Tight budgets

Fiscal warning signs highlight pressures on districts

The number of Colorado school districts tagged with one or more indicators of financial “stress” has dropped slightly in the past year, the state auditor reported Tuesday.

The latest Fiscal Health Analysis of the state’s 178 districts found that 70 districts missed one or more of the five benchmarks used by the auditor’s staff to gauge financial health. Last year 76 districts missed one or more benchmarks.

Missing benchmarks isn’t usually considered an indication of financial management issues. “Missing the benchmark may not necessarily mean there’s a problem,” said Gina Faulkner of the auditor’s office.

“We don’t necessarily have a problem with the indicators, but we want to hear the story behind it,” state Auditor Dianne Ray told members of the Legislative Audit Committee.

In recent years the story behind the benchmarks often has been districts making decisions in response to tight state support for K-12 schools. For instance, some districts have chosen to dip into reserves to cushion the impact of state budget cuts.

Missing benchmarks is “triggered because of very thoughtful, intentional decisions by school districts,” Jennifer Okes, director of public school finance for the Department of Education, told the committee. “They don’t take these lightly.”

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The five indicators

  • Ratio of general fund assets to liabilities
  • Adequacy of revenue available for debt payments
  • General fund ending balance
  • Amounts added to reserves
  • Annual change in general fund balance

State auditors review three years of individual district audits to compile the report. This year’s document covered from 2011-12 to 2013-14.

The report noted that the most common missed benchmarks involved reserves and year-to-year changes in a district’s general fund.

The report found that 28 districts missed two or more benchmarks, and of those, “Twenty school districts reported that they have experienced the effects of the reductions in state school finance funding.” The other reason cited by some of those districts was the cost of needed building repair and maintenance.

The 28 districts with multiple benchmarks “showed some sign of fiscal strain,” said Crystal Dorsey of the auditor’s office.

Okes notes that “many of these districts are small rural districts, and many have declining enrollment.” She said half have enrollment of 400 students or fewer.

Only one district, Pueblo 70, missed four of the five benchmarks. Superintendent Ed Smith described some of his district’s challenges to the committee.

“It’s a combination of things,” he said, including planned spending of reserves for the last five years and incorrect income projections last year. “It’s a delicate balance” to juggle finances and classroom quality. The 9,200-student district is on a four-day week, and “the only place left for us to cut is in the classroom.” Smith said.

Four districts missed three benchmarks, Adams 50, Alamosa, Englewood, and Silverton.

Ray said a key function of the report “is to start those discussions” about finances in districts and between districts and CDE.

Okes noted that 15 of the 20 districts reported as missing two or more benchmarks in 2014 have improved their financial situations this year.

School Finance

Big blow to Indianapolis Public Schools’ bid for tax increase: Realtors aren’t sold

PHOTO: Alan Petersime

A politically influential group representing real estate agents is taking the rare step of opposing Indianapolis Public Schools’ $725 million proposal to raise property taxes to increase school funding.

The opposition deals a harsh blow to the referendums, which have faced criticism and received little public support — driving the district to downsize the request earlier this week.

“Most importantly, we are concerned that property owners have not been given enough detail or clarity on the individual impact,” said the statement from the MIBOR Realtor Association. “The recent change to the proposed dollar amount only elicits more concern with IPS moving forward with their short timeline.”

The association opposes the request because it would be burdensome for Indianapolis residents, CEO Shelley Specchio said. She also criticized the district for not providing clear enough information on how the tax increase would impact individual property owners and how it would be used in schools.

“It was a difficult decision — not something that we took lightly, because of course, we really value strong quality schools,” Specchio said. But “we felt that the tax increase would be burdensome to homeowners.”

The district did not immediately return a request for comment.

The real estate agents group has about 8,000 members in Central Indiana. It has been one of the largest local contributors to campaigns for seats on the Indianapolis Public Schools board, giving thousands of dollars in recent years to support at least four of the current board members.

