letter, West acknowledges the tough job ahead for the legislature and that the state and local school districts will have to dramatically reduce budgets. With more than 80 percent of ISD budgets being for salary/benefits, reducing budgets will require reducing people. “We should not view extreme staff reductions of non-teaching positions as either favorable for students, teachers, or communities or painless to those directly affected. These staff positions play an important role in supporting what happens in the classroom. Without them, much of the work that was done will fall on those remaining, even to the classroom teacher.” Examples cited of current support systems for teachers and students that could be in jeopardy -- solving software/computer issues, student discipline, classroom safety and security, instructional and curriculum support, counseling and health care, cleaning classrooms.

More information regarding staffing growth in Texas school districts can be found here .