Counting Your Chickens, and Other Budget Matters

You've probably heard the good budget news by now-- according to current projections, our district looks like it will have about $3.5 million extra to spend this year, a welcome chance from past years when the budget was consistently in the red.   At Tuesday's board meeting, the budget process was kicked off with an initial presentation of this information, along with asking everyone to think about where the district should prioritize its spending.   Some suggestions included targeted class size reduction, technology improvements to replace some of what we had been hoping for from the failed bond, or focused attention on the most challenged schools to improve student outcomes.

While it's great to be able to think of various positive uses of this extra money to improve educational outcomes, there are a few notes of caution here.   My past election opponent (and now budget committee member) Rebecca Lantz brought up the fact that some of our revenue sources are not completely guaranteed, and also may be one-time bumps, so we should be very careful not to spend in ways, such as hiring new teachers, that implicitly assume they will be repeated next year.      It looks like there are a few areas where I agree with her!    Some also suggested that given the large number of red years, maybe it made more sense to bank some of this money for a rainy day?

This actually ties in to another topic that we didn't discuss much Tuesday, but came up in the Audit Committee meeting the day before.   The district's annual financial report, which was blessed by the auditors, looks reasonable and seems to show the district finances are in good shape.  But-- and this is a big But-- it does not show the full estimated future costs of growing PERS retirement liabilities.   Apparently for arcane legal & regulatory reasons, the discussion of future costs is based on old PERS estimates that only include a subset of the massive Tier 1 cost bubble expected in the next decade.    So, the net summary:  we have a huge future liability that is missing from the financial report.   The good news is that when I asked about this, Adam (district CFO) reported that the law has changed, and starting from the 2015 report, this PERS liability will be directly included.    I asked if he could try to include estimates of this in an appendix to the 2014 report as well.

Back at the school board meeting, one other aspect of the budget discussion really disturbed me.   This was the idea that we have to spend our surplus, because otherwise the legislators would think we don't really need the budget we have, and would feel safe reducing it next year.    This conforms to one of the worst stereotypes of government bureaucracies, that they constantly increase their spending to show their 'need' for the money, and thus are in a permanent state of monolithic growth.   We should have the courage to save when saving makes sense, and then openly defend our decisions in the political arena.   As I see it, agencies that prudently save instead of increasing spending when they are aware of a major upcoming cost are being responsible with the public money; they should be considered more, not less, legitimate stewards of public tax funds.

Anyway, given the uncertainty of some of our revenue sources and the expected upcoming PERS liability, I think we do need to be very careful about how we handle any budget surplus,  We must make sure that we set aside enough money so that we do not drown under red ink in future years, even if things do look good now.    Given the generally negative public attitude towards school district spending as shown by the recent bond vote, I don't think we can expect major increases in district funding.   I'd love to hear what you think about these issues, and (assuming we do have some portion of the surplus that we don't bank) where you think we should spend the extra money.