The Octorara Finance Committee and Board of Directors met on Monday, January 18, 2015. All Board Directors were in attendance. The major discussions revolved around the 2016-2017 Budget, Legal services rates, and a potential efficiency audit by Leadership Consulting Consortium.
2016-2017 Budget Update
The current draft of the budget, based on the information at this time, includes a deficit of $1.5 Million. As we know from Herbein+Company’s Financial and Compliance Report last month, the District cannot continue to use the Reserve Fund to balance. The District not only has a policy that places limits on Reserve Fund usage, but protection of the Reserve Fund is necessary for the overall financial health of the District. Additionally, a strategy to replenish the Capital Expenditure Fund is needed in order to have sufficient funds to pay for capital expenses.
As a result, the Administration has created a plan to cut the 2016-2017 Budget deficit by $420,000. The strategy is for each grade (plus the Administration as an additional “grade”) work to find roughly $30,000 in cuts. The hope is that the grades could find creative solutions, but all options are on the table, including a reduction in teaching staff.
During the Finance Committee meeting, I brought up my concern that non-academics should be cut first. I did not want cuts that would affect Academic Performance and Growth, if it could be avoided. I don’t know if Dr Newcome was being intentionally obtuse, or was playing Devil’s Advocate, but he asked, “There is an argument to be made that everything is for the benefit of academics. What are you advocating, the elimination of sports?”
As an example, I noted that Octorara’s score for the Keystone Biology test is around 40, when the minimum standard is 70. Overall, the Octorara School District struggles with meeting minimum standards across all grades. I do not want cuts that would negatively impact Math, Reading, Science, and other core academics.
I also noted, the former Athletic Director was developing a plan to save the District by limiting the range teams would be allowed to travel for away games. This had the potential to save a considerable amount of money caused by travel. I would like to see cuts like this before any reductions in teaching staff, or other cuts that could negatively impact academic performance.
As a side note, not mentioned at the meeting…. three cuts I have been advocating for a long while would get us to the goal, and I don’t believe would have a much of an impact;
- Return to Half-Day Kindergarten – $240,000,
- Elimination of iPad program – $170,000, and
- Elimination of Armed Security – $70,000.
The total savings would be $480,000. However, I still don’t believe there is support for these changes.
Legal Services Rates
The Board reviewed and approved changes to the hourly rates for legal services, provided by Kegel, Kelen, Almy, & Lord. Additionally, the Facilities Committee also reviewed the rates charged by other law firms, to other school districts, and found Octorara is paying almost twice the per hour rate for Partner and Sr. Partner services. While several Board Members expressed satisfaction with the legal services provided by the current law office, the differences in rates can not be ignored.
It was the direction of the Facilities Committee that the Administration take a more comprehensive look at legal rates and costs, and make recommendations before the renewal of the legal services contract in June.
Leadership Consulting Consortium
Back in October, the Finance Committee met with Joe Antonio and Preston McKnight of the Leadership Consultancy Consortium. The consulting group had presented a business consulting proposal to audit the District, and make cost savings recommendations by applying business practices, long established and used in the private sector. The goal is to reduce operating costs without impacting services or performance.
The Finance Committee looked at the final draft of the contract on Monday. There still remained some questions, and needed edits. However, the Committee chose to not hold up voting at the regular session Board Meeting, which passed “as discussed” with one dissenting vote.
Brian Norris voted against the contract. He noted his objection was not with having an audit; his issue was with the company’s owners, which are employees at other schools. His concern seems to be ultimately that these individuals are moonlighting, and Norris has some issue with their second job being in the same area expertise as their primary. I think I got that right. I was having a hard time truly understanding his problem.
Traffic Light Service Contract
You may remember last week, we discussed the Board paying a portion of a maintenance agreement West Fallowfield Township has with Signal Service, Inc. The payment would be to service the traffic signals on or near the campus, at the cost of $1,225 per year. Before the vote, I asked that since the lights are not truly a district liability, was there a signed agreement with West Fallowfield Township that we would accept responsibility for these costs?
The discussion that followed revealed:
- The light is ultimately the responsibility of West Fallowfield Township.
- There is no known written agreement that the District would take responsibility in perpetuity.
- There is a possibility that West Fallowfield Township is receiving funds from the state for road maintenance, that would include the lights.
- No one knows who’s electricity is being used to run the lights.
- Both of the longest serving Board Members, Sam Ganow and Nelson Stoltzfus, stated the lights were put in before their time.
- Dr Newcome believes the lights existed when he first came to the District, 20 years ago.
- While it is said that the original agreement was the District would pay this cost indefinitely, there is no proof what the actual, original agreement was. It is possible that recollections of the agreement changed over time.
- Municipalities are responsible for traffic lights. It is unknown if other Districts are compelled to pay such costs.
Sam Ganow believes that if the District did not pay this cost, West Fallowfield Township would pull the lights. My response was that there was PennDOT approval needed to put the lights in, and I believe it would require PennDOT approval to have them pulled. I don’t believe they would get that approval.
Here is my ultimate position… those lights were put in more than 20 years ago. While there may have been a strong argument the District help absorb initial costs, that time has long past. It is unreasonable that West Fallowfield Township ask the District to pay these costs into infinity, especially when it is not technically or legally the District’s responsibility. Therefore, I voted against it.
While I was the only dissenting vote, there does seem to be interest by some other Board Members to explore this issue further. We may have a different outcome next year.