FY 2012 budget

UPDATE: The Boston School Committee approved the FY2012 budget proposal in a unanimous vote on March 23. Mayor Thomas M. Menino presented it to the City Council as part of his citywide budget package.

This is the first time in nine years that BPS staff has presented the School Committee with a preliminary budget that is fully balanced, despite the fact that we began with a $63 million anticipated shortfall for FY12. This budget represents a fundamental shift in the way we allocate money to schools and is a far more equitable, transparent and empowering system than we have ever had before. It also reflects difficult choices made by a cross-functional team of principals, headmasters and central office staff, who have worked day and night for the past three months to develop this plan for funding our schools.

The proposed Fiscal Year 2012 (FY12) general fund budget totals $829,533,000, representing a 1.0% increase from the FY11 appropriation of $821,382,404. But this increase does not tell the full story. When rising benefits and salaries are taken into account, as well as the substantial loss of federal stimulus dollars that will expire this year, BPS would require approximately $884 million next year. This proposed FY12 Budget provides the financial blueprint for carrying out year three of the five-year Acceleration Agenda for the Boston Public Schools, which is designed to close access and achievement gaps and raise academic performance in every classroom of every school.

This budget is unique for two reasons. First, it funds students and not buildings. From now on, resources will be allocated to each school based on its enrollment and the specific needs of its students. This is a change from the previous system, in which we tried to maintain a school’s staffing level before we accounted for the number or needs of the students who actually attended that school.

Second, these choices address deep structural inefficiencies in our system and do not rely on one-time measures designed to help us get by for another twelve months. Last year, with the exception of our teachers, nearly every BPS employee took a wage freeze. We deferred important maintenance and turned down the heat. These choices allowed us to continue to fund classrooms but did not address structural inefficiencies.

Since then we have worked hard to identify these challenges and confront them. The budget we present today upholds a core goal of the Acceleration Agenda: To redesign district services for effectiveness, efficiency, and equity.

-Dr. Carol R. Johnson
BPS Superintendent

Attachments:

Budget overview memo
Changes to school allocations and soft landings
FY2012 Budget Documents
FY2012 preliminary budget presentation
Preliminary per-pupil school allocations (these are subject to change as the phase-in is applied)
Example of how a school budget is set under the weighted student funding formula
Changes to Special Education programs
Changes to programs for English Language Learners
One-page fact sheet on weighted student formula
Questions and answers about Weighted Student Funding and the FY12 budget
FY2012 preliminary budget news release

The Fiscal Environment

The most challenging economic conditions in more than a generation have magnified already intense financial pressures on our budget. Even before the recession began in 2008, we knew we would have to confront at least three major trend lines that were drawing resources away from our classrooms:

• Health care: Even though benefits themselves are not increasing, providing health care benefits draws a greater share of our general revenue each year. The cost of BPS-provided benefits has more than doubled in the last ten years. Benefits now consume more than 15 percent of our budget.

• Salary increases: Salaries represent 67 percent of our budget and are increasing. Approximately 9 in 10 BPS employees are represented by a bargaining unit. Adjustments are difficult even during economic emergencies. The step-and-lane system, previously negotiated cost of living adjustments and longevity pay mean that most of our employees receive at least two types of salary increases every year, regardless of the economy. These increases come with no consideration of student performance or budget challenges.

• Transportation: A majority of our students rely on bus transportation to get to school every day. BPS also provides – and pays for – bus transportation for charter school, private school and parochial students who are not enrolled in the Boston Public Schools. State law requires BPS to drive charter school students to their schools even if they are outside their home zone, which is a much higher level of service than is provided to most students in BPS. BPS already spends more than $70 million per year on transportation. If nothing changes, annual transportation costs are expected to exceed $100 million in the next three years.

• Charter schools: The enrollment cap is gradually increasing and more students are expected to move into public charter schools, which mean additional costs for BPS (such as transportation) even as money is diverted from our system. This requires BPS to become more competitive even as our relative resources decline.

These pressures and existing costs help explain why BPS has cut spending on instructional supplies by 65 percent in the last ten years. Investments in our facilities have increased just one percent since 2001, even though inflation was 27 percent in that period and our overall budget has increased 39 percent.

Despite these challenging times, BPS has increased the graduation rate to the highest level it has ever been. Our drop-out rate is the lowest it has been in more than 20 years and our students are outperforming their urban peers in nearly every measure. The achievement gap is narrowing and we are leveraging additional resources and new authority to turn around underperforming schools. We are leading the national conversation about Common Core standards and our influence helped secure tens of millions of dollars in federal Race to the Top funds for Massachusetts.

