F.C. Council & Schools Meet Tonight to Face Off on Budget

March 20, 2014 7:04 AM13 comments

The Falls Church City Council and School Board face off in a joint work session tonight at City Hall in its undersized Dogwood meeting room, and they are going in each already aware of the others’ justifications for their Fiscal Year 2015 budget needs that are more than usually at odds. The opening bill comes at 7:30 p.m.

At one of the better attended Town Hall budget meetings of recent years last Saturday, where some two dozen citizens attended, School Board chair Susan Kearney presented the stark needs of the school system facing the fastest student growth rate in the region, and City Manager Wyatt Shields stuck to the assumptions of the recommended budget he proposed earlier this month.

That combination would result in a 4.5 cent increase in the real estate tax rate and, with real estate assessments up around nine percent for residential homeowners and a new stormwater management fee adding substantially more to the bills that property owners will be having to pay beginning in June, no one on the City Council seems to think they can allow all that to go forward.

While there may be some small areas to trim on the City operating budget side – such as the requests for new positions in the Planning, Economic Development and Police departments – most on the Council seem to have their eyes on getting the big savings they’re hoping for by cutting the school budget.

But Kearney was effective at Saturday’s Town Hall meeting in systematically presenting the need for every penny the schools are asking for, in the face of soaring student enrollment that is not expected to abate anytime soon. (Her argument is reiterated in her “guest commentary” in this edition of the News-Press). Reasonable citizens present Saturday avoided ideologically-fueled rants against government spending, and listened intently to the difficult options that both Kearney and Shields presented.

Some raised questions about alternate forms of revenue generation available to the City that Shields indicated strongly the City was not willing to consider to ease the impending new big tax bite, at least so far.

They involve three untapped sources of revenue, all of which were raised in one form or another Saturday:

The first is to relax the City’s unyielding dedication to a line in the sand on its fund balance, money just sitting in the bank as sort of a “rainy day fund.” Insisting on keeping an absolute minimum of 17 percent of the annual operating budget, in an operating budget of $80.1 million (as recommended by Shields), amounts to $13.6 million. But the real City policy is to maintain a fund balance between 12 and 17 percent, so if the Council decided to keep the fund balance at the low end of an acceptable range, that would free up $4 million and wouldn’t change anything, period.

In a budget of $80.1 million, $4 million is a huge amount, equal to 14 cents on the real estate tax rate. Utilizing that money, then, would result in not a 4.5 cent increase in the tax rate, but almost a 10 cent decrease, from $1.305 to $1.21 per $100 of assessed valuation.

That would more than offset the increases in the real estate tax rate to actually lower the tax bills of average citizens.

It is astonishing to contemplate the fact that could be done without directly impacting a single program in the schools or the City.

The second untapped revenue source that came up at the Town Hall Saturday was the use of some of the cash proceeds from the City’s sale of its water system to Fairfax County that was culminated in early January. It is now looking like the cash coming to the City from that will be around $16 million.

Again, that amount put to the current City and School budget would cover all their needs and result in a sizable net tax cut for citizens. But Shields’ argument that such funds should not be disbursed on a one-time basis was compelling. The money should be invested as to generate an annual yield that serves the City over time, which is smart as long as one is confident the wider markets will cooperate.

The third source of revenue for this budget comes through postponing some of the capital improvement projects – such as a new City Hall, a new library and a $100 million new high school, and more – that are looming and that the budget is starting to fund this year. Postponing each one a single year would save a lot of money, and looking in the meantime for more creative ways of building these things could save a lot more even than that.

By property consolidations, melding the functions of the City Hall and library, for example, and coupling that with a private sector investment as has been done in Arlington could lower costs enormously. None of this has yet been explored as an unimaginative City Hall plods ahead in the ways of the past.

 

  • James E Schoenberger

    Regarding the impact of the schools on the prospective tax
    increase, consider some numbers (all from the city’s proposed budget on the
    city website).

    1. According to the city budget, the school population is increasing 7.1% for the year (page 233) while the city proposes to give the schools 9.8% more money. The overall city budget is up only 3.6% (page 3).

    2. While 9.8% more money seems like a very big proposed increase, last year the city gave the schools an even larger increase (page 201).

