Update: Financial Strategies in Difficult Times

INFORMATIONAL LETTER NO: 31
POLICY CODE:
TO: Superintendents
FROM: Susan A. Gendron, Commissioner
DATE: September 23, 2009
RE: Update: Financial Strategies in Difficult Times

This is a brief overview of activities and developments since the August 28 superintendents’ financial strategies summit, convened collaboratively by the Department and the Maine School Superintendents Association (MSSA) Funding Committee. At least 114 of the State’s 125 superintendents attended that summit held in Augusta. In the weeks following the summit, I was asked to present the preliminary results to the Legislature’s Appropriations and Financial Affairs Committee and to the Education and Cultural Affairs Committee. In both presentations, I shared the suggestions, proposals, and comments from superintendents, including a full printout of the suggestions from that summit. The list can be found at:
http://www.maine.gov/education/data/eps/financial_strategies.pdf .

At the Education Committee meeting, there was considerable discussion of the possibility of shutdown days for schools – either teacher-development days or actual school days. It is vitally important to understand that all discussions are very preliminary and are merely an exploration of possibilities. There are many issues to consider, including contractual issues, the effect on the overall educational program, and, in the case of shutdowns on student days, the need some parents will have to find and pay for child care. I indicated to the Education Committee that I would look first to scheduled teacher-only days, so as to cause the least disruption possible to student learning.

My primary goal, supported by the Governor, is to protect classroom education to the fullest extent possible. The choices are unpleasant: Should we reduce programs across the board, or eliminate one or two in their entirety? Which is better – to lay off some teachers (and thus eliminate classroom learning opportunities for an extended period), or have shutdown days? Given the current extraordinary financial situation, it would be irresponsible not to consider and research all options, in particular if the only other options are to eliminate programs such as Advanced Placement or arts.

What we know is that the current two-year budget, as passed by the Legislature, includes a $56 million reduction in state subsidy for schools in fiscal year 2010-11. That amount already accounts for the additional federal stimulus funds. In addition, the 2010-11 budget contains a provision calling for an as-yet-unspecified $30 million of cuts; the Appropriations Committee has been meeting to make recommendations for those cuts, which could include cuts to state education subsidy.

For the current fiscal year, there is a projected shortfall of at least $40 million so far, and that amount is expected to grow. We do not know how much of the shortfall will fall on K-12 education. Knowing that education accounts for 40 percent of the budget, and looking to the FY 2009 curtailment as an indicator, we should assume there will be painful cuts in the current year and probably next.

When members of the MSSA Funding Committee and I met earlier this month, we agreed to proceed with several activities. First, the MSSA Funding Committee is planning to meet again to develop a set of formal recommendations to the MSSA Executive Committee. Second, I agreed to create two working groups that will include superintendents, special education administrators, and others who are interested.

One working group will work on developing solutions to address special education costs. This group will examine issues such as identification, expenditures, effective delivery systems, and other states’ efforts to control costs in this areas. Solutions may include proposed legislation and rule amendments, and/or recommendations or guidance to school systems on ways to reduce costs without resulting in a negative impact on the education of students.

The second working group will look more broadly at short-term and long-term financial strategies, picking up on the work of the superintendents at the August 28 summit. This group will address possible statewide solutions, such as shutdown days (teacher-only and/or student days), salary freezes for all K-12 education employees, and other solutions. Each of these would require careful examination of the relevant legal issues and the impact on educational programs, not to mention impacts on parents. For long-term solutions, the group will look at possibilities like statewide contracts for personnel, retirement incentives, the delivery of education in the unorganized territories, and the possibility of two-year state subsidy commitments and allowing two-year local budgets.

In addition, the Department is compiling the suggestions for legislation that were made at the summit, such as allowing higher balance forwards, allowing greater transfer across cost centers, reducing the 90-day notice requirement for teacher layoffs, and requiring school approval every few years, rather than annually. I will bring these to the Education Committee for further discussion and consideration.

Separately, last week I brought to the State Board of Education a proposal from superintendents for 10-year certification in place of the current 5-year certification.

Also, please know that I continue to advocate on behalf of school systems for the Governor and Legislature to move as quickly as possible to notify school systems if there are to be reductions in state funding for education and what they should expect so as to provide the greatest amount of time possible to absorb and plan for those cuts.