We must protect this progress and continue the improvements outlined in the Acceleration Agenda. This year, we face new challenges and opportunities as the financial landscape shifts again:

• Federal funds: Stimulus funding (ARRA), which helped us avoid deep program cuts and layoffs in the last two years, ends this June. Last year, Congress appropriated an additional $10 million for education jobs that BPS saved and expects to spend in FY12. No additional federal appropriations are expected this year.

• State funds: The Governor’s recommended FY12 budget includes an additional $1.1 million increase in Chapter 70, but an $11.6 million reduction in unrestricted general government aid. The net cost of state-funded public charter schools increased by $8.2 million, or 15%.

Our work this year

It would cost approximately $884 million to continue doing business the same way in FY12 that we did in FY11, when our general revenue budget was $821 million. This means we face a $63 million funding shortfall for FY12:

Rising continuing costs ($42 million):
•   Benefits: $9 million
•   Step increases: $11 million
•   Transportation: $3 million
•   Temporary cost-saving measures in FY11 that must be spent in FY12: $10 million
•   Other costs, such as out-of-district tuition and Pathways investments: $9 million

Loss of federal dollars ($21 million):
• American Recovery and Reinvestment Act (“stimulus”) funds: $21 million

At the direction of the School Committee and the Superintendent, BPS launched Redesign and Reinvest in 2010. This ongoing effort will protect our academic progress by permanently closing the budget and capacity gaps that direct dollars to buildings and rising costs, rather than to students, high-quality teachers and classrooms. Redesign and Reinvest addresses five key challenges.

The School Committee vote in December 2010 to close and merge some schools has created flexibility to fill empty seats while eliminating administrative overhead and positions. Our next step is to ensure the resources needed to ensure students’ success follow them wherever they attend school. The proposed FY12 budget carefully streamlines many central office functions while actually enhancing the services that BPS provides. In addition, the budget restructures the method of developing school allocations to support this goal. This fulfills a promise we made in the 2009 Acceleration Agenda, which itself was based on a 2007 task force analysis.

In order to help schools manage this change, we will implement the shift to weighted student funding over a two-year time frame. This will help mitigate some of the significant budget impacts that would have occurred had the change been implemented in a single year.

The other important reforms in the Redesign and Reinvest process are underway but will take time. Our collective bargaining team has already met with the leaders of our teachers union sixteen times to discuss contract reforms. Improvements to our student assignment system will require a thoughtful community dialogue this spring, summer and fall. Like the FY12 budget, these critical changes will improve outcomes for students and create more high-quality options while putting BPS on a path to financial predictability and stability.

FY2012 budget details: Closing the gap

BPS proposes to close the $63 million budget gap through a variety of new revenues and structural changes to our ongoing operations. Many of these changes will affect the way we serve students and families. They will require careful, ongoing support and evaluation as they are implemented throughout the year. BPS has already eliminated 1 in 12 positions in the last two years -- nearly 800 positions. The changes outlined here will result in an additional 250-300 positions reduced. Because we normally experience several hundred vacancies per year due to retirements, attrition and performance-based severances, the exact impact on current employees is not yet known.

New revenues:
• Federal jobs bill and increased BPS base appropriation: $18.2 million

Redesign academic services:
• Redesign classes to serve students with disabilities: $2.8 million
Students with disabilities will move from grade to grade within a single school, supported by highly trained, specialized staff. This provides predictability for families and replaces the old system, in which students often moved to different schools each year based on staffing ability and space. These changes were recommended in an external audit requested by Superintendent Johnson in 2009. BPS is working closely with SPED PAC to implement these changes.

• Schedule therapists more efficiently: $2.0 million 
BPS employs therapists and also contracts out services to third-party providers. A close examination of the caseload of our own staff found opportunities to schedule our in-house therapists more efficiently. By adopting new scheduling software, we are able to increase productivity and reduce our reliance on external providers.

• Redesign OSESS administrative support structure to integrate academic support with compliance: $3.0 million 
The Office of Special Education and Student Services expects to restructure some positions, including ETFs and curriculum specialists, to shift from a compliance focus to a focus on achieving academic outcomes for students while also meeting regulatory requirements. The savings are achieved by shifting some of these responsibilities to school-based staff, such as existing administrators.