    3. The schools operating budget has grown at an average annual increase of 7.3% over the last five years (page 235).

    4. The schools propose to give their teachers an average pay increase of 7.1% (page 234). Other city employees will get 3% (page 9).

    Any fiscally prudent person can see that reducing the tax rate starts with reining in the schools’ excessive requests. That combined with the options suggested in your
    story will get the tax rate down to where it belongs compared to other jurisdictions.

    James E. Schoenberger
    Falls Church

    • http://www.fccps.org/ John Wesley Brett

      Mr. Schoenberger,

      Thank you for your comments.

      In answering your concerns, let me begin a basic fact that often gets overlooked when we talk about budgets and taxes every year. As a public school system, if children find their way into the City limits to live, we are required, by law, to enroll them and teach them.

      This budget is based purely on the amazing increases in the number of children who have arrived at our doors over the last several years; more than 500 since 2009 – equal to the total population of Mary Ellen Henderson Middle School. Next year we are projected to add another 172 – the size of an entire grade.

      To you points:

      1. The FY15 FCCPS Budget request will bring per student spending levels to just below that of 2007 – dollar for dollar, with no inflation accounted. In that same 7 years our enrollment will have climbed 36%. Just in the last year our student population has grown 6.4% and expect another 7.1% next year. The City’s population growth is at 2.7%.

      This chart may help provide you more perspective when considering the funding vs growth challenge we face. http://goo.gl/dmajvX

      It’s not that we want more. We need more, because we have more students. Plain and simple.

      2. That is correct. The City, while understanding our enrollment challenge, asked us to work for a lesser increase this year. That we have done, by not including more than $2.3M in identified school needs; most of it being teaching positions.

      You can find the list on our website: http://goo.gl/rTXr1Y

      3. This is incorrect. The Schools Operating Budget has increased on average for the last five years only 3.9%. If it had grown by 7.3%, as published, our current request would have to be over $51M. But let’s also remember, the City Transfer is only a part of our Operating Budget. In fact, for the last five years, FY09-FY14, the average increase in the City Transfer has been only 2.85%. If you add in our current request, then the average City Transfer (FY09-FY15) is but 4.8% per year.

      4. Nearly half of that increase (3.0%) is mandated by the General Assembly to cover Virginia Retirement System contributions. We have no control over that. Without the mandate, teacher and City employee salary increase percentages would be nearly equal.

      John Wesley Brett
      Director of Communications
      Falls Church City Public Schools

      • jimbledsoe

        The machine is mobilized and active. Why can’t you respond without having to say you are the Director of Communications Falls Church City Public Schools? Your spin on our reality is nauseating. No offense, but are you a volunteer or do we pay you to comment on citizen opinions who use mediums like this to vent. What is the purpose of your response? Are you informing Mr.Schoenberger to convince him of something or just spinning the message? As I have said before you don’t need to convince those that believe Falls Church needs to be ‘America’s Premier Small School System’. The rest of us just want to vent as we continue to pay for the dream. It really comes down to trust, and some of us do not trust.

        • http://www.fccps.org/ John Wesley Brett

          Mr. Bledsoe,

          I apologize if I offended you in commenting. I was simply trying, in a respectful way, to correct an inaccuracy.

          We are all for healthy, spirited debate, or “venting” as you characterize it. But the danger comes when that venting includes inaccurate data statements such as “The schools operating budget has grown at an average annual increase of 7.3% over the last five years (page 235).” Someone might actually believe that is true when it is factually inaccurate.

          I include my title in my responses when I am speaking as a representative of the School Division as opposed to offering a personal opinion. Our School Board members and Superintendent offer the opinions of the School Division when and where appropriate. My comments above were simply to correct statistics. Falls Church City Public Schools would also welcome an opportunity to address your lack of trust. Hopefully with our latest response to Mr. Schoenberger’s concern below, we can perhaps begin leaning in that direction.

          JWB

      • James E Schoenberger

        Mr. Brett,

        Page 235 of the budget on the city’s website clearly states that the School’s operating budget has increased 7.3% annually over the last five years and includes a graph. I would have thought those numbers came from the school administration but if the 7.3% number is, in fact, incorrect, I suggest you have a city budget official post a response on this Board that their budget document is incorrect. Absent that, I stand by the 7.3% number.

