Judgement Day

Well, I guess today we find out how the board will vote. Will the Board vote for Outsourcing or will they vote to keep the existing staff at a 43% wage and benefits cut.

I hate anyone to lose their job but I have to think losing it completely is better than a 43% cut. Try as I may I cannot see any merit in cutting the lowest paid school employees by that much and not touching anyone else. It makes little to no sense to me.

Either way this decision will affect our community in a big way. Even then the worst is yet to come next years projections already have NB schools in another major budget shortfall, one independent report I saw has anticipated another shortage of up to $1.5 million dollars.

Times like these you need strong and knowledgeable management and leadership and frankly speaking we the public may be best served by the State of Michigan talking over and making some sensible business decisions rather than the blame and burden being placed on the bus drivers and custodial staff.

Collective responsibility I believe one Board member alluded to, maybe next year.

Jack Lewis, leadership and his hollow gesture

At a recent Board of Education meeting Lewis tried to pressure the other Board of Education members into giving up their expenses, a whopping $25 per person (which is let me tell you the lowest figure I have heard from any Board in this area). He reasoning was they needed to show leadership.

Jack Lewis and leadership do not belong in the same sentence.

This is the same guy that took money from the support staff unions to run for Board of Education and then promptly shared it with his fellow member Ronald Bower whilst they run a joint election campaign. This despite the union being totally against Bowers candidature. The same union today he is a devout advocate of removing from employment.

This is a guy who has actually been Board president and presided over the Board during perhaps the most divided time in recent years, a guy who has in my opinion failed to bring integrity and intelligent leadership to the table.

This is a guy who has not only voted for pay increases for his own family members but who has actually stood on committees that recommended those increases. Did he ever once recuse himself because he had a personal interest, absolutely not.

This is guy who has just voted to pass a contract that actually cost the district even more money than before in settlement of the latest teachers deal whilst at the very same time advocated the eradication of support staff jobs. He knew full well what financial position the school was in but it still did not stop him.

Jack Lewis, you may know something about leadership but you sure have not practiced it in recent years. To be a leader of a strong character and to get people to follow requires the need to show real sacrifice in difficult times, charisma and unquestionable integrity and you, just like the so-called leaders English and Bruff have not got it in you.

Hollow gesture by a hollow man.

Take a look at your fellow Board member who is undergoing chemotherapy but still shows up to do his elected duty, you could do worse than follow his morality and determination to do a good job.

Ignorance is no excuse!

When you read the preceding reports you cannot help but notice how little our school district both Board of Education and Administration have truly done to be fiscally responsible. As far as I am aware very few of the of the excellent ideas contained within these reports/statements have even been examined by North Branch. To me that shows up as a lack of quality, certainly at the professional level. Like I have stated before our Board of Education has been so busy with infighting and personal agenda’s over the last 10 years or so they have lost sight of why they are there. Their personal agendas have dominated their time sitting on what is a crucial counter balance to a school’s administration.

Whether you agree with outsourcing or not is a personal choice but I think it is pretty obvious that selective outsourcing is a weak management technique. To me you either outsource everyone and everything and get the best financial deal for the school, or you sit down at a table with every interested party until you come up with a joint plan shared by everyone involved, maybe more so in a small community like North Branch. It is called collective responsibility. At the most important positions in our district we are sadly lacking in knowledge, ability.and dare I say leadership!

You can’t outsource a liability

You cannot outsource a liability

This is something I alluded to in an earlier post when I stated Bruff has taken NO account of this increase in costs to the school. Maybe I am being overly hard on her, maybe she does not even understand the concept, so for everyone but especially for you Bruff you should find this instructional.

Robert Bobb made headlines again today when he announced Detroit Public Schools would outsource custodians and engineers to save $75 million.     

I recently wrote of the immensity of DPS’ budget problems so it’s tough to argue against anything that could stand to improve their financial condition.  But then again, it’s more complicated than that.  As much as no one wants to admit it, Proposal A binds all of our economics together in ways that aren’t so evident.  Let’s look at some numbers.

 

Proposal A shifted the employee retirement burden to the local school districts.  The state sets a percentage amount applied against all employee salary costs that funds school retiree health care and pension costs.  In 2010-11, this percentage is 20.66%.  Ten years ago the rate was 12%.  So in Grosse Pointe Public Schools’ case, if our rate this year were the same as 2002 our costs would be about $5 million lower.  That’s 5% of our total expenditure – a big number.

 

This obligatory retirement rate is THE number one reason schools outsource.  With contracted employees, you don’t pay this retirement.  This is an attractive option for school districts.  Retirement costs are routinely any district’s second largest expense.

