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On Dec. 13, the Finance Committee of the District 65 School Board, with six School Board members present, considered additional information about the operating costs for the proposed new school in the central core and a possible referendum to increase property taxes over and above the amount permitted by tax caps to provide additional funds for operations (an “operating referendum”).

 Four School Board members favored putting a hold on approving an operating referendum, making it unlikely that the Board will approve an operating referendum at this time. It is anticipated, though, that on Dec. 19 School Board members will vote on whether to place a referendum on the March 2012 ballot, asking voters to approve funding to construct a new school and upgrade the middle schools (a “capital projects referendum”) at a cost of about $48 million.

Operating Costs for the New School

Superintendent Hardy Murphy presented two models which estimated the incremental cost to operate the proposed new school using different assumptions about the net number of additional teachers and support staff needed to staff the District’s classrooms if the new school were established. The issue centers on how many classes will be eliminated at existing schools if the new school is established. Reducing the number of classrooms at existing schools would enable the District to shift teachers from an existing school to the new school with no incremental cost to the District.

 The additional information was presented to address concerns of Board members that the “base model” presented by the administration at the last Board meeting was based on an overly optimistic assumption about the net number of additional teachers needed to staff the District’s classrooms if a new school is established.

Dr. Murphy also presented cost information on certain program enhancements to address concerns that the base model might not address the needs of students who would be attending what will likely be a high poverty school – with almost  90 percent of the students coming from low-income households. The program enhancements were discussed by the District’s New School Academic Committee in October, and include an extended day, extended year, and a community school model.

Model “A” is a “fail safe” model, said Dr. Murphy, and includes all operating costs for the new school without any offset for potential teacher or staff reductions at the existing schools. He estimated the operating cost would be $1,978,093, assuming that the new school would need an additional 18 teachers, 2 special education teachers, 2 teacher assistants, plus administrative and support staff (including a principal, secretary, health clerk, psychologist, librarian, custodians, tech support, food service, lunchroom supervisors), plus utilities.

Model “B” assumes that the District would be able to reduce the number of teachers and support staff at certain schools when students transferred from those schools to the new school and that the District would also be able to reduce the cost of busing. Under this model, the net additional operating cost of the new school is $1,060,093. While administrators anticipate that the District will be able to shift teachers and staff to the new school, Dr. Murphy said there can be no assurance that the enrollment patterns in the new school needed to achieve these savings will materialize.

Dr. Murphy also summarized the cost of certain program enhancements that could be offered at the new school. Tracy Quattrocki, a Board member and member of the New School Academic Committee, said at an earlier meeting that many members of the Committee recommended that the school have an extended day and additional days in the school year, and that the school be operated as a “community school,” providing health, social and recreational services in partnership with community organizations on a daily basis, on weekends and during the summer months.

Dr. Murphy estimated that the cost to extend the school day by one hour would be about $160,000, that extending the school year by 10 days would cost about $100,000 and that implementing a community school model would cost about $200,000 a year, a total of $460,000. He added that the cost of these programmatic enhancements might be reduced by partnering with community organizations.

The table below summarizes the incremental operating costs under Models A and B, with and without the proposed programmatic enhancements ($ in 000s).

                                                Model A    Model B

Without Program Enhancements     $1,978        $1,060

With Program Enhancements          $2438         $1,520

Board President Katie Bailey said, “If we go to referendum, we want to set this school up for success.” She added, it was helpful to have all the cost information on the table.

A Possible Operating Referendum

The District is currently projecting an operating deficit of $3.2 million in 2012-13, which increases to $8.7 million by 2015-16. This does not include the incremental operating costs of the proposed new school. Mary Brown, chief financial officer, presented summaries showing the impact of adding the estimated costs of operating the new school to the operating deficit. She also presented summaries showing how the projected deficits would be reduced if the District was able to increase operating revenues by $3 million, $4 million, $5 million, and certain other amounts, through an operating referendum.

Four of the six Board members attending the meeting said they thought the District should defer an operating referendum for six months to a year.

Board president Katie Bailey said the projected operating deficits are due to a structural imbalance, and that the proposed new school is not causing the deficit.  She said she thought the Board should defer an operating referendum for three reasons: first, the Board just received the report of the Ad Hoc Budget Committee listing possible ways to address the projected deficits; second, before approving an operating referendum, the Board should explore every possible way to reduce the projected deficits and know where the District stands after doing that; and third, after the community voted on whether or not to fund the construction of the new school – assuming the Board decided to place a capital referendum on the March 2012 ballot – the Board would be in a better position to assess the District’s operating needs.

Kim Weaver agreed. She added, “We want to make sure we are asking for the right number.”

Richard Rykhus likewise agreed with deferring an operating referendum and said it would not take a year. “When we go, if we need to go, we’ll have a more compelling case to produce to the public which will increase the likelihood of success.”

Tracy Quattrocki said the Board should take a hard look at the budget before approving an operating referendum. She said deferring an operating referendum would give the Board a year to look at the new school and needs of the community it would serve before going for an operating referendum.

Andy Pigozzi said he would prefer to move ahead with an operating referendum now. He said the reading specialists and other supports in the school are having a positive impact and that he would not want to cut back on the District’s educational program. There’s not a school district in the state that performs better than District 65, he said.  “I don’t want to take that away from the kids.”

He added, though, he was not hearing much support to move ahead with an operating referendum at this time and suggested the Board table the issue.

Ms. Bailey said the Board would be asked to vote on whether to approve a capital projects referendum at the Dec. 19 meeting. She said the Board would be in a better position in six to nine months to evaluate whether to place an operating referendum on the ballot, and if so the amount.