        Regarding the pay increase, if the state is making you contribute 3% to the retirement system, then I suggest the maximum number for the school employees should be the mandated 3% and an additional 3% matching the rest of the city. That would bring the schools increase to 6% rather than the proposed 7.1%.

        James E. Schoenberger

        • http://www.fccps.org/ John Wesley Brett

          Mr. Schoenberger,

          The paragraph you reference and the statistics it contains on which you place your trust was originally written by City staff in the Spring of 2008 in discussing the school’s FY2009 budget.

          For whatever reason, that same exact paragraph has been republished verbatim – with no changes or updates – in the FY2010, FY2011, FY2012, FY2013, FY2014, as well as the City’s current FY2015 proposed budget book.

          As this is a City produced document, we are not at liberty to explain why it has not been updated. Our staff will, of course, follow up with the city for an explanation and corrections to their record. We believe this to have been an oversight, and by no means, intentional.

          So again to clarify, the Falls Church City School’s Operating Budget has grown at an average annual increase of 2.05% over the last five years. And if our current FY15 Transfer Request is approved, the 5-year average would increase to just 3.98%.

          Here are the actual numbers: http://goo.gl/c7sUy1

          Thank you for bringing this to our attention, and thank you for your support of pay increases for our staff.

          • James E Schoenberger

            Mr. Brett,

            Thank you for your prompt and civil response but again I am looking at Page 235 of the budget (I encourage others to view the page also). The graph next to the paragraph you mention shows a 2012 increase in the schools operating budget (from 2011) of 3.2%, a 2013 increase of 5.6%, a 2014 increase of 8.6% and a 2015 (presumably proposed) increase of 9.5%. Are you saying that the graph is wrong too and that all of the years mentioned are actually earlier or other years? If so, once again, I suggest you have a city official responsible for this budget admit the mistake on this board. If the individual does so, I will wonder what else might be wrong in the budget.

            James E. Schoenberger

  • Mike Smith

    And how much of the School budget will be unspent this year? And what was their left over last year and the year before and the year before that? Ira Kaylin used to ask that question and always received an answer along the lines of “there, there, we know what we are doing.” The Schools have a long history of crying about their dire budget woes, getting everything they ask for and then having huge amounts left over each year.

    • http://www.fccps.org/ John Wesley Brett

      Mr. Smith,

      Unlike the City, Falls Church City Public Schools is forbidden, by Charter, from saving any budgeted, but unspent monies at the end of the year. Instead, we are required to use that money as the “Beginning Balance” for the subsequent budget.

      This amount is always clearly labeled “Beginning Balance” and historically has been published on page 5 of each FCCPS Adopted Budget book – and can also be found on line 2 of the current FY15 School Budget summary: http://goo.gl/rTXr1Y

      For the current budget cycle that amount is $590,000 or 1.6% of our Total Operating Budget. We truly believe by being able to budget this closely to our needs we are being good stewards of the monies we receive, especially in light of the current enrollment crisis and competition for teachers with our neighboring districts.

      John Wesley Brett
      Director of Communications
      Falls Church City Public Schools

      • Ira Kaylin

        John Brett,

        Your comment to Mike Smith is misleading. There is no
        difference between a “saving” and a “beginning balance”. The beginning balance or “carry forward” represents the amount of money left over after expenses for that year have been subtracted. I
        believe that is the definition of a saving. The School Division, under the City Charter, can retain the savings for use in future years.

        The School Division had a “Fund Balance”, or reserves, that from 2001 to 2012 grew from under $1 million to $2.9 million respectively. I have asked numerous times how it could be that per capita student costs were considered inadequate while at the same time the School Board was saving money and placing it in its growing Fund Balance.That question has never been answered. After repeated
        questioning the Fund Balance was largely run down in FY13. The numbers I use are audited numbers (by external auditors) and contained in the City’s Comprehensive Annual Financial Report.

        However, a new School Fund Balance was created in the Spring
        of 2013.

        There had been no policy underpinning for the School Fund balance prior to 2013. It was a reserve fund that had no financial parameters and no description of how it was to be used. In April of 2013 the School Board approved a Fund Balance Policy which allows contingency expenses to grow from $300,000 to 2% of the school budget or about $800,000 for FY 2015. If the contingency fund is not used the unspent amount would go to a new School Fund Balance
        with specified potential uses which are so broad as to be with little meaning.