 

Districts have gone this path – aggressively.  Since 2003 the number of employee salaries contributing to this retirement pool has decreased by a staggering 27% as school districts outsource anything they can – mainly substitute teachers, custodians, food service employees and bus drivers.  So school districts have saved a ton of money, right?

 

Maybe not.  As all those salaries drop off from the contribution pool, the state retirement system’s unfunded liability has skyrocketed.  How do you fix that?  Well, you raise the retirement contribution rate.  And now the bill has come due as the Michigan School Business Officials now estimate the retirement rate may rise from the current 20.66% to 27.5%. 

 

How significant is that?  The total of all Michigan school district salary costs are about $9.5 billion.  20.66% of that is just under $2 billion.  If the rate were to increase to 27.5%, the retirement burden borne by the local school districts would increase by $654 million. So remember that entry about the healthy increase in the School Aid Fund and its $523 million projected surplus?  Buh-bye.  It’s not even enough to cover this bill.  Schools could see their most significant per pupil funding increase in years and be as bad off as ever.

 

The “no free lunch” lesson is learned again.  More and more districts have outsourced and one effect has simply been that the temporarily reduced cost resurfaces in higher retirement costs. 

 

Not an uplifting message or analysis, but it’s important that as we read these headlines we realize that you can’t outsource a liability

Minimize Administrative Costs

Another excellent report from the Mackinac Center sure its dated (2002) but that does not detract from the business like approach to fiscal responsibilty.

For public school districts, as with any venture, fiscal responsibility starts at the top. This means controlling administration costs in Michigan’s public schools, particularly since expenditures on administration have risen faster than other budgetary areas over the past three years. According to the S&P School Evaluation Services, central administration costs have increased more than twice as fast as instructional expenses, including teacher salaries. Building administration (principals and school directors), grew at about 5 percent, more than the 3 percent that teacher salaries increased over the same period. Combined, these administrative expenditures make up 10 percent of total annual education spending, or $1.4 billion. This translates to more than $846 per–pupil in administrative spending.

There are ways of trimming administrative costs through outsourcing, while potentially alleviating some of the problems associated with district-run administration. For example, Detroit Public Schools’ payroll system has been fraught with problems, mostly stemming from employees not being paid correctly; outsourcing this to a private company that has a pecuniary interest in its accuracy would likely solve the problem entirely.

School districts of all sizes, though, could benefit from outsourcing administrative functions such as payroll services. The Texas State Comptroller of Public Account’s office (the state auditor) has been conducting school district performance reviews over the past few years. In these performance reviews, the Comptroller’s office estimates how much money could be saved through outsourcing certain administrative functions, among other fiscal recommendations. One example is the Eagle Pass Independent School District in the Rio Grande valley. The Comptroller’s office estimates that the 12,500-student school district could enjoy a net savings of nearly $43,000 per year if they outsourced their payroll functions. Mid–size districts in Michigan could realize similar savings.

Other administrative areas in which school districts should consider outsourcing include records management, benefits administration (flexible spending accounts, some insurance benefits, etc.) and even candidate recruitment.

Another way administrative costs can be reduced is by contracting out administrative functions entirely, which is precisely what happened a few years back in Minneapolis. That city’s school district became the first public school entity to name a private company to the position of school superintendent.

Minneapolis Public Schools (MPS) originally hired Public Strategies Group (PSG), a private consulting firm, in February 1993 to help balance its books. The district was $5 million in debt when PSG was hired. Around that time, MPS also hired a search firm to help locate a new superintendent. The district authorized the search firm to consider nontraditional candidates and even asked PSG if it would be interested in the position.

Peter Hutchison, PSG’s president, took the district’s suggestion to heart and offered himself as a candidate, intending to hold the position of superintendent temporarily. In 1994, the 45,000–student district accepted Hutchison’s proposal, but with a twist. It hired the entire PSG firm to serve, in the district’s words, “in the capacity of superintendent.”

Thus began a unique public–private partnership that ultimately resulted in four contracts between PSG and the district, beginning January 1994 and ending in June 1998. In Minneapolis, an entire firm’s expertise was brought to bear on a school district’s management for a mere $72,000 per year, far less than the average annual superintendent’s salary and benefits.

The Minneapolis school district paid PSG a total of $431,000 for its work during the first contract and its initial extension. This payment included just over $70,000 in base salary, with the rest being bonuses for meeting 60 percent of the school district’s goals. This outcome–based contract allowed the school district to pay most of PSG’s compensation only after the firm had thoroughly proven itself.

Local media also were impressed with PSG’s performance. According to the St. Paul Pioneer Press, PSG “made fundamental changes in a district that was desperately in need of direction and competence. [Hutchison] streamlined some ancient bureaucratic practices and brought about improved test scores in elementary grades.” The editorial continued, “Staff morale has improved, and administrators are encouraged to admit failure as well as success.”

