Financial distress: Paoli schools looking at budget woes which could lead to job losses

“To get the General Fund back … it’s going to take a $972,000 cut,” Jackson said this week. “That’s going to hurt, but, as I see it, that’s what I’m here to do.”

He explained, "You need some cash balance and they don't have any ... You need about a 10 percent cash balance in the General Fund and they've not got any, plus they're spending out of other funds."

Jackson became the interim superintendent in July following the resignation of Casey Brewster. Brewster's resignation came after a 4-3 school board vote in June to suspend him from the job. However, Brewster resigned before a later vote could be taken on whether to terminate his contract.

Paychecks for teachers and staff come from a corporation’s General Fund. Intent on reducing those expenditures, the corporation offered buyouts, with the plan being, when possible, to rely on attrition to address the staff vacancies.

Jackson said only four employees opted to accept the buyouts.

Two of the four represent retirements. "We had two people take $10,000 buyout plans to leave at the end of the (2017 calendar) year,” Jackson said. “But, they had to be at the top of the (pay) scale to do that. … That will save us $85,345 per individual.”

The remaining two accepted an offer to leave at the end of the current academic year. Those are considered resignations. “We will pay them half their salary … for the rest of the (2018 calendar) year,” Jackson said. The offer also included a stipulation that the corporation would continue to pay its share of insurance coverage up to Sept. 1. The two resignations combined would bring in about another $153,000 in savings. All the buyout numbers total about $323,000.

“That’s a third of the way we need to go, right there,” Jackson said.

But, it isn’t enough, and Jackson said it now is a waiting game, and he doesn’t expect to know until May which other employees might opt to leave their jobs.

“Hopefully, we will have some retirees at the end of the year,” he said. “I have had indications — no commitments, no promises, nothing at all except I’ve had indications that there will be some retirees at the end of the year. That could help.”

Fund transfers

Related to the insolvency is the reality that transfers, throughout the years, have been made from various other funds to the General Fund.

Jackson said, “When they go to pulling funds out of the Capital Projects Fund or whenever they go to pulling funds out of the Bus Replacement Fund or when they go to pulling funds out of the Transportation Fund — that’s what they’ve been doing here for a long time — that is not what you’re supposed to do. Can you do it (legally)? Yes. You have to take the money and put it in the Rainy Day Fund and then transfer it to the General Fund.”

The numbers show that overspending has been occurring for 10 years in a row. “What I’ve been hired to do is put that General Fund back in the black.” Moving money to help support the General Fund, for instance, from Capital Projects, had the end result of insufficient money being available for capital improvement projects.

Jackson described the shortfall that would occur if nothing changed. He said, “In 2018, we’re going to start with a cash balance of $475,000. The only reason we’ve got that is because it has been transferred from the Rainy Day Fund. Then, that year, we’re going to bring in $10,115,000 from the state. … We come up short on payroll in ’18 by $497,000, which we’ll transfer out of the Rainy Day Fund.”

He added, “We can do that.” But, he said it could not have been done if the school corporation hadn’t reached a contract with the Paoli Classroom Teachers Association by a Nov. 15 deadline. That contract was agreed on earlier this week.

Failure to have reached a contract would have led to a step known as fact finding. Jackson said, “Fact finding says you can only consider the money in the General Fund in payroll. That would mean everybody would take about a 9.6 percent cut this year. … They were about to lose their minds over that, which you can understand.”

He added, “The contract for ’17-’18 is settled. Now, we’re spending several thousand dollars out of the Rainy Day Fund to do that, and the money out of the Rainy Day Fund comes from the Capital Projects Fund, Bus Replacement Fund and Transportation Fund. That is what it is right now. Many schools are doing that right now. If we were not overstaffed, I’d say OK. But, we’re overstaffed.”

That brings with it uncertainty among employees.

Reduction in force

“We can get this (General Fund) back in the black and still have plenty of help,” Jackson said. “Now, what does that mean? Are people going to lose their jobs? Somebody is. Yes. Hopefully, we’ll have enough retirees (and) it won’t be too many (who are given Reduction in Force notices). It looks like we’ll need six to eight more.” 

He said, “It’s not fun to RIF people.” He added that when such decisions might have to be made, they will be determined through various means, including need and consideration based on employee performance.

Jackson said the budget shortfall has led to low morale. “We did settle a contract for status quo. That’s going to help some. They’re not taking a pay cut this year,” he said.

Warning signs

From the perspective of Lila Tucker, school board president, budget concerns have been mounting. She wrote in email correspondence, “During the fall of 2016, the board narrowly passed the recommended 2016 budget by 4-3 due to the concern over not being able to balance the budget in recent years.”

She continued, “Warnings fell on deaf ears until reports from credible sources showed the corporation was heading for certain insolvency.“ She referred to what she called “recent swift decisions” made after Jackson worked alongside CTA President Marsha Wells and Indiana State Teachers Association UNISERV representative Veronica Hobbs to address the problem. Tucker said the three of them worked “to craft a suitable means by which the corporation can avoid being taken over by the state, while at the same time, keep as many programs and teachers as possible.”

She added, “As a former teacher myself for over 40 years, I can appreciate the soul searching that goes through making a decision that either means accepting a career change as a result of your job being eliminated, or leaving roots that you have put down in a place you call home, having filled your life with children you’ve educated."

Tucker said she spoke with a teacher who “was crushed at the possibility of leaving her children mid-year and referred to it as ‘abandoning.’”

"Not only does this affect teachers, but parents suffer as well,” Tucker wrote.

“When all is said and done, we know that a child’s day is in large part, spent in school. We understand that the experiences they have will shape who they ultimately become.” She said the board has the best interest of students at heart.

Among reasons cited for suspending Brewster from the superintendent’s post was that he failed “to manage the affairs of the school corporation in a prudent, reasonable or professional manner, placing the corporation in financial distress.”

Brewster was hired as superintendent in June 2013.