We’re in fiscal storm season again, and the winds are mounting. The governor has announced his intent to convene a lame duck session of the legislature, centered entirely on the state’s weakening revenues. Districts are bracing for the possibility of midyear cuts, and many fear that next year’s budgets are unlikely to be healthier.

What do SARCs have to do with this fiscal storm ahead? Plenty. Roughly 40 percent of the state’s general fund goes to K-12 schools. Your SARCs now show where the money goes that your district receives, school by school. When many are asking whether public dollars are working hard, this is a good moment to have an answer for anyone who inquires. The good news is that SARCs can help you reveal your schools’ financial condition to your public. In doing so, SARCs can help you ask your public for help.

First, let’s look at the spirit of the legislation and the financial disclosures that your schools and district must make. Second, we’ll consider several suggestions for using your SARCs to help your public see the financial needs of your schools. Equally powerfully, we’ll suggest ways your leadership can show what teachers earn, in full.

SARCS HAVE ROOTS IN PROPOSITION 98: A LITTLE HISTORY

According to John Mockler, one of the authors of Prop 98, the accountability report card provision was included in this voter initiative in trade for a guarantee of no less than 40 percent of the state’s general fund. As he explained it to me over lunch a few years ago, the voters deserved to see schools’ vital signs if they were going to approve a floor funding level for schools each year. It was a “give” and “get” proposition. Those original vital signs included several financial factors about the district’s salary structure for teachers as well as additional disclosures about the share of funds that went for administrators’ and teachers’ salaries. In addition, Prop 98 required districts to disclose how much they spent on the basic cost of education (defined by statute).

SARCS NOW REPORT WHAT SCHOOLS SPEND AND WHAT TEACHERS EARN

This little bit of “sunshine” on district spending was expanded by Senator Simitian’s bill (SB687) in September 2005. Now law, this legislation went beyond district-level reporting to require school-specific financial disclosures. This will be the third year that districts must report what each school actually spends, using actual dollars site by site, not district averages. Equally powerful is this law’s requirement that districts report what teachers in each school earn. In an era when equity and adequacy are the subjects of heated discussion, debate, and occasional litigation, this is a high mark in candor. The real differences in financial resources, site by site, can be read by anyone patient enough to look in each school’s accountability report.

The creation of school-level spending reports has not been easy for many districts’ business offices. It’s taken extra effort, a few sparks of creativity, and some clever query writing to tease out actual teachers’ salaries, site by site. Now that district folks have cracked this nut with the assistance of county office of education staff, the riddle is solved. It is now just a matter of executing the solution, year after year.

Some leadership teams feared exposing unequal spending among schools. They dreaded parent criticism, and many worried that they would be blamed for creating these inequalities deliberately. Happily, we have heard of no raucous board meetings, no angry crowds, no looming litigation. Instead, district leaders now benefit from having in the public record, at last, a real accounting of what it takes to run a school, exclusive of capital costs.

OPPORTUNITY #1: USING SCHOOL FINANCIALS TO DEMONSTRATE NEED

Preparing to ask your public for additional financial support—whether it’s charitable giving or a parcel tax—begs this question. Are you getting a sufficient “bang” for your district’s dollars now? Are you using precious public dollars effectively? Before asking for more, you should prepare to report clearly and candidly what you are doing now with the funding you already receive.

There are several dimensions to this. First, how much funding has your district, as well as each school, received over the last three years, five years, ten years? When expressed on a per-ADA basis and on a total dollar basis, you’re likely to make it easier for your public to see what’s changed over time.

Second, how much funding has each school received compared with the other schools in your district at each school level, in the most current year for which figures are available? Compare elementary schools with other elementaries, middles with middles, K-8s with K-8s, comprehensive highs with comprehensive highs, and continuation highs with continuation highs. Comparisons should be on a per-ADA basis to make school to school comparisons easy.

OPPORTUNITY #2: SHOW WHAT TEACHERS REALLY EARN

With regularity, districts in California face contract renegotiations with their bargaining units. These discussions are often fought in the public eye, but they begin in the dark, where reporters and civic leaders are not observers. If contract negotiations reach a moment of conflict and newspapers pick up the story, where can they see in the public record a clear picture of teacher compensation? The step-and-ladder schedule that is publicly available does not give the full picture. A full picture of anyone’s pay is made up of three large pieces: current gross salary, health benefits, and retirement benefits. If this is in your schools’ SARCs, you will have a place in the public record where reporters and interested citizens can see the full story. Last year, SARCs carried financial reporting for the 2005-2006 fiscal year. Average teacher compensation was about $73,800 a year.

