Small districts, sharp axes: here are some proactive steps that can be taken at both the district and school site level to successfully cope with the continuing budget crisis.

Have the following questions crossed your mind as a small school district administrator who is actively working with board members, staff and community to prepare for the next round of budget cuts for schools?

* How are we going to cut our school budgets even further after last year?

* How are we going to maintain quality programs for children, and meet increased school accountability demands, with possible declining enrollment?

* Do we plan for further cuts despite voter approval of Propositions 57 and 58?

* What happens if the Democratic-controlled Legislature fails to support Gov. Schwarzenegger's budget plans?

* What happens if national economic recovery efforts fall short and fail to deliver badly needed additional revenues?

Small district superintendents and chief business officials have successfully worked with boards of trustees and district and school/community stakeholders to develop innovative ways to cope with severe budget shortfalls several times in the past 25 years. In each of those times, innovative school leaders have successfully reduced budget expenditures as far away from the classroom as possible to balance the school budget. They developed a long range-spending plan by projecting revenues and expenditures in current austere, poor economic times to cope with tough school finance times.

The initiatives

The Gann Limit (Proposition 4) was part of the taxpayers' revolt of the 1970s. It was a constitutional amendment to place limits on allowable growth in state and local government spending to increase no faster than inflation and the change in personal income. The current voter-approved Gann spending limit maintains Proposition 98 funding except in the most extreme state revenue shortfall circumstances.

Proposition 98 and later Proposition 111, approved by the voters in November 1979 and 1990 respectively, were a joint effort by the Education Coalition to establish a funding floor for K-14 education with three formula options.

Gov. Schwarzenegger was obviously successful in convincing the voters to approve Proposition 57 (the $15 billion Economic Recovery Bond) and Proposition 58 (the Balanced Budget Act) on March 2. He also initiated budget cuts in health and human services, and negotiated a partial suspension of Proposition 98 (a $2 billion funding increase instead of a $4 billion increase for 2004-05 calendar year) with the Education Coalition.

Despite the governor's proposals and negotiated concessions, there are still many unknowns that could seriously imperil school funding, including an anticipated $8 billion state budget deficit for 2004-05 and lesser budget deficits for following years, depending on the pace of the state and national economic recovery.

Consequently, it is still incumbent upon small district superintendents, chief business officials and their leadership teams to revise budget projects and develop another spending cut plan to balance their budgets.

To successfully cope with an anticipated budget crisis, what is the best process to follow in developing a budget expenditure plan? What specific ways can local school districts save money? There are several proactive steps that small district superintendents and/or chief business officers can take at the district level and principals can take at the school site level.

The first step is for districts and school sites to put together an information plan to keep the community, staff members and local press well informed concerning the status of the budget. This can be done through periodic press releases, factual community/staff newsletters and board meeting information items.

Small districts should also organize or re-activate a district or school site budget committee. The purpose of the committee is to develop a coalition of staff and community stakeholders as partners in the budget development and information process, and ultimately win their confidence and support of essential budget reductions.

The committee should be composed of board of trustees; approved employee association (union) leaders; selected and respected district and school site administrators; parent, community and business leaders; and local appointed and elected government officials. All members should be committed to serving a finite term of time on the committee.

The budget development process includes involving the budget committee in the annual external audit process, first and second interim reports, budget certification from the county office of education, developing a budget development calendar for board of trustees approval, estimating current budget year revenues and expenditures, setting expenditure priorities based on the district's strategic plan, and projecting long-range revenues and expenditures.

The committee could also be involved in developing awl internal audit process, and in setting two alternative scenarios for balancing the district budget, depending on the severity of the revenue shortfall: best-case and worst-case balanced budget scenarios.

Doing more with less

What are some innovative ways to do more with less at the small district level? Although there are countless innovative ideas for budget balancing, strategies need to be approached from the perspective of increasing revenues and decreasing expenditures for both alternative scenarios.

On the revenue side, increasing both enrollment and average daily attendance should be the top priorities. With the increased enrollment competition from charter schools and private independent schools, small districts and schools need to market their strengths and benefits to well-known members of the community and parent leaders.

Additional services to draw parents back to public schools are needed, including extended/after school day care, Saturday schools and independent study (which requires careful record-keeping, since it is a state audit priority).

