CMS budget: How bad will it be?

Tuesday night's launch of 2010-11 budget talks has taxpayers and Charlotte-Mecklenburg Schools employees buzzing. Superintendent Peter Gorman e-mailed a copy of his "It's not pretty" remarks to the district's work force Tuesday, and he's working on a follow-up today. Bottom line: No one knows yet how much state and county money will come through, but Gorman says it's foolish not to prepare for cuts.

Tuesday's e-mail is below. Those who want more details can also see Chief Financial Officer Sheila Shirley's report to the board, a consultant's proposals for possible teacher cuts and video of the board meeting at this link. (see links to "budget preview presentation" and "analysis from ERS").

From: cmscommunications
Sent: Tuesday, January 12, 2010 4:30 PM
To: cmsmailall
Subject: From Peter C. Gorman: Budget 2010-11

Dear CMS employees:

Tonight we are opening our discussions with our Board about the 2010-2011 budget. As all of you know, the CMS budget is a process and not a short or easy one. This year it’s likely to be even longer and more difficult than usual, I’m sorry to say.

Tonight’s meeting is intended to give our Board some context for the first budget workshop, which is set for the end of this month – January 25.

The executive staff and I have been meeting with Education Resource Strategies for more than a year. ERS specializes in helping districts make sure that district spending aligns with district priorities, and that’s what we’ve been working on. The ERS work is helping us make intentional, careful decisions about our priorities and our spending.

It is so early in the budget process that we don’t have any specific funding amounts from either the state or the county, our two biggest funding sources. But we have some early indicators of what’s coming. I can summarize it for you in three words. It’s not pretty.

On the state side, there are already indications that money will be very tight. Perhaps even tighter than last year. Philip Price, chief financial officer for the Department of Public Instruction, told the Charlotte Observer over the weekend that more cuts seem likely this year. The state budget office has asked DPI for a variety of budget scenarios – a little bit like the tiers we used in planning this year’s budget. The request is for one scenario with a three percent increase and then three scenarios with decreases of three, five and seven percent. And Bill Harrison, the chairman of the state board of education, told the Observer that “The options are not good.”

You don’t have to be a political pundit to conclude that if three out of four scenarios involve cuts, then cuts are the most likely option. What we don’t know, and what we won’t know for some time, is how much we’ll have to cut and if it will be as large as last year, when we had to cut $87 million from our budget. But based on the early indicators, it is likely that there will be reductions in our state funding this year.

On the local front, we have even less information. But again, the information we have is that money will be tight. As we begin to build our budget and decide how much local funding to request, I have asked our Board to keep a few things in mind.

First, we took the biggest cut in local funding in the state last year – $34 million. That reduction was more than ten times the next biggest local cut in North Carolina, which was the $3 million reduction in Wake County. So we had a very large reduction last year.

Second, we have not had any kind of fiscal irregularity. Our budget is transparent from start to finish, and we have used the money we were given in exactly the way we said we would. CMS has had no cost overruns or emergency requests –this despite the fact that we had to make several hastily announced reversions, state and local, last year. That is a tribute to the outstanding work of Sheila Shirley and the financial staff. In a year marked by widespread financial uncertainties, Sheila and her staff have made sure that CMS finances are managed carefully and well. We are fortunate to have her financial leadership and expertise in our district.
We are also fortunate that all of you, our employees, have been able to do more with less this year. Our progress as a district has been substantial, thanks to your dedication and commitment. Thank you.

On the federal level, we are supporting the state application for Race to the Top funds. Although the national amount is very large, four billion dollars for education, the amount we’re likely to receive should North Carolina be successful is a tiny fraction of that. We estimate it will be $4 million or so. We all need to be clear about the role of this money, however. It will help us pursue some of the innovative measures in our Strategic Plan 2014. But it is not going to shield us in any way from state and local cuts, and it is not intended to be a stopgap for shortfalls in our normal funding.

It’s also important to keep in mind that we have a funding cliff after next year, when the federal stimulus money to the state stops. For CMS, that funding cliff is about $47 million – and that means that this coming year is not the end of our budget difficulties. We have a significant funding cliff on the horizon for the 2011-2012 budget.

Finally, I have asked our Board to keep in mind the mission of Charlotte-Mecklenburg Schools. We’re a public school district funded with public money and open to any child in Mecklenburg County. We educate this community’s children. It is also our responsibility to be advocates for children. Our citizens want Charlotte-Mecklenburg Schools to educate their children comprehensively and competitively. This community has a longstanding commitment to funding education.

The budget shortfalls of the present are a reality. But I do not believe they have diminished in any way this community’s commitment to providing the best public education possible for its children.

I hope that this year we will not have the pain of a budget with disproportionate cuts that fall most heavily on children and schools. But whatever comes our way, you can count on two things: We’ll tell you about it as it develops, using staff emails on a regular basis the way we did last year. And we’ll remain focused on our most important job, educating children, just as we did last year.

Pete