Addressing charges of out-of-control Board spending

January 19, 2012 By Brendan 8 Comments

The Tower, the Grosse Pointe South student newspaper, ran an editorial this past week taking the school board to task for not being “frugal” enough “before making salary cuts.”

As treasurer of the Board of Education for the last two years, if the public feels we haven’t been frugal or that the school board is somehow unilaterally “making salary cuts,” I want to be explicit about a few things.

First and foremost, I encourage everyone to review my presentation on the financial state of the district, accessible here but this is the “short short” version:

  1. As the state has cut K12 spending, our district operates annually with $9.7 million (10%) less than we did three years ago.
  2. State mandated retirement costs us $4 million more per year than just three years ago.
  3. We have reduced over 85 full time equivalent jobs in the district in three years, a 10% reduction.
  4. Annual non-employee costs are down annually by nearly $2 million per year from 2008 levels, having been reduced every year for the last five years.

The Tower narrative rings the tired bell that school boards and employees should fight with each other. The contracts we negotiated put an end to this kind of archaic thinking. The contracts pre-negotiated a standard by which we would operate within our means. The contracts delivered substantial benefits that came with risks.

Need I remind us all of the tableau at school board meetings while this contract was being negotiated? The rooms were filled with angry people, a large percentage of whom called the Board out for having too rich a level of fund equity. That money was to be spent on education, was the call to action. I’ve got news for you. That’s exactly where it went.

  • We maintained staffing levels so as to not increase class sizes or diminish our educational program.
  • We are paying on average $5,400 more per employee every year for their retirement plan than we were just three years ago. We have 875 employees, by the way.
  • We funded a $3.4 million early retirement incentive that was strongly advocated for by our employees and their representatives.
  • We added two new salary steps at the top end of our teacher direct compensation salary grid that delivered raises to over half of our teachers who were previously capped. Meanwhile all the others continue to progress through step and lanes.

If the Board “overspent” let it be understood that our most significant incremental investments driving fund equity down have directly benefited our current and former employees via more jobs, higher wages, and higher retirement benefits/packages.

All of the above was incredibly expensive and the main reason fund equity will drop below 10%. But even more significantly, this was all properly negotiated. In that process, the Board was skeptical of our ability to sustain these cost increases. The employee bargaining units pointed to fund equity and said, we think you can.

To break the impasse, the Board agreed to fund these requests – with this single provision: If fund equity drops below 10%, we need to take some of it back in this certain formulaic manner. And our employees overwhelmingly agreed. In this respect, the Board is not “making salary cuts” as has been charged. Rather the Board and the employee bargaining units are merely following the terms of the contract that were negotiated.

As to the charge that the Board has “no incentive” to save money recall that the Board manifested such an incentive when we were negotiating. We were deeply concerned about adding these costs, but the 10% clause provided the balance we needed as a district. This WAS the check and balance that we are now charged with “being a little off.”

In the budgeting process this year I anticipate making formal requests from the Board of our employee bargaining units to receive their cost reduction ideas. These ideas will be evaluated. I for one will look through this simple lens in doing so: Does this change make our district better? If the answer is no, I will be very skeptical.

The Tower editorial aims to remind the Board or certain Board members of their role. Here’s another reminder. The Board was elected by the citizens of this community to make our district better. This is THEIR school district. I take my responsibilities in this regard very seriously.

Filed Under Employee Contracts

Objective view of Michigan K-12 spending needed

January 8, 2012 By Brendan Leave a Comment

Signs of Michigan’s economic recovery are instigating conversation not heard in over a decade. As a result of rising employment, improved Detroit 3 car sales, and a variety of other factors, the people of the state of Michigan are more economically active and tax revenue estimates – such as those issued by the Senate Fiscal Agency last week – are more favorable than they have been in years.

This excerpt from the Senate Fiscal Agency (SFA) report sums things up nicely and offers some context: “Wage and salary employment is predicted to continue growing, increasing 0.4% during 2012, 0.1% in 2013, and 1.0% in 2014. The 1.7% increase during 2011 was the first increase in wage and salary employment since 2000.”

That’s right, twelve long hard years.

As it relates to school funding, this news has sparked a healthy debate with many citing it as evidence that increased tax revenues should bolster a School Aid Fund that, in real dollars, is at its lowest point since voter approval of Proposal A nearly 20 years ago. The chart on the left from the SFA report provides a strong visual of what has happened to School Aid Fund since the passage of Proposal A.