All schools should set ADA goals. Although many schools have a lower student attendance rate, ideally, elementary schools should have a 99 percent + ADA, middle schools 98 percent, high schools 97 percent and continuation high schools 96 percent.

These percentages can be attained by educating parents on the importance of regular student attendance, aggressive staff follow-up of student absences, and maintaining an active School Attendance Review Board with a supportive district attorney to prosecute chronically absent students and their parents.

Another way to increase ADA is to develop a school calendar that provides for an early school starting date, well before Labor Day, so that the P-1 attendance report is reported before the winter break, and the P-2 attendance is reported before spring vacation. Later reporting of these two crucial reports from a later starting school date calendar serves to depress ADA.

In districts with large Hispanic student populations, many parents who are farm workers typically leave for Mexico for an extended winter holiday or work period during January. In many small districts, both enrollment and ADA tend to decrease for a variety of reasons, including early parent vacations and high school student dropout increases, which happen after spring break.

Other innovative strategies to increase revenues include in-house student suspension instead of sending students home, leasing/selling surplus property and/or school sites, hiring a consultant to pursue state-mandated cost reimbursements from the state, and implementing state-deferred maintenance matching funds (if state funds are still available).

Although charter schools can depress enrollment for regular schools, small districts can start their own charter schools to compete with non-district-sponsored charter schools or private schools. Student inter-district attendance requests should be monitored to comply with board policies, and if attendance exit requests are excessive, districts should investigate reasons for the student exodus and design strategies to reverse the trends.

Decreasing expenditures

When it comes to decreasing expenditures, the list of innovative strategies is much longer, but often more controversial. Possibilities include central office reorganization, classified staff restructuring and consolidation of custodial support. At a small central office, administrators can be assigned dual roles, such as the assistant superintendent-instruction also serves as the director of special education; a principal not only being in charge of a school site, but also serving as district safety coordinator or consolidated projects director. In some cases, administrators' consolidated projects time could be charged to consolidated budget(s).

Another way to reduce administrative costs is to develop a partnership with a local university that offers administrative credential programs. Experienced teachers can be re-assigned as intern administrators and paid a lower rate.

Small school districts should also consider pooling their resources, such as hiring one superintendent and a common administration for two or more small districts, while each district maintains its own identity. This practice is currently successful in rural Shasta County.

For certificated staff, changing the schedules of specialized teachers, such as School Improvement, Title I services, ESL and special education resource specialists by having them teach five days per week, with breaks between teaching times for required paperwork, instead of four days of teaching and one day of paperwork, is cost-effective. This eliminates the need for additional itinerant teachers to fill in on the one day off.

Early retirement or golden handshake programs can be major expenditure reductions by encouraging older teachers high on the salary schedule to retire early with a 2.2/2.4 retirement incentive and replacing them with comparable, lower salaried teachers.

Implementing internal collective bargaining by having the assistant superintendent/personnel director negotiate with teacher and classified unions on behalf of the board of trustees is another cost-saver. Use of an attorney or professional negotiator can cost up to $30,000, without any guarantee of full state reimbursement through mandated costs. A skillful internal district negotiator could reduce labor unrest, improve overall employer-employee relations and staff morale while saving the district money.

During negotiations, controlling health benefit costs should be the top priority. A second priority is not giving away the store when deficits are restored in any budget year. Any restoration of a cut should not go on the salary schedule. Dollars, not percents, should be negotiated, since increased percentages equal to the COLA cost more than revenues. And never give away language. Language is forever, while salaries are for one year. "No" is never an unfair response.

On state mandated costs, a small district should hire a mandated costs consultant, who can more effectively collect and process district claims for mandated costs reimbursement by in-servicing all levels of staff to record these claims. Although there is no guarantee that the state will fully reimburse claims, mandated costs consultants are paid only a percentage of the actual reimbursements. The potential revenues for small districts from these reimbursements for expenditures ranging from collective bargaining to processing student expulsions and suspensions can be substantial.

There are a number of expenditure reductions that small districts should consider in business operations areas. Careful monitoring of the need and numbers of both cellular phones and land telephone lines is a good start. Walkie-talkies are much cheaper over the long run, are equally efficient on campus, and eliminate potential abuse of cell phone personal use. Over time, some land telephone lines tend to become underutilized, and should be disconnected. Districts should also weigh the expense of buying vs. leasing telephone equipment.