You can report teacher compensation in full inside your SARC, even though the data definition and guidelines from the CDE only require that you report gross salary. Don’t mistake a data definition for a prohibition. You’re not penalized for doing more than the CDE requires. You are free to step beyond their minimal requirements as you choose. This freedom is powerful. I recommend you use it.

For your reference, we at School Wise Press guided all of our 100+ district clients to do so, and almost every client followed our recommendations. An example of this type of reporting appears below.

Harden Middle School, Salinas Union High: School Expenditures, 2005-2006 FY http://salinas.schoolwisepress.com/reports/sb687/finance_spending.aspx?entity=19020&year=2006&locale=en-US

Harden Middle School, Salinas Union High: Teacher Compensation, 2005-2006 FY http://salinas.schoolwisepress.com/reports/sb687/finance_salary.aspx?entity=19020&year=2006&locale=en-US

These factors are important, and they should not be trapped inside the SARC alone. They are more valuable to your public if they appear outside your SARC as well as inside. This is possible to do with hypertext links, or you can literally copy the content and place it in two places on your district’s Web site. Making it more accessible is key to making it useful. If your financial reporting pages can stand up outside the SARC, as well as inside, they’ll be far more useful to your leadership and to community members.

By the way, GASB-45 requires districts to finally include the deferred cost of retirement benefits on their books. For two years districts have been hiring actuarial accountants to estimate these costs, and for Fresno, they amounted to roughly $900 million. This is no small matter. If you were to include an estimate of the deferred benefits for teachers currently working in each of your schools, this would be consistent with the sunshine requirements of GASB-45 as well as the spirit of the legislation that was reflected in Senator Simitian’s bill, SB687.

OPPORTUNITY #3: SHOW YOUR DISTRICT’S RELATIVE FINANCIAL HEALTH

Outside your SARC, you can do a lot with no constraints. The fabulously rich reporting resources on the Web site of the Ed-Data Partnership are vastly underutilized by district leaders. The Ed-Data pages provide easily accessible comparisons, showing a district’s revenues and expenses compared with other districts in the same county, for instance. An example of a general-fund revenue table for Salinas Union HSD is shown below. You can see the comparisons with the average high school district in the state below, and the arrow points to the column that makes comparisons easy.

A more revealing look at the revenues and their component parts for Salinas Union High, compared with all districts in Monterey County, appears below. This, too, is from the Ed-Data Partnership site. It is not easy to incorporate this information in this complex a form into a district’s Web site or its printed reports. However, with some investment in design and writing, it can be distilled to render a revealing picture of where this district stands in relation to its neighbors, in the money they have to spend on a per-student basis.

It is worth noting that Monterey County’s most well-funded districts on a per-ADA basis are little San Lucas Union Elementary ($18,193 per ADA), Carmel USD ($19,242 per ADA), Bradley Union Elementary ($20,155 per ADA), and record-setting Pacific Unified ($53,008 per ADA).

If your leadership is considering a parcel tax, for example, you will want to show the degree to which all districts in your county depend on local funding sources. The variations in Monterey County local funding are dramatic—15-to-1. If your district is one that is in the lowest tier in local funding, put that knowledge to work. Don’t be shy. Consider shaming your public into stepping up. The power of embarrassment, combined with civic pride, may work wonders.

CANDOR PAYS

The power of persuasion with your public requires that you first disclose your own financial condition, both at the district and school level. This first move is indeed yours. If you report your results with candor, you will have practiced more than good manners and good judgment. You will have attained what Archimedes described as the essential three elements he needed in order to move the world: a lever, a fulcrum, and a place to stand.

REFERENCES

District Accountability Report Card, Monterey Peninsula USD. This report dedicates three pages to distilling the financial condition of the district. Turn to page 21 to see the results. It is intended for anyone who can read the sports coverage in their local paper.

Senate Bill 687, Sen. Joe Simitian (Democrat, Palo Alto). This is the Senator’s Web site, and it will take you to the page from which you can find his press release and background information.

Education Trust West. "Shortchanging Poor and Minority Schools: California’s Hidden Teacher Spending Gap, 2005." This report was one of the factors that led to Sen. Simitian's legislation. This page is where you can find both the report and supplementary material. Among these are reports on each of the 12 largest districts in California, a statewide “Hidden Gap” report, and a way to look up estimates of teacher salary differences in any district in California.

Ed-Data Partnership. This is the best source to date of free reporting about the financial condition of school districts. The comparative analysis is thoughtful and easy to read. The detailed financial reporting may be daunting to the uninitiated. But reviewing summary information is also possible. Be sure to note both reports on finance: "Compare District Finances" and "Financial Reports for Districts."

EdSource: District Budgets. The EdSource folks have done a great job of explaining the maze that school finance has become. This section is one part of a much larger body of knowledge that the EdSource staff has writte and presented well. Be sure to review the links they offer to other material.

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