“Bitter Medicine for Madison Schools”:
07/08 budget grows 3.6% from 333M (06/07) to $345M with Reductions in the Increase

Doug Erickson on the 2007/2008 $345M budget (up from $333M in 2006/2007) for 24,342 students):

As feared by some parents, the recommendations also included a plan to consolidate schools on the city’s East Side. Marquette Elementary students would move to Lapham Elementary and Sherman Middle School students would be split between O’Keeffe and Black Hawk middle schools.
No school buildings would actually close – O’Keeffe would expand into the space it currently shares with Marquette, and the district’s alternative programs would move to Sherman Middle School from leased space.
District officials sought to convince people Friday that the consolidation plan would have some educational benefits, but those officials saw no silver lining in having to increase class sizes at several elementary schools.
Friday’s announcement has become part of an annual ritual in which Madison – and most other state districts – must reduce programs and services because overhead is rising faster than state-allowed revenue increases. A state law caps property-tax income for districts based on enrollment and other factors.
The Madison School District will have more money to spend next year – about $345 million, up from $332 million – but not enough to keep doing everything it does this year.
School Board members ultimately will decide which cuts to make by late May or June, but typically they stick closely to the administration’s recommendations. Last year, out of $6.8 million in reductions, board members altered less than $500,000 of Rainwater’s proposal.
Board President Johnny Winston Jr. called the cuts “draconian” but said the district has little choice. Asked if the School Board will consider a referendum to head off the cuts, he said members “will discuss everything.”
But board Vice President Lawrie Kobza said she thinks it’s too early to ask the community for more money. Voters approved a $23 million referendum last November that included money for a new elementary school on the city’s Far West Side.
“I don’t see a referendum passing,” she said.

Links: Wisconsin K-12 spending. The 10.5M reductions in the increase plus the planned budget growth of $12M yields a “desired” increase of 7.5%. In other words, current Administration spending growth requires a 7.5% increase in tax receipts from property, sales, income, fees and other taxes (maybe less – see Susan Troller’s article below). The proposed 07/08 budget grows 3.6% from 333M+ (06/07) to $345M (07/08). Madison’s per student spending has grown an average of 5.25% since 1987 – details here.
UPDATE: A reader emails:

The spectre of central city school closings was what prompted some of us to resist the far-west side school referendum. Given the looming energy crisis, we should be encouraging folks to live in town, not at the fringes, strengthen our city neighborhoods. Plus, along with the need to overhaul the way we fund schools, we need a law requiring developers to provide a school or at least the land as a condition to development.

UPDATE 2: Susan Troller pegs the reduction in the increase at $7.2M:

Proposed reductions totaled almost $7.2 million and include increases in elementary school class sizes, changes in special education allocations and school consolidations on the near east side.
Other recommendations include increased hockey fees, the elimination of the elementary strings program and increased student-to-staff ratios at the high school and middle school levels.

UPDATE 3: Roger Price kindly emailed the total planned 07/08 budget: $339,139,282

15 thoughts on ““Bitter Medicine for Madison Schools”:
07/08 budget grows 3.6% from 333M (06/07) to $345M with Reductions in the Increase”

  1. On Monday, March 12th, the School Board is holding a Special Board of Education Meeting that begins 6 p.m. in Executive Session then moves to Open Session. The 07-08 MMSD school budget is No. 9 on the agenda.

  2. Doug Erickson reported that the budget recommendations eliminate “109 positions, including 88 teaching positions.” Does anyone yet have a simple list of the eliminated non-teaching positions?

  3. I know educrats believe themselves above economic rules that govern the rest of society. That is why Mr. Rainwater faces his financial situation.
    I think I have posted several remedies in the past, at no cost to the district, but have obviously been ignored. Please understand, it is not my ego or prescience to offer the following.
    admin/student ratio rolled back to 2000 levels
    Reading Recovery teachers handle 3 kids at a time
    copy room budget slashed by 30%
    Eliminate police laison positions (basically there to find trouble where there is not)
    If you did even this, there would be no budget problem and no decline in education to the kids