• Consolidation of centrally assigned ESL teachers: $2.5 million
 In FY11, nearly 70 ESL teachers were assigned to schools by the central office. This was necessary to rapidly scale up our capacity to teach newly-identified students who needed help learning English as a second language. Since then, we have doubled the number of ESL-certified teachers within our system. It is our expectation that principals will leverage the ESL-certified staff already in schools to provide ESL services. BPS is monitoring this closely to ensure that all students learning English receive appropriate services.

Fill empty seats:
• School closings: $10.6 million 
Six mergers and ten school closures result in administrative and facilities cost savings.

• Smarter class size management: $11.0 million 
Even though our contractual class size limits in our high schools is 31 students per class, the average class size is just 22. By strategically managing class size we can offer more students opportunities in higher-performing schools while reducing costs. BPS will set minimum class size targets that are lower than current average class sizes in early grades, and slightly higher than average class sizes in upper grades. Under our weighted student funding model, a school receives sufficient funds to staff a class correctly once it reaches these minimum targets. This means that additional students above the minimum class size will bring in funding above and beyond this level, which can be used for other purposes as the school sees fit. Our low class size maximums are not changing. Here is how it would work:

Elementary Grades K1-2Average current class size: 21
New target minimum class size: 19
Contractual class size maximum: 22

Elementary Grades 3-5
Average current class size: 22
New target minimum class size: 20
Contractual class size maximum: 25

Middle Grades 6-8
Average current class size: 22
New target minimum class size: 23
Contractual class size maximum: 28

High School Grades 9-12
Average current class size: 22
New target minimum class size: 25
Contractual class size maximum: 31

• Additional efficiencies in Transportation, Food Services and Facilities: $7.4 million 
Increased participation in federally-reimbursed breakfast and lunch programs has generated approximately $1.1 million. This increase has helped BPS reduce the annual Food Services subsidy from $6.7 million two years ago to just $1 million in FY12. BPS is also reducing maintenance costs by $2 million, although last year’s deferred projects are being restored. Transportation costs will be reduced next year because fewer bus routes will be needed due to school closure and the creation of highly specialized strands in OSESS, which will place students in classes within their home zones.

• Generate external funding for new academic interventions that were funded by ARRA: $3.5 million 
Governor Patrick’s proposed budget includes a restoration of state “circuit breaker” funding. If this is successful, BPS will be able to maintain some programs that were funded by the stimulus act. Otherwise, BPS would achieve savings in part by pausing additional enhancement of our literacy curriculum and delaying the purchase of new textbooks.

• Various reductions in centrally administered services: $2.0 million 
This represents the cumulative effect of various central office cuts, such as a reduction in support at some central offices and minor offsets achieved through external grants.

FY2012 budget details: Weighted student funding

Consistent with the Acceleration Agenda plan to ensure resource equity for all students no matter what school they attend, we will implement a weighted student funding allocation process. Under our current system, BPS allocates budgets based on the number of programs and students in each school but doesn’t necessarily make decisions based on specific student needs. This used to work well, but has become less effective as BPS has been forced to make difficult choices, layering cuts on top of cuts for several years in a row because of significant budget shortfalls.

BPS is ready to shift to a weighted student funding model. This is more equitable, transparent and predictable, enabling schools to make greater academic progress regardless of the economy. It is the system already used by other major urban districts to allocate budgets, and it is the system already used by our own public charter schools. Under a weighted student funding formula, dollars follow students. This means that BPS anticipates what each student needs each year and then delivers the appropriate funds to the school that student attends. Dollars no longer follow programs, buildings or schools. Instead, we allocate budgets solidly based on student need.

• Weighted student funding is about spending limited dollars much more wisely. 
Our health care, salary and transportation costs are rising rapidly and are taking resources out of our classrooms. The shift to weighted student funding allows BPS to more efficiently direct dollars to where our students need them most; but it does not replace the need to make tough decisions about the way we spend money now. Weighted student funding allows us to focus on investing in programs that work, protect the progress we have made and put the interests of students first in every decision we make. We would propose this change regardless of the economy; it is simply the right thing to do.

• Schools will receive funding based on their students, then will decide how best to spend it.
Schools’ budgets will be based on who they are educating -- not the flat number of students or staff they usually have in the building. For example, schools with a higher percentage of students whose family income is at the poverty level would need more resources to educate students, or a student with language challenges might require more highly specialized staff. In these cases, the school would receive a higher per-pupil amount. This per-pupil amount would follow the student to whichever school he or she chose.

• School budgets may change.
A weighted student funding model creates a baseline per-student funding figure and then adjusts the number up or down depending on individual student need. BPS is working with principals and headmasters to help them allocate these dollars most effectively and in some cases will implement these changes gradually.

