A good portion of last week's work session was focused on budget discussions. As you may recall from my last blog entry, it looks like we will actually have more money than projected this year, freeing up some funds to spend on additional useful projects and causes: hiring additional teachers, investing in technology, etc. However, this projection was also accompanied by additional projections that starting 2 years from now, we expect continually growing deficits, peaking at $8 million near the end of the decade. (Revised projections reduced this, as discussed below, but we still see many future years with deficits.) Given likely upcoming deficits, should we be looking to spend all our surplus money or save some of it for the lean years?
I'm not a professional accountant, but it seems to me that fiscal responsibility and common sense demand that we should plan our budget with a focus on actually being able to afford all our costs for the foreseeable future. As long as I can remember, HSD has been constantly reporting to the public (==> you!) that the schools are in crisis, and don't have the money we need, so therefore you must approve new taxes/bonds/etc. for the children. How can we say this when our inflation-adjusted spending has not only been increasing without bound for half a century, but in the years when we do have sufficient money, we spend it all instead of engaging in prudent financial planning? Does a district that manages its funds like this really deserve to spend more of your hard-earned tax dollars?
That is why I and several other board members asked a lot of questions about this budget, and specifically requested that the district come up with a zero-deficit plan: a spending plan that will show how, for the projected future over the next decade, we can organize our district finances so that we will be able to afford the expenses in our budget. Of course there are no guarantees in life-- things might work out differently from the projections-- but we need to at least make an attempt at this, rather than spending all our money and hoping the future "crisis" will result in more gifts from the public or legislature.
The arguments for spending all our money in the good years seem to be focused on the following points:
"This year's taxes are collected for this year's children, and we're morally obligated to spend our money on them." I fail to see the moral or legal force of this argument: doesn't every government organization in existence spend some money in preparing for future needs, servicing past debt, etc? Not to mention the many families without children currently in public school who pay taxes: do they really prefer their money be instantly squandered when it could be better spent carefully over several years? Is it immoral or illegal to plan for the long-term needs of the majority of children?
"If we don't spend the money, the people and our legislators will think we don't need it, and give us less next year." As I've mentioned before, I find this argument extremely disturbing, both an insult to the intelligence of the voting public and a recipe for permanently snowballing government spending. Would you really vote in favor of a bond allocating more money for a government agency that openly espouses this philosophy? If we want any respect for our financial management, and want the public to have an open mind about future bond requests, we need to purge this line of reasoning completely from our district.
"We need to invest in our future." This is the one argument that has some force here: like a company that goes into debt to modernize a factory, maybe there are some cases where we should spend more money now to enable reduced expenses later. But we have to watch out for confusing two senses of the word "invest" here. In one sense, anything our district spends on education is an investment in our children-- but this kind of general investment, such as hiring new teachers to slightly reduce class size, does not reduce long-term expenses (and in fact often adds to them.) True productivity-changing investment, such as in the Hillsboro Online Academy which provides a new model of education delivery, really does modify education in a way that can reduce per-student costs in the long term. To the extent that we do increase expenditures, we need to carefully direct it towards cost-reducing investments rather than general feel-good spending.
"The projections are very rough anyway, and can't really be used for planning." This is an issue that can be solved: we asked our CFO, Adam, to try to make better projections. He emailed us back a week later with very different numbers, that show much smaller deficits and fewer deficit years, based on some more detailed assumptions. We do need to be careful here; in some sense these seem almost too good to be true in comparison to the previous numbers, so we need to carefully watch how the actual numbers end up in the next few years and continually recalibrate the models. However, past years have shown Adam's projections tended to be on the very pessimistic side, so it's not so unreasonable that the corrected projections put us in much better shape. In any case, we have a duty to intelligently plan based on the best projections we can, rather than just throw up our hands and give up thinking about the future.
Anyway, I am somewhat encouraged by the fact that the revised projections look like they will truly enable us to create a zero-deficit plan without making many major sacrifices as a district. Mike and Adam have promised to come back with such a plan at our next meeting, in addition to the current spend-everything plan. While we may have to give up a few elements of our wish list, and live with less class size reduction or arts grants, I really think that making long-term plans based on continually living within our means is the best direction for our district and our children.