        To better understand how the new Fund Balance would operate
        I asked, as a Council member, for two numerical examples; one assuming the entire contingency was utilized and the other assuming that none of the contingency fund was used. The School Board Chair
        agreed.

        No response was ever provided.

        • http://www.fccps.org/ John Wesley Brett

          Mr. Kaylin,

          With respect, we must disagree with your definition of Saving as “the amount of money left over after expenses for that year have been subtracted.” What you are describing is Net Revenue. Savings, as Merriam Webster defines, is “an amount of something that is not spent or used.”

          With that in mind, the School Operating Fund ended FY13 with a balance of $966,334.

          Of this amount, $486,000 was assigned as carry-forward to support the FY14 (current year) School Operating Budget.

          In accordance with School Board policy, this leaves $480,334 ($966,334 minus $486,000) of the current fund balance to be used to support the FY15 (next year) School Operating Budget.

          The School Board’s Proposed FY15 School Operating Budget currently includes $590,000 of anticipated carry-forward; therefore, we are currently projecting a year-end surplus of approximately $110,000 in the School Operating Budget ($590,000 minus $480,334 = $109,666).

          JWB

          • Ira Kaylin

            John Brett,

            With all due respect do you have any idea what you are
            talking about (by the way who is the we to whom you refer)? As regards financial matters the definition of savings that I provided and that of the Webster are the same. What is
            totally incorrect is your reference to Net Revenue.

            Net Revenue is gross revenues less discounts, rebates and
            refunds and provides a more accurate view of the financial performance of an entity than gross revenue but has nothing to do with savings. I fail what see why you would believe that I was referring to Net Revenue.

            The reminder of your comment provides explanations for
            questions not asked. On the other hand you do not address the issues of how the School’s Fund Balance/Reserves grew
            from about $1 million in FY 2001 to about $3 million in FY 2012. Nor does it address the question of how the School Division reconciles a growing Fund Balance/Reserve while at the same time noting a decline in per capita student
            expenditure post FY 2007.

            You have indicated in a comment to Mr. Bledsoe that you are
            providing comments to correct inaccuracies. It seems that your comments have confused matters rather than clarify
            them.

  • Ira Kaylin

    John Brett,

    The school growth rates stated in your response to Mr. Schoenberger are misleading.

    It has been my experience that the School Division provides data in much the same manner that Lego provides building blocks. First you decide what you want to build then the necessary pieces are assembled and placed together. When a different design is wanted the same pieces are taken apart and reassembled. On and on it goes.

    For example. Why did you use FY 2007 per capita student cost for the base year comparison? Why is 2007 representative of today’s cost structure? Why did you use six years for estimating annual increases in City transfers and then five years to estimate annual increases in operating costs. It sure looks like a Lego approach.

    Also, the time period used to demonstrate that the Schools budget growth has been modest, even low, is misleading. Two of six years during period (FY 2009- FY 2014) analyzed were at the height of the recession and provide a strong downward bias on the growth figures.

    In the school year FY 2011 transfers went down by approximately 6%, The City’s budget decreased by about 9%, The Schools Division budget decrease was two thirds of the budget reduction for the City. The City’s FY 11 budget was savaged by. among other things, the loss of $2.2 million Water Fund transfers as per Judge Ney’s decision. Housing (non-Condo assessments) decreased somewhat but nothing compared to the sharp reduction in Condo and commercial real estate values

    That year the City’s tax rate increased by 17 cents. The budget was balanced in part by the equivalent reduction of staff by 16 City officers. Capital expenditures were cut to zero. Elimination of the capital program left many household vulnerable to flooding and extensive property damage and is still contributing to the City’s budget stress.

    There was no decrease in the number of teachers that year.

    However, the growth of the school transfers for FY13, FY14 and proposed FY 15 are 7.3%, 14% and 9.8% or an average increase of about 10%. The City’s budget. on he other hand, grew by 5.7%, 5.1% and proposed 3.6% for the same period; an average of under 5%. In other words it was half the growth rate of the school budget. Moreover all capital expenses incurred for the School Division are charged to the City budget. Why not use these three years?

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