This is the first time the group has opposed an appeal for more money from a school district, said Chris Pryor, vice president of government and community relations. It has not taken a position on any Marion County school funding referendums, he said. But it has supported raising taxes for schools in other places, such as Anderson, and donated money to the campaigns.

Other influential groups, such as the Indianapolis Chamber of Commerce, have not yet taken positions on the referendums. Many community leaders agree that the district needs more funding, but they have raised concerns about the size of the request.

The opposition from the real estate industry group is a significant blow for the district because there has been virtually no campaign in support of the measures so far, said Ed Delaney, a Democratic state representative who lives in the district. The association is the first civic organization to take a position.

“I’m sorry that an organization like that, which has shown an interest in our community, would feel that they had to take this position,” Delaney said. “I’m saddened that we’ve come to this.”

Just two days ago, the school board responded to community concern by cutting its request from nearly $1 billion to about $725 million over eight years in a bid to win political support. The two measures, which will go before voters in May, would raise money for expenses such as teacher pay, special education services, and building improvements.

If the referendums pass, the tax increase for homeowners would be $0.58 per $100 of assessed value. For taxpayers with houses at the district’s median value — $123,500 — the new plan would increase property taxes by $23.24 per month.

School Finance

Teacher raises would survive $211 million cut from Indianapolis Public Schools funding request

PHOTO: Scott Elliott

Indianapolis’ largest school district cut about $211 million Tuesday from its request for extra funding, in a bid to win public support for the proposal.

That lower price tag comes with tradeoffs, district officials said. Even if voters approve the new plan, the district would dip into its cash reserves, put off building maintenance, and ditch expanded transportation plans, such as additional busing for students who move partway through the school year.

The new request also reduces how much the district would raise to pay for services for students with disabilities, though it was initially unclear by how much and how that could affect students.

But district officials said they still expected to be able to give raises to teachers if the referendums pass.

The scaled-back request would raise about $725 million over eight years, significantly less than the initial proposal of nearly $1 billion.

The board voted 6-0 in favor of reducing the amount of money the district is seeking, backing off the number members approved two months ago.

Board member Kelly Bentley said many school districts around the state have asked taxpayers for more money.

“We all own property in IPS. None of us want to see our taxes go up,” she said. But, she added, “I am confident that it’s money that’s going to be well spent, and it’s money that is necessary.”

Instead of pulling back spending on teachers and school staff, the district is making the new plan work by adjusting revenue expectations, said Chief Financial Manager Weston Young. The proposal is built on the assumption that state revenue will increase 1 percent each year, and the district will no longer hold as much money in reserves, he said.

“We are still committed to our students through our compensation for teachers and the wraparound services that serve those kids,” Young said.

Reducing the request could help build enthusiasm for the tax increase, which has not gotten much vocal community support. Instead, the referendums have been met with some concern over the size of the ask. But even though they have pared down their plan, district leaders will still need to persuade voters in May to raise their own taxes.

Superintendent Lewis Ferebee said the new plan is a balancing act between what taxpayers can bear and the cost of providing the level of service that families need. Ultimately, he said, the tax increase would pay dividends by helping the district prepare students for college and careers.

“This is one of those situations where you pay now or you pay later,” he said.

The move cut the potential tax increase for homeowners in IPS to $0.58 per $100 of assessed value, down from the initial proposal of $0.73. For taxpayers with houses at the district’s median value — $123,500 — the new plan would increase property taxes by $17.70 per month for operating expenses and $5.54 per month for building improvements, according to the district.

The referendum the board reduced would pay for operating expenses, such as teacher salaries, and under the new request, it would raise about $66 million per year for eight years. That’s down from the initial request of about $92 million per year.

Under the new plan, about $49 million of the money raised each year would go to staff pay, while the remaining $17 million would help pay for services and supplies, regular maintenance, and transportation.

A second measure, which was not changed, would pay for about $200 million in improvements to buildings, primarily safety updates such as new lighting and door security. Both measures are expected to go before voters in May.