Financial Crisis or House Cleaning for Greeley District 6 Schools

Cutting budgets is never easy. Particularly when you are talking about cutting out two hundred jobs in an already economically ravaged town. Yet, there are better approaches and poorer approaches. It isn't clear yet just what approach Greeley District 6 is applying but it already doesn't look pristine. What is certain is that the School Board and Superintendent Lang of Greeley Schools District 6 are facing a serious financial reworking of the District or they are being cagey about cleaning house (restructuring/downsizing).

Maybe a little of both, eh? An interesting question isn't it.

After having read through the school district's audited financials report and the budget for the upcoming year, as posted on the District's website, I've been crunching some figures and noting some things that leave me with a lot more questions about the approach the long troubled District has taken.

(Before you keep reading, for those of you who like to skip the pertinent informational numbers--the conclusion is in the bottom three to four paragraphs. So is the District Administrative Organizational Chart.)

First of all I'd like to note that only 39.1 percent of students in this district tested proficient last year in math. 39.1 percent, grades 3-10 from the CASP scores according to an October 2009 budget presentation that Mr. Wayne Eads prepared for the board (it is available on the D6 website). I'll come back to Mr. Eads, Chief Operations Manager, later on in the article but for now let's concentrate on the numbers. This leaves a bit over 60 percent of the students as nonproficient.

Writing: 45.4 percent tested at or above proficiency. Well if we use the bell curve it doesn't seem too bad but I don't recall the theory behind education stating that more than 50% of students will not need to be proficient.

No doubt there are those that will blame the writing and reading issues on immigrant children. That argument is a whole bucket of water complete with holes. If true then the proficiency rate trend would hold similar in all districts with nonnative language speakers. ESL learners tend to be convenient political scapegoats. But we will give D6 administrators the benefit of the doubt on reading and writing simply because they have enough problems without that one.

But math? Math? The universal language. Come on people. There are more than just financial problems in the District.

Okay, let's move on to the next area. Ms. Lang cites up to $16 million in cuts may be needed in her letter delivered to staff last week through email. Shocking isn't it. No, not that Ms. Lang didn't have Mr. Eads write the letter, but that $16 million is a whole lot of money to most folks.

But that $16 million it isn't so big when you put it up against the total budget (revenues in the audited financials in 2009: $162,618,011) and examine the other budget figures for District 6 as prepared by, not the Finance Officer, not the Superintendent, but Mr. Wayne Eads, Chief Operations Manager. If you take a quick peak at the organizational chart at the bottom you'll see finance, oddly, falls under his dominion.

In 2009 budgeted reserves are $3,443,442. That is down from 2006 when reserves for general purposes (restricted reserves can not be used for general purposes) was $11,232,259 *Mr. Eads notes "We have been spending our reserves on instructional tools." The State of Anti-Education Colorado isn't too happy about the "state" of the reserves. Mr. Eads declares "This is a clear warning from the state that we are spending more than we are getting in revenue."

Or would that be that the District is making poor spending choices? Flip-a-coin.

The District is actually seeing a 2.97% revenue increase this year after restrictions the School Finance Act puts on the money reducing the overall increase. Student growth needs have already been calculated into the budget, again, according to Mr. Eads, the custodian turned Operations Director turned District Teacher Contract Negotiator turned Budget Analyst turned District Spokesperson turned School Board Advisor.

What does Ms. Lang do for her $180,000 + salary+ perks besides manage a grouping of Principals?

Mr. Eads total revenue column lists $134.3 million (this comes from Mr. Eads presentation on the current budget rounds not the audited financials quoted above from 2009). This is an increase of $5.9 million from the previous year. The audited statement, of 2009, if I am reading it correctly has a total of $165 million as actual revenues received by the District. I have no explanation for the difference. I imagine a possibility is unanticipated revenue that came in during the year (a windfall), increase in federal funding for that year, Mr. Eads is eliminating restricted funding, or the State cut that amount from the District. Take your pick or make up your own reasoning.

