On March 6, the Madison Board of Education will vote on Johnny Winston Jr.’s proposal for the district to spend approximately $200,000 this year on four community programs. Great Opportunity Needs Your Support
Sounds good. These are all good programs run by good people with good ideas and goals.
The question before the board, however, is not whether we like the programs or think that they would use our funds for good purposes. The question is whether the district should commit these dollars from this budget to these community programs at this time.
I think that the answer is no.
Fiscal policy problem: “These dollars” are the dollars remaining in the Reserve for Contingencies in our budget for “community programs and services” budget, aka Fund 80. Three months remain in our fiscal year. It is good fiscal policy to have money in reserve for emergencies. If an organization must spend its reserve, it is good fiscal policy to use the funds for one-time costs, rather than to create new programs that will need funds again the next year. It is bad fiscal policy to spend all of the Reserve for Contingencies on new programs. We will have no capacity to deal with emergencies in the remainder of the fiscal year if we make this commitment. The same programs will add $208,000 to next year’s budget for Fund 80 (the basic allotment to each program plus 4.1% for increases in their costs).
Budget management problem: “This budget”–Fund 80–is a budget of more than $8M in local property taxes that the board collected for community services and programs in 2005-06. The board also oversees the much larger operating budget. For this school year, the local tax portion of the operating budget is about $294M.
Think of the operating budget as a checking account funded by local taxpayer contributions. Unless voters pass an operating budget referendum, the dollars in the budget from taxes for the next school year will increase by a very small percentage. That’s what “revenue limits” do to the operating budget.
Think of the community service budget as a credit card paid off by local taxpayers. The board can spend to the maximum limit each year. It can also raise the maximum for next year by passing a bigger Fund 80 budget. No messy referendum votes needed for this budget.
Back to Mr. Winston’s proposal. Tax payers gave the board $302M to spend in 2005-06 ($294M in our checking account and $8M in a line of credit). The board will spend the entire $302M. Next year it will need more for both budgets because costs of current services and programs on both sides will go up.
Good budget management would—at the very least—require holding the credit card expenses below the maximum limit. Bad budget management would be spending to the max on the credit card. Worse budget management would be this proposal, increasing expenses beyond the max for next year.
Selection process problems: If the board believes that community programs are necessary complements to the district’s school-based programs, it should identify the unmet needs of our students and openly seek proposals from providers. There was no identification of unmet needs and no open competition in this case. “These communitiy programs” are programs that Mr. Winston asked to submit proposals for funding.