As for the most recent drop in revenue, I put together these two charts using the SFA report to contrast 2010-11 and 2011-12 estimated School Aid Fund revenue by tax source.

Of greatest note is the $739 million in Michigan Business Tax revenue present in 2010-11 that dropped to zero in 2011-12 as a result of the tax overhaul enacted by the Snyder Administration.  Also noteworthy is the continued rise of sales tax as the predominant revenue stream for the School Aid Fund – 46% in 2011-12 compared to 17% from property tax.

 

 

These charts present a strong visual and are good examples of the benefit of trending data, something I have worked very hard to present in the many financial transparency reports I have created. Trend is important because it provides the sense of motion, speed and direction that a point in time snapshot simply cannot provide. Left just to a trend analysis alone, it’s easy to see why many would call for diverting better than expected tax revenue dollars back into the School Aid Fund.

What these charts do not show, however, is how the state of Michigan compares to other states in education tax and spending policy – what is called benchmarking.

We’ve gone to great lengths to provide best in class financial benchmark reports for the Grosse Pointe Public School System that have proven to be incredibly informative to our own financial decision making.  But how can we benchmark the state of Michigan?

One tremendous data source is the National Education Association’s Annual Rankings and Estimates Report. In fact, this report has so much data it’s hard to process it all. But I reviewed it with an objective eye and suggest the following for consideration

The first number is Michigan’s rank among the 50 states and Washington D.C. All data is from 2008 unless otherwise noted.

  • 37th – Per Capita Personal Income ($35,321)
  • 51st – Change in Per Capita Personal Income from 1998-2008 (31.3%)
  • 20th – State & Local Government General Expenditure per $1,000 of Personal Income ($205)
  • 10th – State & Local Expenditures for All Education per $1,000 of Personal Income ($80)
  • 3rd – Public School revenue per $1,000 of Personal Income ($56)
  • 2nd – Expenditure for Public K-12 Schools per $1,000 of Personal Income ($52)

These powerful data points remind us once again of the “New Normal” argument. Michigan plummeted in the rankings in per capita income and was dead last in the country in income growth in the ten year period from 1998 to 2008. But spending patterns didn’t adjust down in the same proportion and as a result our expenditure for K-12 schools as a percentage of personal income is 2nd highest in the country.

That is hard to justify and probably the single biggest driver for Gov. Snyder in his rationale to see the School Aid Fund take a three quarters of a billion dollar hit through the reduction of the Michigan Business Tax. This data is also probably how Gov. Snyder would respond to those who are calling for an increase in School Aid Fund revenue sources.

This is not the answer public school advocates like myself want to hear, but we simply have to be objective in our analysis if we want long-term solutions. Yes, we are recovering but are decades away from regaining the losses from Michigan’s darkest decade.

Filed Under Michigan Public School Funding Tagged With Michigan Public School Funding, new normal, Rick Snyder

Will K-12 emulate Borders or Amazon?

January 2, 2012 By Brendan 2 Comments

Amazon CEO Jeff Bezos

I was recently intrigued by this article declaring Amazon to be the next technology giant, a fairly amazing claim in a market dominated by such players as Google, Apple, Microsoft and others.  I mean, yes, we all know Amazon as the gorilla in the web commerce front, but THE tech giant for all enterprise computing?

The argument for Amazon as tech kingpin goes like this. In order to meet its own technology needs, Amazon developed a technology infrastructure (cloud services) that they have been able to re-purpose as a service to be sold to others. Netflix is an ideal example.

How significant is that?  One of Amazon’s customers for whom they provide cloud computing services is Netflix, a company whose content accounts for a third of all web traffic in the North America. Impressive. Amazon has hundreds of other similar customers.

What is Amazon doing right?

An answer from one interesting source, a former Amazon employee who now works for Google, is that Amazon successfully transitioned from a company that sold products to a dynamic provider of a platform. We all know what a product is, but let’s take a minute to define “platform” because it’s got a technology basis, but really applies to anything – including education (thus this blog!)

A product has a function(s) that people decide they want and they buy it for that purpose. The simplest example is a book. A consumer wants  content that a book provides. Amazon sells the book. Simple, but this is a commodity sale. Anyone could sell that book, as Amazon knew from its own rise as they vanquished Borders. Amazon CEO Jeff Bezos didn’t want to be “Amazoned” himself so he sought an opportunity.