• Other school districts, including Massachusetts charter schools, already set budgets this way.
This is the system that Massachusetts already uses to set public charter school budgets. San Francisco, Baltimore, Washington D. C., New York City and Philadelphia have adopted this approach.

• Individual school budgets are being finalized and community conversations are needed.
The weighted student funding model links school budgets directly to enrollment projections. Principals and headmasters received their initial allocation figures and are meeting with teams from several central office departments to reconcile enrollment projections with their initial allocations. In some cases, schools would experience a significant difference between their FY11 and FY12 budgets if weighted student funding were implemented immediately. BPS is working with these school leaders to develop a “soft landing,” or phased implementation over the next two years. This approach would allow all students to receive the resources they need while ensuring program consistency at schools with unique situations or academic services. Any additional allocations to these schools would require either a reduction in another school’s allocation, a reduction in other district services, or external funding. BPS will hold community dialogues in February and March to discuss budget proposals and get public input to develop appropriate funding levels for FY12.

Under a weighted student funding model, BPS calculates per-student funding by assigning a value to the various factors that go into meeting a student’s academic needs, and then adding them up. Every student has a different one, which is based on his or her grade level, educational needs, and learning challenges or ability. A school’s budget is calculated by adding the individual funding estimates for every student projected to attend that school in the fall.

Here is how we calculate an individual pupil weight:

Grade-level

These weights are a function of class size. The weights are heavier in early grades because the student/teacher ratio is smaller. Our contracted class size maximum is not changing and the weights are set at target class sizes. In addition, incoming 9th grade students defined in our Leading and Lagging Indicators as “high-risk” or “off-track” receive an additional weight. This extra funding allows high schools to provide targeted resources to at-risk students.

Poverty

Students who come from a challenging home environment sometimes need extra support in the classroom. This is why we set higher weights for students who qualify for a free and reduced lunch program. In addition, schools that educate students living in poverty at a higher level than the district average will receive extra funding on top of this increased allocation. Schools with high concentrations of students living in poverty may also receive federal Title I funds, which are in addition to the general fund school allocation that flows through a weighted student formula.

English Language Learners

We are providing common weights for all English Language Learners and distinguish only by grade level. This is because, while some students may require less attention as they increase their skills, they may still require targeted materials and support, which require extra funding. This also eliminates any incentive to shift students in and out of levels based on anything other than actual student learning. The contractual ELL class size maximum is 20, and our weights are based on a target class size of 19. The weights increase in upper grades to balance out the decrease in regular education weights for the same grade levels. The recommended SIFE/NLL class size target is 15.

Students with Disabilities

These weights are calculated based on optimal staffing levels for varying degrees of need as recommended by our Office of Special Education and Student Services. Our new Highly Specialized Setting programs are designed to replace existing Substantially Separate classes. We have based weights on class size targets set at one or two students lower than necessary staffing levels to allow schools flexibility to purchase additional resources if needed. The weights set for “full inclusion” programs account for specialized Higher Complexity programs at the Henderson, Lyon and Mason. Our Lower Complexity programs are for all other students categorized as Full Inclusion at other schools.

Vocational Students

This measure increases pupil funding by 50% for students in designated Vocational programs. This weight was developed based on the standards the state gives us in their funding formula.

School Foundation

All schools, no matter what size, receive $200,000 to support a core administrative function. Typically this will include a principal or headmaster, an administrative support position, and additional funding for overall school support. Principals and headmasters may create other positions based on funding levels determined through class size management and the weighted student funding model.

Background information

On November 17, BPS Chief Financial Officer John McDonough presented the School Committee with a picture of the projected FY12 $63 million budget gap, as well as information on historical trends and spending patterns. The presentation also includes a picture of the choices that stand before us. Click here to view the presentation.

On November 3, BPS presented the School Committee with background on the $63 million budget gap that is projected to exist in FY2012. For additional background, please view the full presentation.

BPS proposes a shift to a weighted student funding model. For more information, see this one-page fact sheet.

For a schedule of School Committee March 2011 budget hearings, click here.

See also the FY2011 Budget,FY2010 Budget and FY2009 Budget pages.

What do we buy with our money?

82% of the BPS budget is spent on salaries and benefits. The cost of BPS-provided employee benefits has more than doubled in the last ten years.

What is our challenge?

Before collective bargaining increases, BPS faces a $63 million budget gap in FY12 and a $91 million gap in FY13.

Our money buys less today

Employee benefits and most salaries have increased faster than the BPS budget. This means every year, there are fewer dollars available to spend on everything else.