The district maintains eight different governmental funds. The major funds are the General Fund, the Capital Reserve Fund, Designated Special purpose Grants Fund, and the Bond Redemption Debt Service Fund. (p. 14 of the Annual Audited Financial Statement for 2009)

Mr. Eads goes on in the slide presentation to list new funding items expected in the upcoming year to cost $1.65 million. He then goes on, in October, to talk about hearing about a 10% shorfall and ponders, "What are the consequences of an actual 10% reduction in the District's budget?"

Now it starts getting more interesting, well at least for me, as Mr. Eads 'brilliantly' reduces a grossly complex budget into two simplistic categories so, I am assuming, the Board, made up of common Greeley folk, can grasp it better. Expenditures are 87% People (note Ms. Lang changes this in her letter to employees as PERSONNEL COSTS) and 13% All non-salary items which are listed as Utilities, Fuel, Textbooks, Computers, Office Supplies.

Okay so where are all the other expenses such as insurance, consultant fees (who are not personnel), maintenance, grounds keeping, etc? Did Mr. Eads leave these out or figure they were just too complex for the Board to grasp things other than certain types of expenditures? Are they in restricted funds (which would maybe explain the above referenced thirty million dollar change in revenues)?

Mr. Eads then goes on to advise the Board, "If a 10% reduction were imposed among all employee groups we would have to lay off at least 200 employees. Class sizes would increase. Programs and services would be reduced." He goes on to give slight scenario examples, advise to the board on broader economic consequences to employees and the community, and lays out criteria and a timeline for how to proceed.

Gee, and I thought the Superintendent did all this work with the support staff. Guess not. So an Operations Manager is left to decide or recommend the cuts to the budget which will threaten learning outcomes for 19,300 students? Why are we paying Ms. Lang again? Public Relations? Fundraising? Oversight of the Teacher's Union? Um, I don't see any evidence of activity in these areas. She has the equivalent of a CFO, an Operations Manager, a Public and Community Relations Manager, a Human Resources Person, a Security Advisor, and an Assistant Superintendent plus more.

I'd like to see Ead's resume and both Mr. Eads and Ms. Lang's job description please... thank you very much.

Let's visit the number relationships now. $16 million, the maximum predicted shortfall of revenue is, rounding numbers, right at 12 percent of Mr. Eads $134 million dollar budget. It is about 10 percent if you use the $165 million dollar budget figure (rounded up) from the audited return mentioned above (available on the D6 website).

So here are my thoughts. Do with them as you wish. I am not an accountant and there is certainly room for reasonable explanations in rebuttal here. If we could only get Ms. Lang present to answer questions.

The 10% figure does not sound as significant as $16 million dollars when put in the context of the whole budget. Although I can understand why they would put the shortfall out in concrete terms rather than a percentage. After all math proficiency in the District isn't great. If all areas of the budget receive a universal 10% reduction what would the effects be?

Why not go to the public and ask for specific help in raising funds to save specific favored programs? Why not make cuts in the "upper-crust" schools as deeply?

Here is another radical idea, if 87% of the costs are personnel based then why not encourage those able to do it to take a 10% reduction in compensation for a period of one year. Hence saving a little over $14 million with 100% participation and saving 200 jobs (according to Mr. Eads). It is a radical idea and rather a pushy one. Those making $180,000 a year, like Superintendent-What-Does-She-Do Ms. Lang would be sacrificing $18 thousand while a custodian like Eads-Used-To-Be, probably paid $18,000 a year or so would be sacrificing $1,800. On the flip side of the argument, the $1,800 would probably bite into essentials a lot more for the custodian than the $18,000 that wouldn't go into Ms. Lang's savings account. Alternative or future year benefits could be promised if better solutions develop. Although the Board's "promises" haven't proven to worth squat in contract negotiations.

