Va. Beach superintendent presents budget proposal

8/9/2019 Va. Beach superintendent presents budget proposal

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Good evening, Chairman Edwards, Vice-Chair Anderson and School BoardMembers. Tonight, I am delivering my Estimate of Needs for the 2015-16 schoolyear. As you are well aware, this process is all-important because a well-thought-outexpenditure plan truly drives the progress of a school division.


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Aspirations for Virginia Beach City Public Schools are high, and they should be,because weve already achieved so much. For example:

For the second year in a row, all 11 of our high schools were ranked in the top 9percent nationwide by The Washington Post . We are the only school division inHampton Roads that can make this claim.

In addition, Newsweek ranked the top 2,000 high schools in the country that bestprepare students for college and 10 of our 11 high schools made that list as well.

The College Board reported that we continue to increase the number of studentstaking Advanced Placement courses and earning qualifying scores on APexams. By the end of last year, our students had taken more than 8,850 APexams, an increase of approximately 200 exams from the year before. Of those,nearly 5,200 had qualifying scores of 3, 4 or 5, which means those students are

already earning college credit.


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Kemps Landing Magnet School was awarded the 2014 Governors Award ofEducational Excellence for the seventh year in a row and was one of only fiveschools in Virginia to receive the honor.

And, our elementary schools have enjoyed great successes too. This year,Hermitage Elementary School was named a 2014 National Blue Ribbon Schoolby the U.S. Department of Education. The school earned this prestigiousdistinction for the second time in less than a decade and was one of only 10schools in Virginia to achieve the honor in 2014.

Seatack Elementary School opened An Achievable Dream Academy this summer,where more than 200 students are now receiving additional instructionthroughout the week as well as a focus on their social development.

Rosemont Elementary School was selected as a Title 1 Distinguished School bythe Virginia Department of Education and was one of 36 schools in the

Commonwealth recognized as a Title I Distinguished School.


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Bevin Reinen, a first grade and special education inclusion teacher, was namedthe 2015 Region 2 Teacher of the Year by the Virginia Department of Education making this the second straight year VBCPS has had the Region 2 Teach of theYear.

Community involvement in and support of the mission of VBCPS is ever-present.More than 22,000 volunteers, 2,031 community partners and 2,828 mentors lenttheir expertise to our schools last year. Their contributions fuel the excellence ofour school division.

I could go on listing accomplishment after accomplishment for our school division.Great things happen here. Our top-notch teachers, administrators and staff, and ourcaring community members understand their roles in helping to build strongschools, and we intend to continue this fine tradition in the years ahead.


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At the recent School Board retreat, we discussed at length plans for charting ourprogress forward plans that are in alignment with the strategic frameworkadopted by you in December. I think we all agreed the plans are ambitious, yetachievable. Of course, their far-reaching nature will require adequate funding andhuman resources. Unfortunately, to say times are tight is an understatement. Weare facing formidable financial obstacles this year. Consequently, many of our plansare built on a philosophy of incremental implementation. That said, when you aredealing with childrens futures, you also have to make sure that learningopportunities and resources dont lag behind.

This budget proposal, amounting to $689.6 million, represents a $13.7 milliondecrease from the current year. In spite of that decrease, this budget is built tostrike a balance between dealing with our fiscal reality and allocating and

organizing the resources we need to ensure success for every child, every day.However, because our resources have tightened, I think we all understand that thisbalance is becoming more difficult to achieve.

So why is that?


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One reason is because we have been relying on one-time reversion funds toaugment our operating budget. Actually, that reliance on reversion dollars can nowbe called a trend since this marks the sixth consecutive year we have had to do so.This reliance is not a sound long-term solution. In fact, it is a major structural flawwith our operating budget, especially when available reversion dollars areshrinking. Next year we are projecting to have $4.5 million less reversion dollarsavailable than this year. I realize not all of our stakeholders understand whydependence on reversion funds is a problem. After all, money is money and anysource is a good one.