  4. Reed Schneider makes budget cutting look so easy – even a school board member could do it. Unfortunately the numbers aren’t as easily convinced; here are Reed’s suggestions – and how much each would save:
    admin/student ratio rolled back to 2000 levels – that would actually require us to add 12.37 administrators and result in a cost increase;
    Reading Recovery teachers handle 3 kids at a time – I assume the intent is to serve the same number of students with fewer teachers; in this case I have been generous with my estimate – this would cut 10 positions = $565,620
    copy room budget slashed by 30% – this would save about $164,000
    Eliminate police laison positions (basically there to find trouble where there is not) – this saves about $250,000
    Total amount saved: $979,620 (I didn’t add in the INCREASE in administrators – that would have eliminated any savings).
    Only another $6.2 Million left to cut.

  5. Both of the last bloggers missed a big budget savings – cutting extracurricular activities, which would “save” about $1.5+ million, but again, only for this year. I think that would be misguided as I think the proposed further cut to strings is misguided.
    As Lawrie Kobza commented during Friday’s press conference, the cuts proposed and upcoming budget are not thinking about investing in future education. They are responding to the revenue cap limitations, which is the School Board’s responsibility and which members will do as they do each year.
    Changes at the state do not look promising, referendums are iffy, at best, and it’s hard to secure non-grant sources of funding. But, I think we have to think and to work multiple approaches even if they seem daunting. In mid-February, Lucy Mathiak commented about capital campaigns for certain areas that may help free up some money under the revenue caps. Lawrie added that the community ought to pursue options that do not have the same costs as a referendum and that the board needs to think in terms of transitions. I tend to agree with this, recognizing that it will take time and hard work. Such efforts will require strategizing and planning with the community – less throwing of cold water onto each other’s ideas would be helpful.

  6. And no one has the chutzpah to identify the real problem: salaries and benefits. Administrator and teacher compensation have increased in good times and bad, whether other public employees have gotten raises or not, whether inflation is low or not. The MTI has done its job brilliantly, and I applaud them. The admininstration and board have shown far less drive and oversight. Balance is missing when you even have the governor calling for all the same things as the unions do. I repeat, the unions have done a great job. The others who have influence on the pursestrings have not.

  7. Madison may pay better than surrounding districts for starting salaries, but we’re trying to attract excellent teachers to teaching vs. other professions. I personally don’t feel that the total package increases over time have been out of line with inflation, or other costing factors.

  8. It looks pretty simple from where I sit.
    Assuming that $200M is the total for salaries and benefits, a 4% increase in compensation is $8M. So, to balance the budget, either no raises this year, or a 4% decrease in the number of employees. In business, this type of decision is dealt with year after year.
    So, I’d ask the union, if it was an either/or decision, would they take the raises and the job cuts? Or, would they keep the number of positions and go without raises?

  9. With regard to Barb S’s comment about community efforts and capital campaigns etc. Where do I sign up? I’m tired of talking about it.

  10. Ann,
    Thanks. One effort underway is the School Board Community Fine Arts Task Force that had its first meeting a couple of weeks ago. I am co-chairing that committee with Leotha Stanley.
    One of the charges for the group is to develop funding priorities/strategies for the School Board to consider for Fine Arts, which I see as a mix of district, grant, private money. As Lawrie Kobza pointed out a few weeks ago, going to referendum costs $1.60 for every dollar. If there are ways to bring in $1 for $1, wouldn’t we want to pursue those opportunities.
    I also think the same is needed for sports and other areas that are valued but threatened annually by the school board cuts. Personally, I would like to see communication across groups. The bigger and clearer statements we make to the community, with the School Board’s support, the bigger impact we will be able to have on the School District.
    There are non-profit vehicles, such as the Madison Community Foundation and the Foundation for Madison’s Public Schools, that could play important roles – and already do, but in a smaller way that began as efforts to help enhance what the schools are doing.
    This is different, and the community needs to know clearly from the School Board it’s importance and role in the future financial picture of the district, and I would like to see the School Board have those conversations now. Emailing the School Board at comments@madison.k12.wi.us is a way to start.

