Career Corner

Where do we go from here?

From my first two blogs, you should have the impression that I have issues with the budget cuts in education. Yes, revenues may be down due to a variety of reasons but it seems like education is the first place to cut. I would look a little harder at some other budget lines, salaries and government waste and inefficiencies.

There are some positive points to the down economy. Because the demand for many products and services is down, companies are more willing to negotiate prices. The vendors are hungry. Ohio has been able to get 30 new school buses for the price of 37 (that is three FREE). This is because the manufactures are sitting around doing nothing and are thankful for any business they can hang on to. Use your negotiating skills.

A major controversy is the distribution of income to support school systems. In many states the major source of income comes from property taxes. Many argue that this creates inequities because the wealthy districts get more funding than the less fortunate districts. Some states are looking at distributing the revenue to colleges, universities and school districts based on certain standards and achievement goals. So if your program does not meet the expectations set down, your revenue share will be cut and redistributed to one that is meeting or beating the expectations/standards. Will this create grade inflation? Will this change the attitude and behavior and expectations of the administrators? How can this affect the education process? Will we be so focused on meeting the new initiatives to make sure we get our money that we will forget about the values and morals of why we are educators? I look for opinions to these questions.

Neil Shnider, MBA, CPA
Executive Director

Posted by AAEE at 11:42 PM | Permalink | Comments (0) | TrackBacks (0)

We Can Invest In Sports Facilities Why Not Education?

As a follow up to my first article I would like to again emphasize the fact that there are massive budget cuts occurring throughout the country in many areas including education. So where do we cut and how do we find resources to help finance our education budgets? These are questions that school districts are asking themselves. School districts can partner with their PTA and attempt major fund raising events and/or they can get creative in their thinking and rent out space to complimentary services/organizations when their school buildings are not being used. They can go into the business marketplace and find corporate sponsors for their major events such as sports, concerts, plays and food concessions.

The middle school and high school bands can develop sponsors like the Rose Bowl sponsored by CITI. This only generates ten million dollars a year. Boy would that be a windfall of cash and solve all the budget deficits. Why not? Across the country, local communities are luring major and minor league sports teams (baseball and hockey) by giving them tax relief and/or passing new tax bills to sponsor and support them. Great idea, why don’t we get sponsors for each of the classrooms, auditoriums, gymnasiums, athletic fields and projects? All of these may produce enough revenue to keep our education system the best it can be.

Benito middle school in Tampa, FL found a cash windfall. They signed a lease contract with cell phone towers. “This year, Hillsborough schools could rake in more than $230,000 from the leases on towers”. Initial leases are for 10 years and the lease payments rise 3 to 4 percent per year.

Other areas of government budget cuts can be offset by increasing penalties and/or fines such as the price of running a red light or speeding. How do we deal with this in education? Colleges/Universities can raise tuition and implement transaction fees.

If we scratch our head what creative methods can school districts use to increase their revenue?

Neil Shnider, MBA, CPA
Executive Director. AAEE

Posted by AAEE at 10:35 PM | Permalink | Comments (0) | TrackBacks (0)

At year end of 2008 we see a dismal economic outlook. The broad market (Standard & Poor 500) is off by almost 40% since the beginning of 2008 and the Dow Jones industrial index is down 34% for the year. We see that your dollar, from January 1 to end of the year, only buys about 62 cents of goods and services. How does all this affect education? Well, we see endowment funds of colleges/universities, state retirement funds and 403b accounts have lost value and to make a grim situation look even more depressing, interest rates on no risk investments such as U.S. Treasury Bonds are paying literally no interest while the cost of goods and services are increasing. Couple this with the crash in the credit markets, cash is drying up. When cash dries up, creditors can’t get paid and defaults become common place. It is all a domino effect.

We are all in the budget squeeze. State budgets are being cut which is forcing cuts in the education budgets of the states which we are directly hitting the school districts budgets. Many of the members of AAEE are experiencing this. They are being forced to cut travel, professional development, staff, custodian services, programming and many more activities.

Ultimately we are trying to reduce expenses to match revenues so that we are not operating at a deficit. Let’s look at some examples of what is happening.

• In Ohio, tuition and fees at colleges and universities will increase, on average, nearly $2,000. The state education budget might have to be cut by $2 billion starting in July, 2009.
• North Kitsap, Washington school district is looking at $600 thousand budget cuts. How will this affect class size and special ed kids needs?
• Gov. Arnold Schwarzenegger has proposed budget cuts to K-12 education in the food program. Berkeley Unified School District may face and estimated $3.5 million budget cut.
• Lee County School District (Florida) needs to cut $14.6 million from its budget.
• Capistrano Unified School District (California) is facing at least a $12 million budget deficit next year
• Bakersfield School District (California) is also expecting a $12 million reduction in expenses

How do we work with these challenges? Where will the cuts occur and how do we continue to provide quality education and staffing excellence in education with these trying challenges? Do we increase class size, reduce staff, stream bus service, reduce custodian personnel, eliminate sports or implement a pay for play policy, reduce food programs, have fee for service programs such as music and art? What are the choices and how do we make the decisions that will least affect our kids?

Next week we will look at how some of the decisions are being made and some opportunities for revenue.

Neil Shnider, MBA, CPA
Executive Director, AAEE

Posted by AAEE at 7:52 PM | Permalink | Comments (3) | TrackBacks (0)