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The question of whether expenditures for technology should be classified as capital or operating expenses resurfaced at the May 9 meeting of the District 65 Finance Committee.
Board member Richard Rykhus said, “I think this Board is interested in trying to shift to operating expenses our technology investments.” He asked that future budgets contain information about investments in technology – “our current investment levels and our projected ones – even for the maintenance that we are doing.”
A revised capital plan presented to the Board last month allocated about $3.8 million to technology and software over a three-year period, 2017-19, financed through the Districts debt service extension base (DSEB), and then $800,000 to technology and software for each year after that.
Shifting the technology costs from capital to operating expenditures would allow more money for more structural improvements to buildings but if technology were to be paid for out of operating funds, that would decrease the operating funds available for such things as teachers’ and administrators’ salaries and curricular items.
“The trade-off becomes not ‘the computer and the roof’ but ‘the computer or other operating expenses, – which is a whole different composition,” said Superintendent Paul Goren.
Board member Jennifer Phillips suggested allocating a certain percentage of technology costs to operating expenses.”
Board President Tracy Quattrocki said, “It’s a tough decision right now. It’s really hard to flesh out what those [tradeoffs] look like right now. Cuts to be made to the operating expenses are a little too abstract to know how painful they would be – and we don’t know what we would be gaining on the capital side.” She said she would need to see “what I’m getting on the one side and what I’m losing on the other, before I feel comfortable with it.”
“I can’t tell you that tonight,” said Dr. Goren.
Noting the not-yet-settled teacher contract negotiations, Ms. Phillips said she would like to see a “long-term practical plan of moving some technology expenses over into operating – but, again, what you trade is so unclear right now.”
“I do think it’s a conundrum,” said Ms. Chow, “but it’s a conundrum that continues. … I think the ask is from a Board governance level. Do we believe that 2016-17 is the year to increase the $50,000 [in technology expenditures currently in the operating budget], or do we believe that we should continue as we are for 2016-17 and begin the shift at a later time. Or – if we don’t know that – what is the information you need to know [to make that decision]?” She suggested that the Board should decide this before the budget discussions in the fall.
Ms. Quattrocki said that with priority-based budgeting, administrators could propose to the Board certain shifts from capital to operating budgets.
Board member Suni Kartha said one problem is “that our debt service has got to such a level that we don’t really have the cushion that we need. It’s not even about ‘Can we get a water cooler or half a roof or whatever?’ I think it’s about freeing up that money in the debt service extension base. Right now we’re just making this assumption that technology is its own thing over here, and it’s more important that roofs and more important than whatever.”
Ms. Kartha said she understood that the District has to honor its technology leases, “but I do think we need to more aggressively say that by the end of four years – or five years – we shift the technology costs into operating. … I think technology is important. I think all of this is important. We have to be realistic about understanding where our priorities are – and to me, it’s clear we’re doing that with technology.”
Ms. Quattrocki said, “I think another way to look at it is that we are looking at big cuts for years out and want to think of this shift with those bigger cuts.”