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Feature                                                       Pages 26-29

   

Riding Out a Financial Storm 

Three key takeaways from a painful turnaround of fiscal fortunes in the Rio Rancho, N.M., school district

BY RANDY C. EVANS

Randy Evans
Randy Evans 

You could call it a perfect financial storm. After two decades of steady growth and financial stability in the Rio Rancho Public Schools, New Mexico’s fastest-growing school district found itself face to face with a $3.8 million budget deficit going into the 2008-09 school year.

The massive shortfall seemed to come as a surprise to many. The most outspoken critics in our community demanded to know how this had happened, given the school district’s reputation for frugality and the years of growing and maintaining a comfortable cash balance. All eyes turned to the finance department, whose members had to convince the district leadership and the board that we really did have a financial crisis on our hands, and we had to explain why.

For four months, throughout the spring and summer of 2008, the department collected financial data that substantiated the stark scenario that we ultimately presented at the district team meeting in August of that year: We would not be able to make payroll in the spring if we didn’t do something drastic and immediate.

Our operations team in Rio Rancho presented a midyear plan to decrease the budget deficit by approximately $4 million. The proposal made sense to us, but it left the district’s board of education and the public frustrated. In fact, it took more than five months of some serious persuasion to gain approval from the school board to move forward.

Growth Challenges
Rio Rancho, a city founded in 1981, has been one of the nation’s fastest-growing communities. Between 2000 and 2010, the city’s population grew by an astounding 69 percent, owing to the availability of land and relatively inexpensive housing. Through the years, Rio Rancho Public Schools has been challenged to accommodate the rapid gains and, more recently, to weather what can best be described as a perfect alignment of factors for severe fiscal stress.

Rio Rancho was carved from portions of two existing districts in 1994 — the massive Albuquerque Public Schools and the tiny, rural Jemez Valley School District. The district started with 5,900 K-8 students in seven schools (five elementary, two middle), but by the beginning of 2008-09, the school system was serving more than 16,000 students and had built or acquired 11 campuses, replaced two other aging facilities and was constructing its second comprehensive high school.

Operational funding proved a significant challenge amid this growth. In 1999, the state moved to a school funding process that was based on the prior year’s enrollment. For four years, until the state legislature provided current-year funding for growing districts, Rio Rancho had to educate hundreds of new students with minimal funds.

However, as a new decade dawned, the perfect storm was brewing. Enrollment growth slowed, the economy went sour, state funding plummeted, and the district struggled to obtain good financial data during a software conversion.

A Fiscal Shortfall
Because people in the district hesitated to change anything that would cut into student programming, and nobody wanted to resort to teacher and staff layoffs, we proposed a battery of spending cuts, savings strategies and cultural changes.

Budget Cuts: We started with an initial 25 percent decrease in school and department budgets. That entailed cutting money for classroom supplies, professional development and travel. We made these cuts ahead of the formal budget process because we knew they were imperative. We also knew they’d be unpopular.

We then went back through and cut another 15 to 20 percent on top of the original 25 percent, this time with full support from the board of education. Educators, school administrators and district personnel were discouraged by the cuts — especially those in staff travel and professional development, though they understood our position and supported it.

Cost Savings: After much research and discussion, we determined we could save about $1.6 million through attrition. As positions became vacant, we did a careful analysis before filling them, basing our decision on enrollment, demand, whether duties could be picked up by existing staff and whether a pressing need existed for the position.

Consequently, in 2008-09, we chose not to replace departing employees in approximately 20 positions, including teachers and teaching assistants as well as various central-office posts. For example, we did not replace the purchasing coordinator or the director of professional development.

We saved utility costs by encouraging staff to turn off lights, shut off personal computers and remove individual refrigerators. The community also pitched in to help. One of our local churches donated several cases of paper and other school supplies. Parents and community organizations collected supplies and supplemented schools’ wish lists.

Reductions in professional development were mitigated when those who did go to training came back to train their colleagues. Many personnel found external sources of support for professional growth.

Cultural Changes: These were some of the toughest moves we made. We changed the mind-set of substitute-teacher use, a staple of public schools. Teachers often don’t think twice about arranging or asking for a substitute.