Since Amazon sells book (and thousands of other things) to millions and millions of people with diverse interests, they had built this immense amount of computing capacity. By making that capacity available to third parties who, as an example, see a market opportunity to stream video content over the Internet (Netflix) Amazon successfully transitioned to a platform provider from a product seller.

See the trend elsewhere?  It’s subtle, but pervasive:

  • Apple could have sold the iPhone a product that plays music, makes phone calls and connects to the Internet. Instead they established a platform from which third party developers sell thousands of applications (via the App Store) and music (with musicians seen as third party developers) selling songs (via the iTunes). And these are just two of many examples from Apple as platform.
  • Facebook is a platform that allows third party developers to deliver applications (e.g. Farmville, Mafia Wars, etc.) and content (e.g. any and every Facebook user who shares their own or third party content).  Oh by the way, Facebook has nearly three-quarters of a BILLION users.  Platforms enable immense scale.
  • Microsoft, from its inception, is a platform (i.e. an operating system, OS) that allows their own developers (e.g. Microsoft Office) and third party developers (e.g. Quickbooks) to build applications that run on desktop and servers that run on the Microsoft OS.

So let’s stop there for a minute – Amazon, Apple, Facebook, and Microsoft. Think they’ve been successful?  Maybe just a little? I submit the essence of their value is that each allows for the needs of individuals to be met and their platforms provide the means to do so. They recognized that allowing others to leverage and contribute to their platform enhanced their value and relevance by meeting the diverse needs of millions of customers. Each has successfully delivered mass customization in the greatest scale.

Does education as an industry see this trend?  The smart players do, and Massachusetts Institute of Technology (M.I.T.) is a pretty smart one. They made news recently by making all their coursework available online to anyone – free of charge.  Notice the language of M.I.T. spokesman Anant Agarwal:

“Creating an open learning infrastructure will enable other communities of developers to contribute to it, thereby making it self-sustaining,” he says. “An open infrastructure will facilitate research on learning technologies and also enable learning content to be easily portable to other educational platforms that will develop. In this way the infrastructure will improve continuously as it is used and adapted.

The pattern could not be more clear.

M.I.T. smartly views educational content as their infrastructure in the same way Amazon saw its computing capacity. M.I.T. recognizes researchers and professors as developers the way Amazon did Netflix (and Apple, Facebook and Microsoft see their legions of third party developers). M.I.T. sees themselves as a platform provider and thus the ability to make open learning content “to other educational platforms [that term again] that WILL [my emphasis] develop.”

Now, before anyone interprets this blog as advocacy for cyber schools – STOP. That’s not the point – nor is it M.I.T’s point, I’m sure. This is all about the individualization and improvement of education as a service in an industry where consumers naturally need customization and content never stops evolving. It’s the natural migration for an industry (K-12 education) that generally sells a product – be it a course credit in Biology or even a high school diploma itself – to a services platform that promotes innovation and collaboration.

We need to see our teachers as developers and establish a culture that promotes this innovation and development. Teachers need to then embrace that responsibility while also recognizing we live in a hyper-connected world where educational practices and content from thousands of other sources is an asset to be utilized by our students and themselves to allow for further innovation and, in the vision of M.I.T. “improve continuously as it is used and adapted.”

Our platform needs to mesh with the fabric of other platforms, be they other K-12 institutions or higher education, such as M.I.T.’s., or the social media fabric that is pervasive in the lives of our students.

M.I.T. is right. One way or another, education as a platform “will develop.” It’s an industry tidal wave that will cause some institutions to drown and others to surf.

The choice that the traditional K-12 education industry must contemplate is what business model they wish to emulate – Borders or Amazon?

Filed Under Technology and Education Tagged With Grosse Pointe Public School System, new normal

What public school districts can learn from Big 10 and PAC 12

December 29, 2011 By Brendan Leave a Comment

Yesterday the Big 10 and PAC 12 NCAA conferences announced a new scheduling alliance that will increase the number of games among their member schools – some of the most respected in the country.  Analysts lauded the move, citing its potential from intersectional branding and promotion.

Big 10 commissioner Jim Delaney said, “Because there’s no overlap (geographically), it really helps… It allows us to extend our reach to become more national, while also sort of maintaining the essence of the competition that we have within our own region… It’s a natural fit.”

What can public education learn from this?  Plenty.

The Big 10 and PAC 12 are reacting to a new world order in college athletics that requires them to compete more on a national scale then on their traditionally regional scale (i.e. the Midwest and the West Coast).  They are responding to ferocious competition from the insurgent Southeastern Conference (SEC) which has come to dominate the recently established Bowl Championship Series (BCS) as well as radical re-alignment of other major conferences.  In short, they are responding to a dynamic and more fiercely competitive marketplace.

