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March 7, 2006

A 5 Year Approach to the Madison School District's Budget Challenges; or what is the best quality of education that can be purchased for our district for $280 million a year?

Two weeks ago, Roger Price presented a 5-year forecast for the district, which included a projection that there would be a $38 million budget gap, by 2011, if the district proceeded with it’s present operations.  He emphasized the presumption that this was before changes are implemented to address the gap.  He also emphasized his discomfort with the accuracy of any forecast beyond one year.
As a consultant who has done economic modeling and forecasting for almost 20 years, I can certainly understand this discomfort.  However, I note that the district website contains a list of budget cuts enacted by the board since 1993, a list which includes over $32 million in cuts over the last 5 years.  With prices only increasing over time, and with the special concerns raised over health care and energy costs, the initial $38 million deficit projection does not seem unreasonable.  My preference would be to round it to $40 million, and to recognize that it may require six years (give or take) to achieve that gap.  But the forecast makes clear that we are talking about a very large amount, and that there is a structural budget gap.  By structural, I mean that anticipated revenue increases are expected to consistently fail to keep up with expenses, and that over time ever-more drastic cuts will be required to remain in budgetary balance.
How might the district address this ominous gap?  I think there are two basic approaches that can be taken.  One is to endeavor to cut approximately $8 million each year, to address each budget year on its own, and to effectively ignore the looming structural gap.  This approach implies keeping the same district structure as today, and essentially tearing away different pieces of it each year.  Of course, this approach continues to be more and more painful each year, as the easy cuts are long completed and now only more critical programs and services remain for the knife.
I would like to respectfully recommend a second approach.  That rather than look at the budget picture one year at a time, that you instead look at where the budget will be (approximately) five years from now.  In effect, that you determine how to cut $40 million from the budget, not $8 million.  Last month, numerous efforts were made to find $3.77 in cuts from a $100 budget.  Few were able to find that amount.  I am suggesting a group be formed to find the equivalent of $15 in cuts, and by the way, they will have five years over which to implement those cuts.  You may laugh at the prospect, but that is exactly the situation this district is facing – it indeed must find $15 or more in cuts over the next five years.
How to find $40 million?  By asking a very different question, one which has nothing to do, and everything to do, with that amount.  By asking, what is the best quality of education that can be purchased for our district for $280 million a year.  Start with a completely clean slate.  Identify your primary goals and values and priorities.  Determine how best to achieve those goals to the highest possible level, given a budget that happens to be $40 million smaller than today’s.  Consider everything – school-based budgeting, class sizes, after-school sports, everything.
When it’s all done, this group will have likely shaped an educational structure for this district that is quite different than the one you use today.  The second task of this group, therefore, would be to determine how to implement the necessary changes.  Perhaps one school is run under the new model in the first year, then additional schools, or perhaps all other schools, would be so run the following year.
I have no idea what this new structure, what this new district, will look like.  But I am sure of this:  I will be much more likely to prefer my two kids attend a district that is the outcome of a process such as this which is well-thought out and planned, than I will a district that has continued to endure the annual relentless torturing of it’s current structure.

I read these words during the public appearances segment of last night's School Board meeting.

Posted by at March 7, 2006 9:29 AM
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