Council, Charter School Authority hear financial stability plan
City Manager John Szerlag, with the help of Burton & Associates, laid out a three-pronged approach to solving the financial instability of the city’s Charter School Authority during a special City Council joint workshop meeting with the Charter School Governing Board Monday night.
“To reach financial sustainability we have to consider three things,” Szerlag said. “One is a subsidy where the city picks up the lion’s share by absorbing the costs of city services to the school system. Another is to consider constructing a brick and mortar expansion at a cost of about $5 million. The third is to look at the lease, which is very favorable to the school system.”
Councilmember Marilyn Stout came out against the school subsidy.
“I am against that because the charter schools were sold to the citizens based on the fact that the city’s general funds would not be touched,” she said.
Councilmember Rana Erbrick said subsidizing city services to the school system is an easy fix to help ease the obstacles facing the system.
As for the lease, the school system pays no rent, but is responsible for capital improvement costs. The city can further lighten the schools’ financial burden by absorbing capital improvements.
Burton & Associates used the same modeling analysis it used five years ago when the city’s operating budget was financially unstable. Changes were plugged into the model in real time, showing the changes in the financial picture over the next 10 years.
The model provided a baseline approach that kept teacher pay raises at 3 percent annually and the student count the same, since without expansion all but the high school are at full capacity. The model assumed adding five students at the high school level annually.
With the restricted enrollment increase, the amount of state money the school system receives will not increase significantly.
The Burton model also indicated that not charging the school system for city services – such as personnel, accounting and legal – greatly improves the financial sustainability picture.
The city recommends adding a structure to house classrooms for 80 more students and four teachers at Christa McAuliffe Elementary. The school already is expanding through the use of portable classrooms, costing the system $2 million. That’s why the city recommends a brick and mortar expansion.
Szerlag recommends the school system acquire a bank loan backed by the city and Burton’s model suggests using larger portable classrooms while a permanent structure is built and helping bring in more state money.
Councilmember Richard Leon asked Szerlag directly if he sees the school system becoming sustainable in the future. Szerlag answered, “Absolutely.”
He then directed the same question at school Superintendent Nelson Stephenson, who responded, “Absolutely.”
“I can see now that the financial picture is not as bad as portrayed, not by staff, but by the public,” said Leon. “I still think this was a waste of $27,000, but a third party has shown there is room for improvement.”
Stout suggested since the Lee County School District has chosen not to share the capital improvement funds it gets from the state with the charter schools, that the city work hard to try to change the statute that states it may share funds to state it must share funds.
“Changing that one word can make a big difference for the charter schools,” Stout said.
Leon applauded the school system for letting its state lobbyist go, pointing out that the schools can better be served by piggybacking the city’s lobbyists.
Stephenson commended the city manager and staff for the hard work they have done.
“When I got here I saw no audit had been done when it is required every year,” said Stephenson. ‘I have a certificate to protect, so we had one done this year. We are going to a three-year budget model with a capital plan. As Mr. (Councilmember Jim) Burch said, raises for the teachers is important to me, too. I agree with the city manager going forward, but I want to be involved in the process.”
Council decided the next step is for Szerlag and staff to begin working with Stephenson to create a set of best practices as the charter schools continue to grow. Both boards agreed to set a date for a follow-up meeting.
The charter school board is holding a budget workshop in a few weeks to come up with system needs, expectations and possible solutions using the Burton Model.