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Editorial An Analysis of U-46 Budget, Part 1

The following is the first of two parts of a guest editorial by School District U-46 Board Member Phil Costello that provides his view of the new  U-46 budget that was passed by a 5-1 vote (Costello did not vote) at the district’s board meeting on Monday, Sept. 25:
  Due to a prior commitment, I will be unavailable for the Sept. 25 board meeting where the board will be asked to approve the Fiscal 2018 $518 million budget. Nevertheless, as with all meetings, please know that I read the agenda items, attachments and analyze the financial value propositions to assess the impact for students and value to taxpayers. In most cases, I ask the district to respond to inquiries prior to the meeting that respects staff time and conserves meeting time.
  Having studied the budget, I have concluded that I cannot support it in its present form based on its lack of proactive budget constraints. While the state recently passed a budget favorable to U-46, there are still numerous inherent concerns. Beyond Fiscal 2018, the longer term prognosis weighs into my decision that I believe will have significant negative influences on future School District U-46 budgets including:
  Recent enrollment trends and forecasted declines of 2 percent per year over the next three years.
  Unsustainable $367.4 million (71 percent) of our budget in personnel expenses that is projected to increase by $8 million (2.4 percent) per year - most of which is subject to contractual increases.
  Implied need for larger class sizes with less programs or additional income derived from public sources.
  What makes this vote even more contentious is that in most instances board member input is marginalized during the budget process. In contrast, I am most impressed by the district’s ASBO Meritorious Budget Award and GFOA Distinguished Budget Presentation while maintaining a 380 (out of 400) District Financial Score which keeps U-46 among an elite group of rated school districts.  Questions raised to the district’s finance team are always answered promptly and I am confident that they have a thorough grasp of financial scope of a $500 million plus organization. Nevertheless, as a Municipal Superintendent of Finance with a CPA, MBA, and serving as the president of a non-profit foundation that manages an $18 million investment portfolio for ChildServ, I believe that I have some related expertise to offer constructive insights that are generally acknowledged and then summarily dismissed by the district.
  Regardless, my commitment to U-46 will continue to be as an engaged member of the Board of Education asking for rationale and expecting justification. To that end, here are points raised for public scrutiny.
COMMUNITY IMPACT – One of the overarching areas that the board has never addressed is objectively measuring the long-term impact on our student’s outcomes and return on taxpayers’ investment on our community. How do we measure longitudinal success? Given the difficulty in compiling community metrics, I suggest looking at how U-46 education plays a role in annual changes measured in the community served by relative to regional comparisons:
Increases in median family income; increases in equalized assessed value (EAV) of property; increases in number of net households (more families moving into the district); increases in number of business start-ups or moving into the district; reductions in poverty - percentage of families that are eligible for free or reduced support; increases in percentage of eligible district residents that are registered to vote or actual voters; and reductions in crime statistics.
DASHBOARD REPORTING – The district should provide residents with a concise financial picture that demonstrates performance trends tracked to achieve strategic objectives. Utilizing dashboards to identify critical success factors (e.g. average daily attendance, graduation rates, reading scores, tax rates, liquidity, etc.) and then track key performance indicators over time rather than the current default method of highlighting selected metrics in one-off data points.
BUDGET VETTING – Say what you will about the merits and shortcomings of the EMSA charter proposal, the board invested countless hours and heard or read over a thousand public comments over this past year regarding the finances and value proposition of a $4 to 6 million budget impact. Then when faced with our district’s $518 million budget, the board is asked to approve it after two presentations with no registered public comments. This should raise flags to the public and our leadership of dubious priorities in agenda setting.
EARNED INCOME – With our network of almost 60 community facilities, can we offer fee-based adult education or even extended fee-based school day programming including working with local business partners to develop and teach customized curriculum? I am aware that our district rents out facilities with a break-even philosophy but I would encourage more of an entrepreneurial approach to be a community incubator for community groups.
TRANSPORTATION – Our district has one of the largest fleets of owned/operated buses in the country yet we haven’t realized earned income opportunities. I have discussed opportunities with one firm and seen a number of other bus firms reaching out to community and business groups and exploiting untapped markets.
ATTENDANCE – It has been reported that for each 1 percent increase or decrease in average daily attendance, the district stands to gain or lose $1 million. Regardless of the financial impact, all registered students should be in school unless they have an excused absence lest they fall behind in the scheduled lesson plans. Though the district has many tactical initiatives for improving average daily attendance, I know that Chicago Public Schools (CPS) has worked collaboratively with business to promote first day of school campaigns that sets the tone for the school year. I would encourage the district to work with businesses and the media to create awareness of daily attendance and reduce unexcused absences.



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