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Think of it this way. After budgeting carefully, a family finds that it has money leftover at the end of the year, and theyd like to put that money away for somethingthey may need later unexpected expenses, for example. This family wouldnt wantto think about having to use that money to pay next years electrical bill, but what iftheir income declined and expenses rose? Theyd have no choice, right?Unfortunately in that scenario, if that trend continues, the family may in short orderfind itself unable to pay its electrical bill. Clearly relying on one-time dollars forongoing expenses is not a sustainable budget strategy, and we do not want to findourselves in a similar position. The long-term fix for the school system is the sameone such a family would need to employ. We need to reduce expenses significantlyand/or obtain adequate ongoing revenues. Such strategies undoubtedly wouldprovide a firmer foundation for this operating budget and improve futurebudgeting practices immensely.


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But this is not our only challenge. Weve had to use these reversion dollars becauselagging state funding over the last six years has proved a major impediment for us.In 2009, the state gave $5.6 billion to public education. Last year, it was $5.2 billion.Thats a cut of more than $400 million statewide and that doesnt even account forinflation and rising costs. Virginia now ranks 39 th amongst all states in per-pupilfunding, and Virginia teacher pay now trails the national average by almost $7,500.

In an opinion editorial recently published in The Richmond Times Dispatch ,Christian Braunlich, president of the Virginia Board of Education, wrote about thecumulative effect of the states underfunding. He pointed out that the JointLegislative Audit and Review Commission, or JLARC, had reported that statespending in 2005 was $3,639 per pupil. He went on to examine what has happenedsince then, writing and I quote, With inflation since then rising by 20.9 percent,

had spending simply kept pace with inflation, state spending would have been$4,388 per pupil in FY2014. Instead, it was $4,290. Thats not a one -year anomaly:Its a 10 -year trend. While the difference may seem relatively small, it totals $124million and is exacerbated by increases in student populations that are the hardest,and most expensive, to teach.

To prepare for this presentation, I asked Mr. Hanzaker to do some calculations thathit a little closer to home.


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So what does that loss of funding look like for Virginia Beach? Six years ago, in2008-09, the state was providing Virginia Beach $3,088 per pupil in basic aid. In2014- 15, that total was $2,568. Thats a loss of $520 per pupil during a time whencosts and inflation have not been declining, but rising. As you can see, in Virginiathe localities are having to pick up a greater share of the responsibility for funding.We are fortunate to live in a city where education is valued. However, increasingcosts and the loss of state and federal revenue have again created a fundingsituation that is going to require considerable cost cutting on our part.


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So, just where does VBCPS stand as we face the 2015-16 budget year?

All together, we are looking at a shortfall of approximately $ 15.1 million. Besidesthe aforementioned $4.5 million less in reversion funds, that shortfall also includesa $3.5 million reduction in federal impact aid. In addition, we are projecting a $3.2million increase in health care costs. Other circumstances contributing to ourshortfall include the expenses related to the proposed employee raise of 1.34percent that constitutes a VRS offset as well as increases in utilities costs, thecontinuation of the Bayside 6 th grade program and the continued expansion ofGreen Run Collegiate as it moves towards its first senior class. All of these costincreases must be addressed before we can even consider implementing newprograms or giving employees a much-deserved raise, which we will discuss later.


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So here is where the rubber meets the road. In order to present a balanced budgetwe must address this significant shortfall. As we do that I think it is imperative tounderstand what cost-cutting strategies have been used since 2008-09. Forexample, we have:

Eliminated 43 central office positions Closed a school Ended five year-round school programs Reduced departmental budgets by a cumulative 13 percent Extended the school bus replacement cycle Ended a costly after-school program Increased class sizes

As you can see, in years past we have really cut close to the bone, and yet we findourselves in a situation where we have to do that again.


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We are fortunate to have Farrell Hanzaker as our chief financial officer andVirginias CFO of the year for 2014, according to Virginia Business magazine. He ishere to help us engineer a workable operating budget. Mr. Hanzaker and his staffhave worked tirelessly to strategize with me on how we can best position thisschool division for progress and continued success.