So, why all the hoopla about consolidating schools, closing off buildings, selling buildings, and major changes? Hoopla is easy to create when there are other economic crisis in play throughout the State of Colorado and the Nation. Sometimes people have the tendency to overreact. Of course if you are one of the two hundred employees who have now been told job cuts are on the way a big reaction should be on the table. The sky is falling, the sky is falling, said Chicken Little.

But what if it's not. What if the crisis is only a 10% crisis, as compared to say a "huge" crisis. Let's put Chicken Little away for a moment and play out another scenario.

Greeley has a school district which has had some very hard times and made some very poor financial decisions in the past. In my own personal view the main issue in the district is poor hiring choices (see my prior posts on the topic) that have left the district riddled with semi-skilled ideologues and a "good old boy" network. They've made some improvements in the last couple of years with some minor administration changes and new Board members. But more changes are needed.

So I have to ask myself if I am a board member and have spent a couple years researching the problems and have identified the need to drastic changes to correct previous errors of judgment, how would one do that? Politely ask people to leave so you could replace them with more qualified staff and downsize the facilities? Somehow I don't think that would go over well.

The problem becomes clearer. How do you make the needed changes when faced with 87% of your costs in personnel and most of that backed by a Union--where you have to have a substantial and documented objective reason for firing someone? Laying someone off due to economics is an easier route. Additionally firing classified staff gets even easier if the Union has been substantially weakened through failed contract negotiations and faces little public sympathy in an era of recession in a working-class town. In fact, considering the District has forced contracts onto the teachers that are only one year in duration, for this current school year, it might be substantially easier. So easy that teachers may have almost no recourse at all. Political enemies are next on the list.

And then, finally, the house is clean and ready for a fresh start and the people mainly responsible for the problems in the first place get another turn at another go at fixing things without direct accountability or consequences for the initial errors.

Okay, I am not an attorney. I wish I had stayed awake during my fund accounting courses. The above is a conspiracy scenario and a rather scary one to consider. I have been through a restructuring myself and I have also been in charge of restructuring a couple of smaller corporations. I know how the strategies in management can be played out. It doesn't mean, they are playing out. But appropriate questions should be asked of the Board and their employee, Ms. Lang. Or perhaps Mr. Eads is the one to be questioned. I also know that there are presentations I haven't seen and documents I haven't read. I do not have any experience at management levels in a government supported organization. I also don't know the true legal ramifications of the contractual failures. And, truly, the Board is in a very difficult place any way you look at the situation.

Fixing both past and present errors in judgment and shortfalls with an open and forthright agenda would be the humane approach. Well, maybe not for the Board but certainly for the employees and community. Hiring highly skilled people to complete the downsizing would be sensible.

Establishing a written criteria for selecting people to be laid off based on a combination of actual performance, tenure, job duties, etc., would go a long way towards ensuring that the above scenario has not one bite of reality in it. A preliminary plan for educational quality recovery might be the next best comforting thing. How does the District go forward after the debacle.

Other things on my mind, where is Ms. Lang when the community needs to hear her professional assessment of the state of education in Greeley? Is direct oversight of the Principles and Associate Principles a good use of her time and skills during this crisis? Why is Mr. Eads signature on the cover letter of the Audited Financials in lieu of Ms. Lang's? Did Ms. Lang purposely not sign the audit? Is there another signature somewhere? Why is Mr. Eads, on the organizational chart, the supervisor of the finance officers in lieu of the Planning and Accountability Manager supervising this department? Maybe an ex-custodian has the qualifications, experience, and skills required to be in this position over a $134 million dollar budget. Maybe not. Personally, I'd feel a whole lot better if the information was coming out of Ms. Lang's mouth and not Mr. Eads'. At least I'd have a more complete picture of whether she has a handle on this mess.

There are 19,300+ students counting on us to get it right.

The District 6 Organizational Chart--from the Audited Financial Report

(If you double click on the chart it might open up into a bigger window. If not the chart can be found inside the audited financials on the District 6 website linked above.)