Sound familiar, public education?

It should.  The state’s recent decision to uncap charter schools is a major competitive influence that will, at first, massively affect districts struggling financially and academically.  Ask the folks in Willow Run what they think of a Northern Michigan University authorized charter operator actually building a new school in their district.  The next frontier for the charter operators will be those districts that think they are secure from this competition.

When assessing competition, smart organizations do a SWOT analysis, cataloging Strengths, Weaknesses, Opportunities, and Threats.  We should be doing the same in the Grosse Pointe Public School System.  Upon doing this analysis, you identify your gaps, then you set goals.  I do not feel we have done this nearly as thoroughly as we need to, which is why I voted against the rather anemic district goals the Board was presented in our last meeting.  I’m please a majority of the Board joined me in rejecting them and I look forward to a smarter, more specific plan being developed.

But the Big 10 / PAC 12 announcement  spurs thoughts of Opportunities in response to the competitive Threat of uncapped charter schools.  These two conferences are tapping into their rich history and leveraging the combined brand value each brings to their partnership.

Regionally we have the same Opportunity.  Like the Big 10 and PAC 12, traditional public school districts do not have “geographic overlap,” as Jim Delaney mentioned.  We do, however, share common interests with like school districts who also face stiff competition not only from charter schools, but other private schools as well.  Now is the time to explore progressive new partnerships that enhance our combined Strengths.  I see a few logical areas where we can start:

  1. Common Core Standards and Curriculum: The state of Michigan has obligated public schools to adopt the Common Core Standards, as have nearly every state in the country.  Yes, we need to have local involvement in curriculum development, but why not distribute this across traditional public school districts with similarly high standards?  Like many districts, we’ve had to reduce our human resource investment in curriculum development, but Common Core presents new opportunities on this front – and now instead of each school staffing curriculum development ourselves, many like districts can pool resources for an even better result.
  2. Common Assessments: Once Common Core Standards and Curriculum are in place, this opens the door for more meaningful assessment tools than standardized tests.  These would be mid-year and year-end assessments that, for example, every student enrolled in Biology would take.  So not only could we normalize how our two high school Biology students compare with each other, we could also compare this to high schools across the Metro Detroit area (or further).
  3. Technology Infrastructure:  I referenced this in a recent blog, but this is an area of low hanging fruit.  If a large volume of districts pooled their technology spend and were able to create a cloud based infrastructure of servers and applications, we could make a dramatic forward step in our technology plan that we could never do on our own, perhaps not even with a technology millage.  This would also allow us to centralize pooled support and infrastructure management.
  4. Online Educational Content: One of the barriers to adoption of more online course work has been the concern as to whether it meets the high standard we have locally (as opposed to use of Michigan Virtual High School). But with Common Core Standards and joint curriculum development, we could then take the next logical step and create our own digital learning content to enable locally flavored flipped classroom learning at a level acceptable to school districts with equally high standards.  This might even be able to expand our course offerings as well.  We undoubtedly offer courses not available to other like districts and I’m certain the reverse is true as well.

This all amounts to a limited and logical version of the “crowd sourcing” movement that has turned many an industry on its ear.  Daniel Pink in his book Drive references this repeatedly.  Wikipedia overtook Microsoft’s Encarta as the preferred encyclopedia.  Firefox snatched massive swaths of market share from Microsoft Internet Explorer and Apple Safari.  Linux is the preferred server operating system for a quarter of all enterprise servers, beating out products from Microsoft, HP, and IBM.  What do these have in common?  They are all “crowd sourced” or “open sourced” products.

One of the many broad lessons of the Internet era is that everything and everyone are inter-networked.  Connected.  To try to operate in isolation is a very poor decision.  Michigan’s charter school legislation is a wake up call to public education.  It sends a clear message from the state to the local districts:

  • You exist at the grace of the state.  We control your funding.  We are no longer patient with what we consider a poor return on investment.
  • If you are falling short of the expectations of your constituents, we are obligated to provide them with an alternative.
  • The uncapping of charter schools and possibly a move to force open enrollment provide us with means to do so.  If you choose to not compete, that’s your prerogative, but know that we will enhance the capacity for other options.

Traditional public school systems, the ball is now in our court.  Let’s not squander the great opportunities that are presented to us if we choose to combine our resources.