What we all understand is this: To address a shortfall of this magnitude you cantpick the pocket of this program or that unit code. You have to look for sources thatare deep and wide. Unfortunately, the only way to address this shortfall -- withouttrampling on employee compensation and benefits -- is to look at raising class sizes.To be clear, we have looked deeply at the budget for other avenues to close such asignificant operating gap. We have considered things like eliminating middle schoolathletics, ending transportation to academies, and even increasing our walking

zones, to name but a few. As creative and difficult as this thinking is, takenindividually and collectively none of these come close to providing the savings weneed.


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And so that brings us again to the most feasible strategy, the recommendation toraise the class size by one student. This strategy, combined with a lower estimatefor student enrollment, will save the division approximately $12.1 million based onan overall reduction in teaching positions a strategy that will not result inteachers losing jobs but can be handled through attrition. Please believe me, this isnot a preferred strategy; it is more of a forced choice. However, in building thisbudget, the ability to provide employees an adequate salary increase and the needto reduce our reliance on reversion dollars were foremost on my mind.

I want to be clear that the sacrifices inherent in this budget are not just resident inour schools. We are currently looking deeper into organizational efficiencies thatwill capture savings. For example, I am proposing the elimination of eightadditional central office positions for a savings of $650,000. We have also adjusted

our baseline projections across all line items in our budget to more aggressivelyaccount for savings. This adjustment, which stands at $3 million, is the result ofvarious efficiencies and cost savings measures, tighter calculations for salaries andbenefits, and a more conservative approach to projecting our student membershipnumber. As a reminder, these are in addition to the cuts discussed earlier that haveoccurred over the past five years.


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To ensure our staff also understands the environment in which weve had tooperate and the challenges we must overcome, we have held four budget forums. Ihave also had many conversations with employees during my school visits. What Ican tell you from these conversations and comments Ive heard at our employeebudget forums is that for the most part, our workforce understands the constraintswe are under. They are, of course, concerned about adequate compensation andemployee benefits. But when you couple those concerns with the extraresponsibilities brought on by state and federal mandates, you can see why some ofour employees are frustrated.


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If you look at these slides [quick flip through slides], you will see the staggeringnumber of responsibilities teachers have had to take on over several decades. Theserange in breadth from assistive technology, physical therapy services, and allergyaccommodations to additional remediation, bullying prevention and concussionmanagement, to name just a few. Clearly, our teachers are doing more with less, andwe have to be their advocates.


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So how can we do better for employees? Lets talk about compensation. Thisproposal, as it stands now, includes a 1.34 percent salary increase for all eligibleemployees. In reality, this is a hold harmless adjustment because it offsets therequired increase employees must pay into the Virginia Retirement System. So,while this will not increase employees net pay, it will help ensure that their net paydoesnt drop either.

That said, relying on hold harmless measures will negatively affect our schooldivisions ability to recruit teachers in the region. Earlier this year, our humanresources department made a presentation to the School Board outlining howVirginia Beach ranks in the Hampton Roads region when it comes to teacher salaryand benefits.


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As some of you heard in that presentation, VBCPS is third in our region for entry-levelcompensation and fourth in the region at year five. We do not rise to the number one rankuntil a teacher has 25 and 30 years of service. We also know that we still haveapproximately 2,300 employees who remain eligible for an internal equity adjustment. Quite frankly, I believe our employees are the very best in this region and theircompensation should reflect that.


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As we developed this budget, my senior staff and I discussed at length what wouldbe the school divisions unmet needs if, at the end of this process, we found we hadto operate within the constraints of the budget I am presenting tonight. We haveprepared an accounting of those needs that is included in your budget document.For the sake of those listening tonight, some of these needs include morecollaborative planning time for our teachers, bus replacements, reading and mathcoaches across our schools, and the expansion of our swim program, to name but afew. But the chief priorities are a greater salary increase for employees andcontinuing the incremental but purposeful implementation of equity adjustmentsto the unified scale.