The public–private partnership of Minneapolis Public Schools and PSG contains a lesson for school districts everywhere who wish to improve education while freeing scarce resources for other purposes. As Hutchison told the Minneapolis Star Tribune, privatization gave PSG “a chance to share … our success and the elements that have gone into that success, so that we can all learn how to get better.

Clearly, minimizing administrative costs can reap savings for public school districts of all sizes. Districts should therefore analyze their administrative expenditures first when they look to maximize classroom spending.

I can hear Bruff and English now, “That would not work in OUR district!”

Outsourcing the Superintendent

This is a post from a MICHIGAN SCHOOL TEACHER that I find very interesting and a cohesive plan and frankly I cannot understand why we as a district are not looking into this kind of action:

Public school districts are facing a major budget crisis in Michigan after almost a decade of disastrous fiscal management and poor policy decisions and school budgets are now facing considerable pressure. Almost every school district in the state is looking at cutting teachers salaries and benefits and many are also considering outsourcing or privatizing support services including custodial, food service, or transportation. Although these options likely do need to be considered, very few districts are looking at another potential source of savings outsourcing school administration services.

In our district, our administration building supports teachers in many important ways, including budgeting and financial reporting, taking care of accounts payable and accounts receivable, managing the payroll, taking care of grant reporting, keeping track of banking and investments, and service the debt in the district. Administration runs the human resources office, which hires employees, keeps their paperwork current so they remain highly qualified, manages benefits, and provides other services to employees in the district. We have a purchasing office which oversees purchases in the district, whether they be big or small, and we have a technology department to provide technical support to teachers and staff. This whole operation is managed by an expensive and highly paid Superintendent, who works with the community and school board and manages the whole operation.

All of these jobs can easily be provided by private businesses that may possibly cost the district less money or provide them with better services.

Private management firms are out there, providing these sort of purchasing, payroll, HR, and management services to small businesses in our nation so that those businesses can focus on doing what they know best. These firms have many clients and because of the large numbers of clients they can provide more efficiency based on economies-of-scale, lowering the costs of providing these services to a district. They also can draw on substantially more experience and resources than found in school districts, potentially providing better services than would be found in-house. And because these firms would be hired by the district, they would always fear losing their contract and thus be more responsive to the concerns and pressures of the district, perhaps more so than the districts own employees, many whom view their jobs as virtual lifetime guarantees.

If teachers and custodians and bus drivers are being asked by administration to consider all options and are being looked at to see if they can be outsourced, administration also needs to know that there are companies out there that can do what they do and that they do not have some sort of monopoly on job security and pay. If I were a union official in a tough bargaining fight, I’d make sure that I brought to the table this line of thinking, because perhaps a district could save vital dollars by privatizing or outsourcing its school administration and spare cuts to teachers and other support staff who actually work with students.

We await any responses from the Board of Education

I have sent an email to all Board of Education members with the exception of Jack Lewis (total waste of time) the question listed in the blog below ( A Challenge to the Board of Education).

Lets see how many have the courtesy to reply

A further challenge to the Board of Education

Can you please explain why you are not holding all of the school employees equally accountable for its financial situation?

I would just love for even one of you to have the decency to tell the public who elected you to serve them why you are targeting just one section of employees for cost savings.  You just concluded a deal with teachers that required them to pay FAR LESS than you are asking support staff to pay (both as a percentage of earnings and in actual dollar amounts)and they are naturally the least able financially to do so.

Make some sense of that for the community if you will.

To all our Bus Drivers and Custodians…

You are and have been valuable members of this community. I know you are being treated with a huge lack of respect and integrity by the school’s administration and by certain members of the Board of Education. I know from speaking to many of you that you have been made to feel worthless but that is simply not reality.

I want you all to understand the VAST majority of people in this community respect you and acknowledge your various roles in our community.  Those that don’t tend to be people who have little idea of what you do on a daily basis and the additional care and protection you place around the communities school children. Our schools will certainly NOT be as safe and as comfortable a place for schoolchildren as they once were.

Great job and I at least personally thank you

School needs additional tax revenue from local tax payers

Up for renewal in the fall of this year is a proposal by the school to continue a 18 mil tax cost as the school’s administration say they need the additional money for operations.

It begs the question why should the local tax payers continue to bail out poor financial performance by the schools administration and in particular its business manager. The financial situation facing the education world today are not new, yet it seems even knowing that they have failed to cut costs in order to meet expenditure.

I think by making 46 people unemployed and the suffering that will follow for those families the vast majority of whom live in our community, pay taxes in our community and have children in school the administration has already told you what it feels about the community it serves, IE we don’t give a damn!

I would hope members of our community will take note of that and vote in an appropriate manner in the fall.