MPS preparing to make cuts to avoid budget deficit
MONTGOMERY, AL (WSFA) - When Arthur Watts was hired on as the chief financial officer for Montgomery Public Schools last July, he had to play catch-up. He was tasked with getting the budget for Fiscal Year 2019 in on time as well as turning in the 2018 financial statement and the FY 2017 budget, neither of which were approved by the state prior to his arrival.
“I started immediately working on that budget, while at the same time, preparing the 2019 budget,” said Watts. “We were able to get both of those things done, but it’s been quite a challenge.”
Watts called the work a “team effort." Not only did Watts and his team get the FY 2019 budget in on time, the budget included the one month’s reserve funding each system is required by the state to have. MPS had gone without the reserve funds for nearly a decade.
“We did end the year with more than $20 million, and we’re very very happy about that,” said Watts. “I was able to come in and look over a number of funding sources and make several adjustments so we could improvement our financial position by about two or three million dollars more than our earlier projections.”
Watts said those adjustments included using grant money, instead of money from the general fund, for expenditures that qualified and being “more strategic” in how the district spends federal dollars.
Watts’ strides to improve MPS’ finances have not gone unnoticed. Earlier this year, State Superintendent Dr. Eric Mackey applauded MPS for no longer being a “financially fragile” system because it met its one month’s reserve. When AdvancED came to give the results of the system’s monitoring review for its accreditation, the accrediting body acknowledged MPS’ budget success and even removed a directive from its plan that addressed the system’s finances.
Despite this success, Watts said he is careful remind the school board and other stakeholders that the sytem’s is currently operating with $10 million it received from selling Georgia Washington Middle School to the Town of Pike Road last year. The one-time revenue is not going to stabilize the system in coming years. In fact, Watts said the system is already looking at “challenges” ahead for the current
“We project to end 2019 probably a $11 or $12 million fund balance," Watts said.
The system’s one month’s reserve is about $19 million.
Watts confirmed the system is currently working on plans to consolidate in a number of areas including staffing, facilities and school campuses. Last year, MPS was slated to close three schools, in addition to selling Georgia Washington, in an effort save money. Floyd Elementary School closed, but Dozier and Chisholm Elementary Schools remained open after lawsuits prevented system from having enough time to close the schools and communicate effectively with impacted families.
“We are continuing our consolidation plans,” said Watts. “Whether those two schools will be the ones, I’m not quite sure yet, but those conversations are taking place. Not only are we talking about the consolidation of schools, we’re also looking at the consolidation of administration buildings.”
Currently, Watts said MPS has about seven administration buildings and he said it would be “more efficient” to cut back.
“We’re going to focus on the classroom first and foremost,” he said. “We’ll look at central office administration and instructional support areas. We don’t intend to have any negative impact on the classrooms.”
Last November, the school board passed a resolution to put a millage increase up for a vote in Montgomery County. Funds from the increase in property tax would benefit the school system. Watts acknowledged that the $54 million MPS currently receives from property and sales taxes is substantially less than the local funding systems of similar demographics with fewer students than MPS receive.
“We have to do a better job in supporting our schools and our students,” Watts said.
However, he said even if the tax increase went into effect, it would not help the system with its bottom line going into the next fiscal year.
“I think right now, what we have to focus on is reducing our expenditures,” said Watts. “Even if the tax was voted on and passed three or four months from now, we may start receiving those revenues in 2020 or for 2021. We still have a little bit of time to start collecting those revenues. We have to look at our current revenues, look at our expenditures and adjust accordingly."
Watts said communicating the system’s financial situation with stakeholders is a top priority.
“In a budgeting process, you don’t just want to sit in your office and just put numbers down,” said Watts. “You want to talk with the stakeholders, talk with the principals and talk with the superintendent.”
Watts said his process involved asking those stakeholders what their plans were, creating budgets for those plans and making sure to not compromise the financial responsibilities of the system.
“It’s about ensuring they understand the processes we’re putting in place and making sure they’re following through on those processes,” he said. “They’ve been very willing to do so.”
Watts said Superintendent Dr. Ann Roy Moore will announce any closures and adjustments impacting students and families “months before” the start of the 2019-2020 school year. He said the plans are being created based on space and available transportation routes.
“If we didn’t make these adjustments, I think there could be a situation where the state would have to come in and look at the entire administration,” he said. “We know what our jobs are. We know that we’re in this particular situation. It’s incumbent upon us to make these necessary decisions.”
Watts said even with the adjustments, which he admits will be “tough," the system can continue to move forward. He said those changes along with the proper processes, collaboration will hopefully help the system come from under review for its accreditation and put it in a financially stable place.
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