QUOLKE’S CORNER #86
CMSD FINANCIAL PLAN
Earlier this year the Cleveland Metropolitan School District released a report to the media called “FiscalStrategy-Project Compendium.” This 178 page document is the result of a 1 month project designed to provide an outline of how the district could reach financial solvency and sustainability over the next several years. On Tuesday, January 25th this plan was shared with the Board of Education and a much shorter, 40 page document, was made public. This is available on the CMSD website (a link to this document is also available on the CTU website).
For those of you who are not familiar with the document - this is a plan to save money. Many options are listed such as cutting wages, changing and restructuring thesalary scale; outsourcing foreign language classes to Rosetta Stone; eliminating some paraprofessional positions; reducing costs to special education; elimination of many assistant principal and safety & security positions; reducing benefits; closing schools and accrediting more charter schools; and even selling therights to become a reality show. To date, when questioned about this plan, the District repeatedly said that it is just a list of ideas brainstormed since many of these actions require negotiations, changes to laws or board regulations, and community support.
So here we are in 2011 – almost exactly one year after the announcement of the much ballyhooed Transformation Plan with yet another plan – a plan for financial stability. Although you may think the Transformation Plan and the Financial Plan are two completely separate entities, you may be surprised to learn of the similarities that exist. This Financial Plan was created with the assistance of the Boston Consulting Group – yes that is the group that oversaw and brought you the Transformation Plan. This Financial Plan was created in a vacuum of selected CMSD administrators working with individuals selected by the Greater Cleveland Partnership (GCP) and the Boston Consulting Group, without input from other employees of CMSD or the community – just like the Transformation Plan. This Financial Plan is a document on hundreds of pieces of paper, yet without a strategy for implementation – just like the Transformation Plan. The Financial Plan talks about continuing to actively engage stakeholders but little or no dialogue actually occurs/occurred—just like the Transformation Plan. And finally, after months of delaying attempts to start negotiations, the Financial Plan is released prior to starting negotiations – just like the Transformation Plan.
While it would be easy to jump to conclusions about what may be implied in this Financial Plan and its potential implications a couple ofpoints struck me as I re-read the document. First….. ok the plan is written, now what? Many of the structural changes would have to come through negotiations. Not just with the CTU but with all ofthe Unions. The plan not only acknowledges that fact but calls for negotiations in January. Unfortunately, that date has already come and gone. Another component of the plan calls for community forums to educate the public on aspects of the plan. Now, since parents and the community were not involved in the development of the plan, I would assume this will be similar to the Community forums about the Transformation Plan. In my view, since much of what is in the plan needs to be negotiated, taking this to the public in the middle of negotiations would almost seem to me like they are intending to negotiate in public AGAIN. It should be interesting to see if the Unfair Labor Practice containing a “Cease and Desist’ order that the State Employees Relations Board adopted on January 20th is adhered to. (See CTU Website for Order).
However, a far more troubling aspect of the Financial Plan is the dialogue, or should I say lack of dialogue, around additional revenue growth for the district. Some of Cleveland’s most hotly debated topics for the past 3 decades, TAX ABATEMENTS, TAX EXEMPTIONS, AND TAX INCREMENT FINANCING (TIF) are glaringly omitted from anyreference in this Financial Plan. How anyone can exclude the financial impact of Tax Abatements, Tax Exemptions, and TIFs is beyond me. Adding insult to injury is the District’s contention that every idea that was brainstormed, no matter how absurd (i.e. becoming a reality show) was considered and not tossed out. If that is the case, and with the knowledge that 55% of property tax revenues go to the Cleveland Schools, we are led to believe that no one thought of revisiting or eliminating tax abatements, exemptions, or TIFs? What does this mean in $$$$: Consider a few deals that Roldo Bartimole pointed out in a July 22, 2009 article titled “How Much $$$ Does Cleveland Lose to Abatement,” covering abatements from the previous two years:
Browns Stadium: Property Taxes paid: $0
Should have paid: ~$16,000,000
Loss to CMSD: ~$8,800,000
Quicken Arena: Property Taxes paid: $0
Should have paid: ~$7,500,000
Loss to CMSD: ~$4,120,000
Progressive Field/Gateway Garage: Paid: $0
Should have paid: ~$9,700,000
Loss to CMSD: ~$5,330,000
And Sport venues weren’t the only recipients:
Key Center Paid: $0
Should have paid: ~$10,700,000
Loss to CMSD: ~$5,800,000
Marriott Hotel Paid: $0
Should have paid: ~ $2,300,000
Loss to CMSD: ~$1,265,000
Wyndham Hotel Paid: $0
Should have paid: ~$674,000
Loss to CMSD: ~$370,700
Ritz-Carlton Hotel Paid: $0
Should have paid: ~$1,718,020
Loss to CMSD: ~$944,911
You see the pattern… abatements, TIFs and Tax Exemptions are financially killing this school district. Yet, they go completely ignored in what we are led to believe is a comprehensive Fiscal Strategy!
In fact, the only tax issue that warranted discussion in the Financial Plan was a property tax levy, which certainly wouldn’t harm the above groups. Did anyone think of a sales tax, parcel tax, entertainment tax, and any other revenue sources besides a levy? It does not appear so. None made it into the recommendations. I can’t say that I am surprised. This was spearheaded by the business community with the BCG acting as consultants so one would expect to see pro-business/anti-teacher recommendations. Most of what is in this plan would come on the backs of the educators and support personnel in the buildings, the students, and those that live in the community. At a time when the phrases “Shared Sacrifice” and “reining in salaries” are continually bantered about to the public to describe our CTU members, it is appalling that the same litmus test is not applied to the recipients of multi-million dollar tax breaks.
The unfortunate reality is that this plan, like the Transformation Plan, has been developed in the District’s traditional culture of exclusivity. While much of the District’s talk focuses on collaboration and stakeholders being engaged; the reality is educators, parents, and community members are more often an afterthought than a partner.
CMSD Leadership should be inclusive not exclusive. Leadership that is inclusive means that ALL parties will work to make the District fiscally sound. Leadership that is inclusive means that difficult topics, such as Tax Abatement, Tax Exemptions, and TIFs will not be summarily ignored and dismissed. Leadership that is inclusive ensures that ALL stakeholders are at the table from the beginning.
Leading by exclusion is easy. It means less resistance and possibly a faster turnaround for reports such as the Transformation Plan and the Financial Strategy Plan. But that does not lead to productive, sustainable changes that will move the District forward. Changing to a culture of inclusiveness is just what the Cleveland schools need now to emerge stronger during this difficult time. It means having a truly diverse leadership.
In Union,
David