Facts on fund balance & why we must spend on technology

UPDATE (Jan. 17, 3:25 p.m.): Mayor Karl Dean will file legislation with the Metro Council for $6 million in capital funding to purchase technology needed for PARCC testing.

Read the full press release from the Mayor’s Office.

PREVIOUSLY:

What is a fund balance?

The amount of money we receive from Metro Government is based on a projection of county revenue. When revenue is more than expected, the difference goes into a “fund balance,” a pot of extra money set aside for a rainy day. Likewise, if we do not spend all of the money in a given year’s budget, the remaining funds go into the fund balance.

Metro Government policy dictates we keep the fund balance high enough so that it’s equal to at least 5% of our operating budget, a number we’ve beaten handily for several years.

Are charter schools part of this fund balance?

Interestingly enough, no, even though they are funded according to the same methods we are. Any extra money they receive is readily available for spending. They do not need special authorization from the Metro Council as the district does.

What is the fund balance spent on?

The Metro Council must approve any use of the fund balance, usually based on a recommendation from the Mayor.

Earlier this fall, the Board of Education approved a plan to use some of the fund balance. The Board sent a request to the Mayor to use parts of its fund balance for big, one-time expenses including:

  1. Retirement incentives for 30+ year employees
  2. Technology and teacher training to prepare for state-mandated PARCC testing for Common Core State Standards
  3. A newer, more efficient timekeeping service that will help us better keep track of employee hours, attendance and pay

The Mayor recommended to Council to allow us to tap the fund balance for item #1, and we are grateful for that. The retirement incentives could save our district between $2-7 million per year in employee costs.

The Mayor did not recommend our requests for funding for timekeeping services and to buy technology and properly train teachers for upcoming PARCC tests.

What are PARCC tests and why do teachers need to be trained?

PARCC testing is the online testing that goes hand-in-hand with the new Common Core State Standards. It will take the place of TCAP and End-of-Course tests very soon. The entire state is moving to PARCC testing, along with most other states. Just like Common Core State Standards, PARCC assessments have been developed by the states, not by the federal government.

Huge portions of PARCC testing are only done online. That means our classrooms and teachers need to be technology ready before we can even take the tests, much less score well.

That gives us three big, immediate needs:

  1. Buy 8-9,000 laptops, enough to allow every student in the largest grades of every school to all take online tests simultaneously.
  2. Prepare our schools with strong enough wifi to handle all the simultaneous traffic.
  3. Train teachers on using the new technology for classroom instruction and on the specifics of PARCC testing and the technology to administer PARCC.

Need #2 is finished. That’s a project we proudly capped off this semester. Needs #1 #3 are still needed. We need to buy more laptops and train some 6,000 teachers and staff to ensure proper administration.

As you can imagine, that costs money. Our hope was to use some of the fund balance to pay for this, and incorporate future technology needs and upgrades into future operating and capital budgets.

Why didn’t you just ask for this money in the operating and capital budget process this year?

We did.  For the last few years, the Board of Education requested millions of dollars in technology funding from the Mayor and Metro Council, but those requests have only been partly met, if they were met at all.

We haven’t made a substantial investment in technology since the 2007-2008 school year, when we received $14 million for technology spending. Every year since has been $10 million or less, and some years have been $0. Our ten-year plan calls for $15-20 million every year in technology spending just to keep up.

What will you do without the funding for this technology and training?

We will have to find the money elsewhere. We must provide the technology for students to take PARCC assessments and must train teachers to use the technology and administer the assessments.

Just like the Nashville Area Chamber of Commerce recommended, we intend to be the leading district in Tennessee in implementing and communicating Common Core State Standards. And nothing has changed about the need to buy more technology for PARCC testing.

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Facts on district revenue and per-pupil spending

In past articles, we’ve shown you how much money we get and where it all goes.

Our community deserves an honest dialogue – without ideology and special interest talking points – about school funding that includes a fair assessment of needs, expenses, and revenue.

So let’s talk for a moment about where money comes from and under what circumstances we get more of it.

Where does revenue come from?

About a third of our operating budget comes from the State of Tennessee. They give us a certain amount of money per student and according to what kind of student. When more students enroll, our revenue from the state goes up, to the tune of about $3,200 per student.

The other two-thirds comes from the Metro Government, paid from county taxes and allocated by the Mayor’s Office and the Metro Council. The amount of money we get from the Metro Government is fixed. It is not tied to a per-student formula the way state money is.

This year our enrollment is up by nearly 1,800 students. About a third of our revenue (from the state) reflected that increase. The other two-thirds of our revenue (from the Metro Government) remained flat.

[NOTE: We received a $26 million increase in our operating budget from the 2012-13 school year to the 2013-14 school year. Of this $26 million, $12 million came from our own fund balance, $10 million came from the state and $4 million came from Metro Government.]

How does that money move around the district?

It’s a phrase people use a lot: per-pupil spending. Metro Schools spends around $9,100 per pupil in grades K-12. When a student moves from one school to another, the money theoretically follows him.

If the student leaves his neighborhood school and moves into a magnet school, he is moving from one district-operated school to another. The money attached to him stays in the same pot of district money and our per-pupil spending amount stays the same.

When a student leaves his neighborhood school – or a magnet school – for a charter school, the $9,100 moves to the charter management organization that runs the charter.

When a student leaves a district school for a private school, the money does not follow him to the private school. The district loses the state revenue associated with that student, but the private school does not get it. The funding from Metro Government is unchanged. The private school gets private money in the form of tuition.

The expenses of the neighborhood school don’t increase with every additional student and don’t decline with every student departure. The school is spending the same amount to keep its lights on and its hallways clean. The school still has teachers to pay and technology to buy and maintain.

Innovative practices that are designed to quickly improve achievement could face tough times, like extended learning time, model classrooms and certain kinds of school-level professional development.

What’s the solution?

Our strategic plan calls for more equitable use of resources, placing money where it’s needed most for fair service of students. We are already moving toward a model that puts more money directly in the hands of principals, allowing them to spend money in ways that will most directly benefit the unique needs of their students. That will help everyone decide best allocation of existing resources and ensure that money is spent in the most effective ways.

But what about revenue?

The answer will come from a community discussion of school finances. We must have an honest and open dialogue about revenue and expenses. The Board of Education began that conversation this fall, well in advance of the usual budget cycle.

This issue has wide-reaching effects, beyond just budgeting and buying textbooks. It can affect a school’s character and existence.

Let’s look at it at the individual school level. When a school is constantly threatened with drastic budget cuts or even closure, it has a more difficult time attracting students, which leads to further budget reductions.

It is a cycle that puts even more of a burden on teachers and principals to properly educate the students they already have.