Filed Under School of Choice

Top 5 technology to-do’s for Grosse Pointe Public School System

December 24, 2011 By Brendan 5 Comments

Top 5 things the Grosse Pointe Public School System should immediately explore or act upon relative to technology and education in our district:

1. Enable Wi-Fi throughout all buildings.

    • Why?  Internet access is the sine qua non of technology integration.  Our district is woefully behind the times in terms of enabling wireless Internet access in all buildings.
    • How to pay for it? This project could be funded from the voted bond. Such a project should be an absolute priority.
    • Other dependencies? We need to perform a network utilization analysis.  Since any devices that would use this wireless access will then ride on our Wide Area Network (WAN), we need to ensure we can handle the increased volume.  Staff have expressed dissatisfaction with WAN performance, but due diligence has not been completed on root cause analysis.

2. Allow students and staff to BYOD (Bring Your Own Device)

    • Why? This is a trend overtaking enterprise computing today because companies know that a large percentage of their employees have smart phones and tablets in their possession.  Allowing users to bring devices they already own, or knowing that they can, eases pressure on the district to purchase equipment for the students and staff.
    • How to pay for it? Well, this is the beauty part.  We’re NOT paying for it.  However…
    • Other dependencies? … we need to be cognizant of student inability to source their own device.  However, the prospect of finding an affordable personal computing device (be it a tablet, smart phone/device, or laptop) is much more realistic than the outdated mode of the district buying desktops and laptops.  Wi-Fi access (number 1 above) is also a dependency as Board policy changes may be.

3. Migrate from proprietary desktop applications to cloud-based or open source applications.

    • Why?  Another trend in enterprise computing as businesses realize that open source options exist that sufficiently supplant licensed and costly software.  Examples include traditional office productivity applications and e-mail.  Let’s also not forget such free applications as Skype, Twitter, blogging, and other social media tools our students and staff use everyday.
    • How to pay for it?  Again, the whole point is that this could reduce our costs, not increase them.  In fact, this cost reduction could offset other technology related investments we may need to make to move forward.
    • Other dependencies?  If we’re moving to server based computing models, again we need Wi-Fi access everywhere, sufficient WAN capacity, and training to migrate from long-used tools to new applications.

4. Drive for statewide, or at least multiple district, participation in increased shared infrastructure – specifically desktop virtualization computing model.

    • Why? It makes too much sense not to do this.  At a time when all public school districts in the state (country even) must keep pace with technology while budgets are reduced, sharing investment is the perfect solution.  If every district pooled a portion of their technology spend and were able to leverage a cloud based model which could serve up computing capacity currently dependent on local PC desktops and servers, we’d be able to make a quantum leap in our technology capabilities.  Why should we host and maintain our own servers, which are already outdated and underperforming?
    • How to pay for it?  This is a shift of current spend to a shared spend.  Lots of financial analysis would need to take place, and perhaps some incremental investment would be required, but it’s an analysis that MUST be done – and soon.
    • Other dependencies? Lots of them.  Same Wi-Fi and WAN issues as above, but we need to gain buy in from other districts and even Intermediate School Districts (Wayne, Oakland, etc.).  But these should be very willing partners who have the piece parts dispersed across them.

5. Promote culture of technology integration through internal grant process then share best practices.

    • Why? Technology adoption in the classroom (or outside the classroom) can’t be a top down edict.  All that I have described above is enabling technology.  It’s the application and adoption for the purpose of furthering our educational mission that is the main thing.  What works for one teacher or student won’t work for all.  We have some teachers WAY out on the edge doing amazing things, but some others are just not there.
    • How to pay for it? It depends if it costs anything.  This is the whole point. Think about how much technology we all use every day that does not require an incremental investment.  Those of you with iPads, iPhones and Android devices, look at your application downloads and take inventory of how many are free.  I bet more than are paid.  But some things WILL cost money and in those cases traditional cost benefit analyses should be done.
    • Other dependencies?  This one is most dependent on cultural change.  We need our school district to encourage educational technology experimentation.  To do this, we need to have a nice clean and capable sandbox for our students and staff to play in (thus the list above).  Once that sandbox is there, we don’t tell everyone what toys to use and how.  We say, go do what you do and then tell everyone how it worked.  I am certain that as a result we’ll compile a cornucopia of best practices that many others will leverage for educational outcomes.
Filed Under Technology and Education Tagged With Grosse Pointe Public School System, school budgets
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