Ray Clarke attended last night’s TESD Finance Committee meeting and provided his notes from the meeting.
Reading over Ray’s notes, it appears that members of TENIG (Tredyffrin Easttown Non-Instructional Group) are once again going to find themselves front and center for the 2013/14 budget discussion. In prior years, it often looked like the TENIG custodians were the target in the school district’s budget woes. Privatization through outsourcing was seen by some as a way to preserve the classroom and its programming, but at what cost?
Outsourcing services that historically have been in-house functions with long-time employees is a major shift in institutional culture. How does the possible cost savings of outsourcing compare to the quality of job performance and productivity? How does one measure the safety factor that comes with the connection that current custodians have developed with the schools and the students? It is difficult to measure the ‘safety’ intangible to in-house custodial services, plus many of the employees live in T/E and their families are part of the community.
For the 2012/13 school year, the custodial workers offered a 10% reduction in their salaries and they did not take the 4.5% increase, which were contained in their existing contracts. In real dollars, the cost savings to the District was $197K in salary reduction, plus the additional percentage contractual savings for a total savings of approximately $285K. By giving back, TENIG’s custodial workers helped the 2012/13 budget and the additional bonus of saving local jobs.
Beyond the custodial workers, it looks like all of TENIG will be under the microscope for possible outsourcing in the 2013/14 budget. The plan is for separate RFPs for each of the various TENIG job functions – security, kitchen, clerical, etc. in addition to the custodial workers. The possible outsourcing of TENIG workers is still in the early stages of the budget process,
The following are Ray Clarke’s notes, along with his thoughts from the Finance Committee Meeting, 12/10/12:
The main topic of Monday’s Finance Committee meeting was the 2013/14 budget, in preparation for the January 7th Board vote on whether to apply for Exceptions.
The basic discussion framework is the projection model we’ve seen before, based off an estimate for the actual current year results. Since this 2012/13 estimate drives every out-year, its accuracy is critical – yet the numbers do not inspire confidence.
Total 2012/13 expenses are estimated at $107.8 million, $2.5 million less than the budget. The difference is driven by $1.5 million lower benefits cost (estimated by our benefits consultant), $0.4 million from the new TEEA contract plans, and $0.5 million net salary savings from “breakage” offset by 3 additional FTEs. So the year’s imbalance turns from negative to positive, which is the good news.
However, expenses are still $6.1 million (6%) higher than the year just completed. No-one at the meeting was able to provide a breakdown of this increase. I think that the PSERS increase is about $2 million of the number. Where’s the other $4 million going?
One clue might be that the total healthcare and benefits expense for the following year is projected in the model to be flat (0% increase), based again on the consultant advice. Could it be that this year’s expense is overstated in the model? I don’t think this can explain the whole $4 million, though.
So, it’s hard to put much faith in the projected 2013/14 imbalance of $2.8 million as a basis for discussion of next year’s tax rates. Moreover, this number also includes the one time TEEA bonus ($1.1 million?), which should not be built into the tax base.
It hardly seems worth spending much time on the model for the years beyond 2013/14, except to note that refinements in the current version include:
- Total healthcare costs increasing at 9% per year (previously 10%, 15%)
- Special Education costs split from “other”, and projected to grow at 7-10%, vs 2-3% for other
- PSERS expense will increase by $1.4 million next year, then $1.1 million, then $1.2 million, and then level off.
- An additional 6.2 teachers are projected to be needed next year to meet enrollment growth
A number of “budget impact items” were listed but not quantified. On the saving side, these include outsourcing not only TENIG functions, but also aides and para-educators. Each TENIG job function would be bid separately in an RFP which would, for example, allow discretion to select a supplier that met standards for benefits. I didn’t catch how the educational staff “out-sourcing” would work, but I gathered that it would allow the district to avoid the PSERS expense. On the increase side, the topic of adjustments (in base salary or one time) for non-contract employees is on the table.
Bottom line: we are clearly going into the next budget cycle with a smaller problem than in previous years (no contracted near double digit compensation increases). At the same time, though, we seem to have been lulled into being much less prepared and thence likely to vote for an Exception application with information even more imperfect than it needs to be. (Yes, Exceptions don’t have to be levied if approved ……) .
Separately, at the beginning of the meeting, Chair Fadem asked for the financials to be presented as more of a “vanilla” summary. Not sure that’s the direction the district should be going in.