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As we move through this budget process, I am asking board members to work withschool leadership and city leadership to change Virginia Beach City Public Schoolsunacceptable loss of competitiveness in the workforce marketplace. In fairness, Irecognize that in the last six years our employees salary increases have averaged1.58 percent. However, even that percentage is deceiving because much of it hasbeen dedicated to a Virginia Retirement System offset that came with the newobligation of paying 5 percent of their base salaries into that system. Couple thisnew obligation with rising health care costs and we find many of our employees aremaking less than they did six years ago.


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So, tonight I am proposing we find a way to raise employee salaries by 5 percent(inclusive of the 1.34 percent VRS adjustment). We must commit ourselves toraising the stature of a profession that is life changing for the children of this city. Ihave every confidence that our city leadership, which works diligently every day tomake Virginia Beach the greatest city in the world, will work with us to addressthese funding challenges, which are a direct result of lackluster state funding,dwindling reversion funds and rising costs. I am asking the Board to work with thecity in a good faith effort to halt the incremental degradation of our competitivenessin the regional market, and to provide our employees compensation that reflectsthe value of their contributions to our community.

I understand the obstacles to this that this years budget presents, but I believe nowis the time for bolder, more decisive strides forward, because each year cannot be

about just meeting a shortfall. A class size increase allows us to correct structuralflaws in the budget and lessen our reliance on reversion dollars. With thataccomplished, it will also take increased resources to provide an appropriate andcompetitive salary to our employees. As the budget dialogues unfold in the comingweeks, I know the School Board will talk strategically about the need to increase therevenue picture for Virginia Beach City Public Schools so this can be accomplished.


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As a part of that dialogue, I am sure we will also examine the many other pressingneeds that must be addressed if Virginia Beach City Public Schools is going toachieve its goal of becoming the premier school division in this nation. For example,we must expand access to technology for all of our students. This is how childrenlearn; this is how they engage. We need to meet them where they are and not expectthem to unplug when they get to school. We also need to improve equity in accessto rigorous courses, especially AP, IB and dual enrollment courses, for our students.If that means increasing supports, we need to find a way to do that. We must ensurethat every child -- no matter where he or she lives, no matter what his or her familycircumstances, no matter what his or her socioeconomic situation may be reacheshis or her full potential.


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We also need to talk about efforts to revitalize our CIP, which has gone woefullyunder-funded since the dramatic decline in state funding that began in 2009. Infact, the CIP has been reduced to nearly half of where it was seven years ago. Thismeans it is going to take the school system far longer to renovate its buildings thanwas originally planned. Initially, VBCPS was committed to renovating two schools ayear. The pace of renovation has slowed to one school every two years, which placesour schools on an unacceptable 150-year replacement cycle. In the meantime,VBCPS is also forced to defer significant maintenance projects such as new roofsand HVAC upgrades, and we have effectively ended the practice of making a transferfrom the operating budget to help fund one-time capital needs, what we used to callPayGo. Clearly, we must continue to have strategic discussions on how to bolster theCIP.


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As a profession, Virginias superintendents are stepping up advocacy efforts forincreased funding at the state level. As a Board, you have passed a resolution askingstate legislators for the restoration of our funding to the 2009 level as well as forthe state to go back to funding some of our CIP costs. There are many groups thatare issuing a call to action with the intent of making a corporate case for more staterevenue. I am hopeful in the coming weeks we will move beyond the ask to thetell. As a city and a school division, we need to tell a compelling story to theGeneral Assembly one that moves them to action.

Finally, as you are in contact with your constituents, please remind them to use thecollective power of their voices to call for improved K-12 funding, especially withtheir state legislators. Share with them our success stories and ask them to imaginewhat would be possible if we received appropriate and full funding.


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Together we will improve the quality of education for every student, every day, andVBCPSwill be the premier school division in the nation.

I thank you for your attention, and at this time, I will ask our Chief Financial OfficerFarrell Hanzaker to come to the podium to share additional detail about elementsof this budget proposal.

Va. Beach superintendent presents budget proposal

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