  11. “And no one has the chutzpah to identify the real problem: salaries and benefits. Administrator and teacher compensation have increased in good times and bad, whether other public employees have gotten raises or not, whether inflation is low or not.”
    That may be the case, but I wonder if folks here really, truly understand how boxed in school district/boards are regarding their ability to hold down salary increases.
    Yes, teacher compensation increases year in and year out, regardless of the compensation environment in either the public or private sectors, or the funding/budget environment for school districts. That’s because, I’d suggest, of the state regulatory environment that governs teacher contracts.
    Wisconsin teachers in all but one public school district (Hortonville) are unionized. Unions in this country, through laws and years of court precedents, have the right to strike. Only certain unionized employees are prohibited from striking — typically, those in areas of public safety (police, fire) or public necessity. Teachers in Wisconsin are prohibited from striking, through legislation adopted after the famous Hortonville teacher’s strike in the early 1970s.
    But — and this is a pretty key point — in return for taking away that right to strike, state lawmakers adopted a “mediation/arbitration” law that, to this day, still largely governs teacher contract negotiations. The med/arb law essentially guarantees that teacher wages will increase by a certain percentage every year, because of the mechanics of the way the law works once you get to an impasse in negotiations and go to binding arbitration.
    Binding arbitration is binding — each side presents their final contract offer, and an arbitrator has to choose between the two offers in their entirety. The abitrator can’t pick and choose elements of each offer to reach a settlement; it’s an all-or-nothing proposition (one side gets what they want, or their last, best offer in its entirety, and the other side gets nothing, or no part of their last, best offer). The all-or-nothing nature of binding arbitration is designed to bring those final offers from each side “closer” to each other, because it carries with it an element of risk. If your offer is seen by an arbitrator as too unreasonable — too low, or too high — you run the risk of “losing” due to the all-or-nothing nature of binding arbitration.
    But arbitrators don’t just sit there and make judgements in a vacuum. They are required, by law, to consider a number of factors when deciding between the two final offers. One of the most critical — some would argue the defining one — is judging the final offers against teacher contract settlements in comparable districts. Those comparable settlements often become very much the guiding force in an arbitrator’s decision regarding which final offer should be accepted.
    So let’s say District A’s school board wants to hold the overall package to 1 percent, arguing: revenue caps are killing us, we’ll have to make cuts without holding wages/benefits to 1 percent, we can’t afford it. Teachers say, sorry, we need 4 percent. It goes to binding arbitration, and an arbitrator looks at Districts B, C, and D, and sees settlements of 3.8 percent (QEO), 4 percent and 4.2 percent. Guess who the arbitrator will rule for?
    Of course, very few contracts statewide go to arbitration, and everyone on both sides knows how this will play out if a contract ever does go to arbitration. And a key component of this debate that I think is sometimes overlooked is this: the QEO/wage limit law didn’t end binding arbitration; it merely said a district didn’t have to go to binding arbitration if it offered a settlement (wages and benefits) of 3.8 percent. Districts can still try to hold out for less than 3.8 percent total package, but then they risk going into the all-or-nothing phase of binding arbitration, and the guiding force of comparable settlements.
    In effect, since the imposition of the QEO, it’s meant that the 3.8 percent QEO has become the starting point for all teacher contract negotiations. True, there are some districts that have held fast to the QEO, and imposed it on on teachers and held fast to it. But most districts, in all honesty, try to buy off a bit of labor peace by settling in the range of 4 to 5 percent. A district like MMSD — which, as Gregg argues, is in the position of making budget cuts without concurrent wage controls — could argue for a 1 percent total package during teacher contract negotiatons. But it would run up against the state’s med-arb law, and the knowledge that other, comparable districts have been settling at 3.8 percent or above that. The board might reasonably conclude its push for a 1 percent wage/benefits settlement would likely fail if push came to shove and the contract went to binding arbitration.
    Maybe the solution is having MMSD’s comparable school districts all get together and work on a strategy to hold contract settlements to a level below the QEO-imposed 3.8 percent, and thus reduce the risk of losing in arbitrated cases. After all, doesn’t WEAC have a statewide bargaining strategy? Indeed it does. In fact, that very tactic (school districts getting together) has been discussed (very quietly, very discreetly) among some education observors, and it’s quickly followed by the word “collusion,” and the knowledge that WEAC is a pretty deep-pocket organization with the willingness to take on legal challenges regarding teacher contract negotiations.
    In the end, I’d argue the QEO has essentially mandated spending increases in school districts beyond what many districts can mine from their (revenue-capped) property tax base. I’m not sure what the solution is, but I do worry when the governor suggests doing away with the QEO without a corresponding adjustment on the revenue cap side of the picture.