The use of automobiles by staff and payment of mileage is a major expense and should he carefully monitored. Small districts should severely limit the purchase of automobiles for business use. Payment of mileage on an employee claim basis should be implemented, but carefully monitored.

All small districts should seek ways to pool their insurance expenses, including worker's compensation, health/dental insurance and fire/peril/liability. Most county offices of education offer Joint Powers Agreements with a locally elected JPA governing board for sell: insurance arrangements. They can contract out insurance plan management for a finite expense with appropriate private companies while carefully monitoring expenditures, fund reserves and premium increases with these companies. JPAs have proven effective over the years at reducing local district expenses.

There are a number of ways that small districts can save expenses with classified staff, although prudent care should be exercised to maximize cooperation with the local classified employees union(s). Controlling and scheduling vacation, illness and worker's compensation leaves; and paying substitute help at least 5 percent less than beginning classifications, are excellent starts.

Small districts should also review the use of custodial time. Starting a student anti-litter campaign could reduce custodial services. Charging a portion of custodial expenses to categorical program classrooms and charging kitchen/cafeteria custodial services to the food service budget may also help.

Food service and transportation

Small districts should strive to make food service operations completely self-supporting, including the replacement of expensive equipment. Inviting a Department of Education food service consultant to visit the district for auditing, observing and recommending changes for more efficient food service operations is prudent. These consultants usually recommend maximizing meals served per employee labor horn, joining a food service JPA to bid out purchase of commodities and supplies through a distributing, and bidding out milk supplies through a local dairy.

Student transportation is another major small district expense that warrants review. Schedules should be reviewed and policies revised for student pick-up points. Field trips should be limited, and a full-day kindergarten should be considered to eliminate extra home-school runs for these students. Small districts should seriously consider pooling their transportation services into a multi-district JPA, saving a transportation director and mechanic expenses and providing competitive driver compensation.

As an example, Southwest Transportation Agency in southern Fresno County pools eight geographically adjacent small districts into a single transportation agency that provides all home-school and field trip transportation services for these districts. This agency, governed by a board of directors with one or two representatives from each serviced district, hires a chief executive officer to employ and train staff for operations and control of expenses. A JPA is preferable for contracting to a private transportation contractor, because of greater district control over operations expenses through direct representation with a JPA.

Visionary leadership

It takes visionary leadership from district and site administrators to review their district strategic plan to meet accountability challenges and maintain quality programs to meet the needs of all students. It also takes a collective wisdom of minds to seek unique ways to improve the efficiency of educational and support services at reduced costs.

For those districts experiencing declining enrollment, it is critical for small district superintendents and chief business officers to cut staff each year to match the decline. Since multi-year projections deal with the future of present decisions, administrators need to plan daily. Strong, proactive leadership is critical during budget cuts, since superintendents and business managers are held ultimately accountable by school board members, staff and the community for a balanced budget.

References

Elmore, Richard and McLaughlin, Milbrey. (1981). "Reform and Retrenchment: The Politics of California School Finance Reform." A Rand Note, pp. 35-45.

Hall, Kenneth F. ACSA 2004 Symposium Presentation in Monterey, CA. Avoiding the Traps of 2004. School Services of California, Inc.

Legislative Analyst's Office. Analyses of Propositions: Proposition 57 & 58. www.lao.ca.gov/initiatives/propositions.

McFadden, Brett. (Jan. 11, 2004). Governor Releases 2004-05 Budget. ACSA Alert.

Townley, Arthur J.; Schmieder-Ramirez, June H.; Webmeyer, Lillian B. (2002). School Finance: A California Perspective. Sixth Edition. Dubuque, IA: Kendall/Hunt Publishing Co.

True, Nellie B. (September 1995). "Doing More With Less." CASBO Journal, pp. 39-42.

EdSource. (December 1992). Understanding School Budgets: Budget Calendar (figure 5).

Clifford E. Tyler is a lead faculty member in educational administration at National University-San Jose. He served as superintendent for 20 years in several districts in four states, including 13 years in three California school districts: Cutler-Orosi Unified, Amador County Unified and Laton Unified School Districts. Robert W. Kibby is a lead faculty member in educational administration at National University-Sacramento. He has been a superintendent for 10 years in Lake Isabella School District and a chief business officer in Cabrillo Unified and Woodland Unified School Districts for a total of 13 years.