An update from Superintendent McDonoughWednesday, January 15, 2014I would like to share some details that will help you understand the full picture and participate in our budget planning process in the weeks ahead.
As usual in times like these, parents and staff are growing increasingly concerned about the potential for budget cuts and the impact they could have on learning for next year. These are important concerns and it is critical that we listen carefully to them. At the same time, we have a responsibility to ensure the community understands the nature of the challenge and knows that even though the need is growing, our relative resources are declining.
After nearly two decades in our financial offices and now as Interim Superintendent, I understand the challenges that difficult fiscal environments present. I also know our school and leadership teams have the capacity to navigate the current challenge successfully so we can continue to serve students well. This will be difficult, which is why I am counting on you to help all of our families understand the full reality that we face.
Our costs are increasing very rapidly. We have committed to another three percent salary increase for our educators next year, which they absolutely deserve. This alone is an approximately $17 million cost increase, in addition to nearly $12 million in employee step increases. Health insurance and other benefits will cost an additional $7.6 million next year without any change to the level of service. Taken together, these salary and benefit increases alone add more than $36 million to next year's budget. When transportation, student services, facilities maintenance and other factors are taken into account, we believe we face approximately $60 million in rising costs - and this is without any major new investments or expansions to the services we provide to students.
State, federal and grant resources continue to decline, also rapidly. Fifteen years ago the state provided 31 percent of the BPS budget through Chapter 70. This year that number was just 14 percent. Ongoing challenges in Washington and the expiration of the Race to the Top grant mean that we project that we anticipate a loss of approximately $31 million in external funds next year.
These challenges are significant. At the same time, I want you to know that we have made a key decision: Overall, we will increase direct school budgets for FY15 by approximately $4 million. Whereas last year we allocated $447 million to schools through weighted student funding, next year we plan to allocate $451 million. While this is not nearly enough to sustain the increases in costs and external funding reductions, it is reflective of our core belief that the more resources we can push to the school-level through bounded autonomy, the better.
To accomplish this we will make significant reductions centrally. I have directed our departments to prepare for major reductions and reorganizations to help us ensure maximum flexibility for our schools.
Keep in mind, however, that the entire central office budget today is about $56 million, or 6 percent of the total. Another 16 percent of our budget is made up of school services that are budgeted centrally, which includes items such as summer academic and enrichment programs, transportation, utilities and many academic services. We are working to improve our direct services to schools in an effort to reduce costs and relieve some of the pressure on school budgets by "picking up the tab" for more services.
Another factor is at play beyond the budget challenge itself. As we discussed in December, last year at this time we overestimated the number of students we would serve this school year by 2.7 percent. Because we fund schools based on the number of students we expect to attend and their educational needs, this meant that about two thirds of our schools received significantly more funds in FY14 than they should have had we projected enrollment more accurately. Certainly, this was a "good" problem for schools to have - it meant most schools had more resources available to serve fewer students - but it is an issue we must correct to ensure equitable funding next year, because this year about one-third of our schools received less than they should have.
Our projections today are based on actual enrollment patterns - the "reality" of what we are seeing right now in our classrooms. For schools that benefited this year from enrollment projections that were higher than the actual result, this means next year's budget will be based on actual enrollment numbers that are smaller - which means fewer resources.
While this is a challenge, correcting this imbalance helps us ensure that we are funding every school equitably - and a student attending one school will have the same level of support as he or she would receive at any other school.
In total, just over half of our schools are expected to have lower enrollments next year than were originally projected for this year, and just under half will see an increase. This, of course, directly influences the resources that are available under weighted student funding.
School budgets are still being developed and are not final. We, like you, are hearing from parents and staff who are concerned about specific budget decisions - such as reducing a particular position or cutting a popular activity or program. While some of these outcomes will certainly occur, it is important to stress that final budgets are not yet complete.
School-based decision-making means that our school leaders, teachers and parents have lots of control over how to use the dollars they are allocated, provided they meet the needs of all students regardless of language, economy or ability. Weighted student funding means school allocations are calculated by the number and type of students each school serves. It also means that we must do our very best to ensure enrollment projections are accurate, so every student in every school has the same opportunities no matter the neighborhood.
According to Georgetown University, only one other major district sends more resources to schools thorough weighted student funding (as a share of the total budget) than Boston. We are just behind Saint Paul, Minnesota and ahead of districts like New York City and Denver. This means BPS puts more decision-making control in the hands of school leaders, teacher-leaders and parents than almost any other district in the nation.
Our budget teams are continuing to meet with school leaders to ensure school budgets meet our obligations to serve all of our students well. We are also adjusting enrollment projections - and therefore school budgets - to make them as accurate as possible. We are continuing our conversations with the City regarding the expected fiscal environment for next year, and we are paying close attention to developments in Washington and Beacon Hill regarding external resources, such as federal and state dollars.
Mayor Walsh has demonstrated that sustaining and improving the quality of all schools is a high priority for our city. Even as external resources decline, the City of Boston has not wavered. The Mayor's team has let us know that BPS will represent approximately 35 percent of the total city budget next year, which demonstrates the high standing that public education has within the new administration. Specifically, Mayor Walsh has indicated he expects to increase the BPS portion of the city budget by approximately $36 million next year, raising the city's total public schools investment to $973.3 million. This is a welcome increase that will help us ensure Boston continues to lead the nation in educational excellence.
If I were to sum up this entire letter in one sentence, it would be this: We are all in this together. A difficult choice in one department or office will have a direct impact on a classroom. Sticking by a program that is less than effective means we may not have the resources to fund another one that we know is making a big difference. Making the difficult choice to end a program frees up needed resources for another.
In the weeks ahead we will face many trade-offs, but there can be no change to our core mission: to eliminate achievement gaps, ensure a high-quality education for every student in every classroom, and continue to ensure the Boston Public Schools is the best urban school district in the nation.
Chief Financial Officer
Deputy Chief Financial Officer
Senior Financial Analyst
Senior Financial Analyst