  12. Phil,
    Thanks for the explanation of arbitration. I now have a better appreciation for why this avenue seems to be catagorically ignored.
    In this entire discussion we seem to be focusing on the impacts (cost to continue exceeding revenue limits, QEO,…), but not looking at the root source of the rapid growth of cost to continue. Why is the cost to continue outpacing desired inflation?
    I acknowlege that some cost increases (health insurance, fuel, …) seem beyond-our-control. But why not target legislation to address these root issues, instead of simply focusing on increasing revenue.
    In particular, I see our entire community facing a collision with regards to health costs. Private and public sector employees are facing increased insurance costs, increased copays, fewer services covered… I have been astonished at the “costs” defined on EOBs for medical services and can’t imagine someone in this country receiving care without insurance. This problem seems to be growing almost exponentially. However, the situation doesn’t seem to be so dire in other countries. Are they truly living in a medical “utopia” or are we truly being “gouged”?
    If I am to direct energy towards the legislature, would this perhaps be a direction of focus with a greater payoff and longer range return?
    What are your thoughts?

  13. Phil M
    Very nice analysis but I must correct you on one thing. Hortonville School District teachers are now represented by the AFT after years of having their own union (Hortonville Educationa Assn, HEA). The WEA, reeling from its several US Supreme Court losses, would not allow Hortonville’s membership into the WEA until all the scabs were gone. Linda Cross, et. al. were still around when approached by the AFT, and the rest is history. No wonder then that the WEA can’t allow Linda to head the DPI (But I digress). I was on the board several years ago when it happened and was also a sophomore in high school when the strike occured. Believe me, seeing your middle school homeroom teacher screaming and being dragged away by helmeted National Guardsmen is something one does not soon forget.
    I also thank Carol for her reply. As another blogger to this post said, it is what business does every day. I will cede a rollback in administration levels thereby resulting in my million dollar savings for a few minutes of thinking. Give me 3 hours with the books and I’d likely be able to cut every taxpayer a $100 check.
    With all due respect, nothing will ever get done if suggestions like mine and others are dismissed as simplistic. Characterizing rock solid financial advice as simplistic or somehow not deserving of true consideration is done at great peril.
    In Jim Collion’s book, “Good to Great”, the business person/manager/administrator is often reminded that you cannot go from good to great unless you are willing to “confront the brutal facts”.
    The brutal facts are these. There are too many people, employed by the district, that have nothing to do with teaching. If I had a school, I can hear the gasps from some of you, everyone would teach. The principal and his/her legions of assistant principals would teach at least 2 classes per day. Curriculum directors would be abolished and department heads would assume that responsibility. The obscene amount of money being spent on “leveled books” to facilitate RR and BL would be eliminated and sold off. If ya wanna park in the school parking lot it’s going to cost you $200…..a year. School psychologists would not have free reign to diagnose as they see fit. The explosion in special designations, improperly done, ensures exponential cost increases.
    The above analysis likely saved 1.5 to 2 mil. On top of the mil I already saved, we’re half way there.

  14. Reed,
    While you and I would probably disagree on specifics, I completely agree with you that an unwillingness to make big changes, even when the necessity of doing so is apparent, is a huge problem in K-12.
    Changes, especially painful ones, are made incrementally. In the long run, the total result is more damaging than directly evaluating what a financially stable structure is and making the changes comprehensively.