First, we froze the budget for substitutes, and during the second half of the school year eliminated the use of substitute teachers except for emergency situations or those covered by the Family Medical Leave Act. Administrators and support personnel stepped in to take over classrooms as substitutes and filled some non-teaching roles to free up school staff to assist in the classroom. The superintendent, directors of support departments, school nurses, counselors, librarians and others pitched in to cover classrooms and supervise recess and lunch.

The greatest push back came from parents who were concerned the person in front of the classroom was not a certified teacher. We explained that our substitute substitutes were often more qualified than those in the regular substitute pool. Their children were being taught by administrators who held doctorates and master’s degrees in education and related fields and school staff who, although not certified teachers, had worked within the education environment for years.

We also changed our sick-leave process and policy. Previously, teachers charged sick leave in half-day and full-day increments, so a teacher who had to run down the street to a medical appointment was charged one half-day of sick leave for an hour-long appointment — and took advantage of that by not coming back after the appointment. Now sick leave is charged by the hour. Consequently, we don’t have to hire substitutes for short-term absences because a teacher on planning period, an administrator or another staff member can cover the class for an hour or two, and teachers don’t need to charge more sick leave than they use.

Budget Turnaround
No one could fail to see the urgency of the fiscal crisis. When they saw the data, board members, administrators, school-based personnel and parents came around to support the plan. Our chief operating officer played a key part in ensuring buy-in from all of the support departments, including human resources, facilities, information technology, security and finance.

Through our spending cutbacks, we saved more than $1 million in our substitute-teacher budget and more than $2.4 million in our department and school budgets by June 2009. (In 2009-10, substitute allocations were restored, but at a greatly reduced rate from pre-2008 levels.) We realized more than $1.6 million in savings due to our attrition plan. The result was a budget swing of more than $5 million.

Today, Rio Rancho Public Schools forecast a nearly balanced budget for the first time in five years. For the 2010-11 school year, our cash balance had grown to more than $8.9 million despite state budget cuts. Our plan for 2011-12 was to use some of the cash balance to help sustain programs and avoid personnel cuts. Through the entire process we were determined to protect our loyal and talented staff. A principal goal was no involuntary reductions in personnel. We have been able to accomplish that while maintaining a quality education program.

Takeaway Points
What are the simple lessons gained from this painful experience?

Don’t sugarcoat a crisis. If we had carried on with business as usual, hoping for additional state funding or a massive voluntary retirement, our school district would not have been able to survive. Despite the fact school business personnel were called “doomsayers,” pessimists and worse names, we knew we were in a crisis situation and had the data to back ourselves up.

We also recognized we had a responsibility to the students to do whatever was necessary to ensure they continued to receive a quality education. We had a duty to our employees to do whatever we could to ensure they had a job to go to every day.

Stick to your plan. Our initial proposal to bring our district’s finances back to health was not greeted with enthusiasm or support from the district leadership, board members, teachers or community. People don’t want to give up something they value, whether it’s a stipend for classroom supplies or an opportunity to travel out of state for professional development.

When we presented the proposed cuts, we made it clear that we didn’t do so lightly. We didn’t consider these programs superfluous. We recognized the cuts might put a burden on the staff, but we also knew they were critical to the future of the district. The result was an incredible team effort that included every staff member of the Rio Rancho Public Schools, from custodians to teachers to administrators to the superintendent and school board.

Use tough times as an opportunity. This experience required all of us at every level of the district to take a good hard look at our policies and procedures. Yes, we did save money, but we also improved our district in areas that went beyond budgets and finance. We identified some areas where we could achieve long-term savings, affirmed what we considered most important — students and staff — and worked together to ensure they were the least-affected by our budget plan.

Our new substitute-teacher policy gave some of our district personnel who rarely get into classrooms an opportunity to spend time with students in a way most never would have been able to otherwise. In addition to interacting with students firsthand, they could also provide feedback to principals about where the district could help meet classroom needs.

Great things can be accomplished when everybody looks to the interests of the whole. Our entire district and the community have a much clearer understanding of the budget, finances and the business side of education. We will definitely reap the benefits of the lessons learned from this budget crisis for years to come.

Randy Evans is executive director of finance for Rio Rancho Public Schools in Rio Rancho, N.M. E-mail: revans@rrps.net

 

 

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