  15. Deb G:
    It seems pretty clear, to me at least, that there is some kind of movement statewide toward adjusting the revenue caps. When the likes of school districts such as Madison (Dem. Party central) and Waukesha (Republican Party central) are both complaining about the caps, that creates a climate in which doing something with the revenue caps becomes politically feasible. GOP Sen. Dale Schultz was instrumental in passing the caps, e.g., and now he’s calling for certain exemptions to them (bussing, for one) because districts in his area (southwestern Wisconsin, one of the poorest areas of the state) are getting whacked by the revenue caps. But a complete abandonment of them? Doubtful, in my mind; they are so much a cornerstone of how schools are funded that I think a wholesale change in them pretty much requires a wholesale change in the entire state formula. And as I’ve posted before, I don’t see anyone calling for that, particularly the one person — Doyle — who has the political clout to do so. (UW-Madison Ed. Professor Allan Odden has a pretty in-depth proposal ready for release this summer, but vultures are already circling around it.)
    The QEO (and the med/arb law) is a much tougher question, I think, because of the disparate way in which it is viewed among the key players in the education policy debate. From the standpoint of school boards/administrators, the QEO is the absolute foundation upon which all annual budgeting rests. Because of the mechanics of the med/arb law, school districts are quite literally required to raise spending for their largest group of employees by a minimum of 3.8 percent every year. With revenue caps “yielding” allowable spending increases of around 2 percent a year, it’s inevitable that budgets will be tightened (absent new revenue streams, which in Wisconsin means mainly new students, one reason that no-growth and declining enrollment districts scream loudest about the revenue caps). The mis-match between the QEO’s near-mandate of a spending increase and the revenue cap limits is one reason, to cite a specific program, that items like elementary strings are constantly on the budget-cutting table — because a huge section of the budget is pretty much off-limits. Now MMSD is at the point where it’s actually cutting classrooms teachers, largely by increasing class sizes at some elementary schools.
    However, the QEO is very much seen by teachers as a wage cap, and to be fair, it is. The QEO (quietly, and not very publicly) was welcomed by school districts/boards when it was first enacted, because wage settlements (by and large, generalizing here) were running well above 3.8 percent prior to their implementation (in truth, in some areas, they were running well above the typical post-QEO settlement of 4-5 percent). And it has done (somewhat) what it was intended to do, which — in combination with the revenue caps — was to hold the line on property taxes. It hasn’t stopped property tax increases, but I believe there are studies out there suggesting the school portion of property taxes has risen more slowly post-QEO than pre-QEO.
    There is also the issue of competitive pay, and there is some evidence that Wisconsin teacher salary averages are slipping relative to their geographic (Upper Midwest) peers in recent years, which WEAC (among others) blames on the QEO.
    And, speaking directly to your question about health-care, I’m not enough of an expert on the ins and outs of health-care financing to form a reasonable opinion about what to do about it with regards to school financing. I do think the health-care debate is an important one, but I see it largely as an issue (from the standpoint of a school district) of short-term vs. long-term costs. Due to some new federal accounting standards, local units of government are under enormous pressure to rein in their long-term payouts to employees (not just health care, but retirement as well). It’s pretty clear to me school districts need to find ways to mitigate some of those long-term costs. But for purposes of the QEO, however, health-care costs are “packaged” with salary increases, and the 3.8 percent requirement of the QEO includes both costs. From the standpoint of teachers, some do complain that health-care costs are squezing salary increases (and if you’re John Matthews, that’s by choice re. the whole WPS debate).
    As for long-term strategy, it’s hard for me to imagine — given that teachers are probably the strongest unionized work force in the state — that Wisconsin won’t have some kind of med/arb law that essentially continually nudges salaries upward. Whether that “nudge upward” is ever aligned with the revenue caps — upward or downward on either side, it almost doesn’t matter — is the crux of the state’s current school funding dilemma. That’s probably not a satisfactory answer, but it’s a tough question.
    Reed — I stand corrected, and thanks for the insights into Hortonville. I used it because the strike there really still does reverberate on school financing policy 30-plus years later.
    I do take issue with the “schools run as a business” theorem, but that’s probably another thread. I will note that Chris Whittle, CEO of Edison Schools (which, admittedly, runs pretty flat administrative schools), thinks public schools ought to have about half as many teachers as they do now, and pay them twice as much.
    And Tim is correct; change in public schools does occur at a glacial pace, and there is plenty of responsibility for that (I often find parents more unwilling to change than anyone else connected with public schooling).

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