QEIA and Budgeting for Class-Size Reduction

April 2008

Presented by:

California Comprehensive Center – School Services of California

QEIA Technical Assistance Center

Building the QEIA Budget

This workshop will address:

Understanding the QEIA class-size reduction (CSR) guidelines

How much QEIA CSR costs

The cost to reduce class size to meet QEIA requirements represents the largest single cost associated with QEIA

The QEIA CSR ratios are relatively easy to determine, but budgeting for CSR requires consideration of several factors:

Staffing Norms/Formulas

Collective Bargaining Provisions

Compensation Costs

Pace of QEIA Implementation

If your district has made budget reductions that affect staffing, QEIA site budgets may require changes!

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Myths . . . CorrectedMyth Fact

QEIA may be going away so let’s not worry about meeting CSR requirements.

The QEIA settlement is in place and would require CTA, Governor Schwarzenegger, and Superintendent O’Connell to collectively agree to a change.

The CSR provision can be waived by the State Board of Education.

No way!

A site can stop participating in K-3 CSR, but reduce classes to meet 1/3 implementation.

No, there is no 1/3 option for K-3 CSR – it’s 100% or the requirement is not met.

If CSR was funded by Title II, A, this would not be included in target calculation.

Class-size ratio targets are based on CBEDS data and this does not separate out Title II CSR.

If our district eliminates K-3 or 9th Grade CSR, the QEIA grant will need to pay for all of the extra teachers previously funded by the state CSR programs.

No, the QEIA sites should continue to participate in K-3 or 9th Grade CSR, but the cost for CSR charged to the grant may be higher –reflecting the difference between district staffing norms and QEIA staffing norms.

If we run out of QEIA funding, we’re done meeting the requirements

No, and running out of QEIA funding is a real possibility without careful planning.

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The Governor’s Proposed 2008-09 State Budget included major reductions for all state programs, including K-12 education

QEIA funding remains at agreed upon levels

But, given proposed 2.4% reduction to revenue limits and 6.5% reduction to state categoricals, many districts are considering staffing reductions – which have the effect of increasing class sizes

Early retirement incentivesEliminating temporary/provisional positionsReduction In Force (RIF)

Funding Per Pupil*

Grade Level

2007-082008-09 to

2013-14

K-3 $333 $500

4-8 $600 $900

9-12 $667 $1,000

The State of the State and QEIA

3*Based on prior-year CBEDS

QEIA Class Size Reduction Calculation Instructions

Instructions for schools and districts to calculate class size to meet class

size reduction requirements of the Quality Education Investment Act (QEIA).

The State of the State and QEIA

We should know more as of the Governor’s May Revision, but indication is that state revenues will continue to be anemic

Factors that could improve the funding outlook:

Revenue enhancements (aka – tax increases)

Recent Public Policy Institute of California survey shows that nearly half of likely voters are in favor of dealing with budget problems with a combination of tax increase and spending reductions

Pressure to limit impact of reductions to K-12 education

But general consensus is that hopeful outlook would be for a flat year – no COLA, but at least no roll-back to unrestricted funding and special education

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Survival Strategies

The Governor has stated that the problems with the State Budget are an expenditure problem – hence no new taxes – but there are two parts of a budget

Consider all options:

Increase revenue

Decrease expenditures

People

Programs

Efficiencies

Utilize flexibility

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Revenue Options

There are very few options to increase revenue, but, to the extent that enrollment and attendance are increased, funding will increase

Improvements in average daily attendance (ADA) yield immediate payback for nondeclining enrollment districts

Including increases in special education funding, which is based on a percent of ADA

If students have gone to charter schools, are there ways to get them to come back?

Increases in enrollment may not yield funding for 2008-09, but we don’t expect the problems to go away completely in 2009-10

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Expenditure Options

There are many ways to spend less, but it often is necessary to overcome “TTWAD” (That’s the Way It’s Always been Done)

Biggest expense is for personnel

Average unified districts spend 92% of unrestricted budget on compensation

Reductions can be made by:

Altering staffing norms

Eliminating nonessential positions

Example: Media clerk overseeing film reels

Another tack is to examine changes to programs

And improve operational efficiency

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Reducing Personnel Costs

The easiest way to start is to get an accurate assessment of retirements, nonrenewals, and temporary employees

If further reductions are needed, a few options are:Notice certificated (March 15) and/or classified (45 days)Early retirement incentives, but watch out – this could cost

more than it’s worthMake cut from unrestricted budget and backfill with restricted

resourceMay be considered supplanting if not done properly

Eliminate or significantly reduce pay for extra hoursContractual changes:

Increase class/program sizesChange benefit package structure to reduce costsReduce preparation timeFurlough days

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Making Changes to Class Sizes

Many districts are considering increasing class sizes, but be aware of constraints

Class-Size Reduction incentivesLegal limitsContractual limits

Grade Level

Target Actual

Contract Limit Statewide County Max Ed Code

K-3  

 

19.7  19.1 

Kindergarten-average class size not to exceed 31 students; no class larger than 33 students and grades 1-3 average class size not to exceed 30 students, no classes larger than 32

4-8  

 

 27.5 28.5 

Grades four through eight – current fiscal year average number of pupils per teacher not to exceed the greater of the statewide average number of pupils per teacher in 1964 (29.9) or the district's average number of pupils per teacher in 1964

9-12    27.7 26.6 No limit

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Eliminating Class-Size Reduction

Before deciding to stop participating in K-3 or 9th Grade CSR, calculate revenues and savings carefully

Have revenues been maximized?

If your district is under the 20.44 cap (K-3 CSR) or 20:1 average, with no more than 22 in any class (9th Grade CSR), reevaluate staffing

This may mean combination classes are necessary

Or, in the case of K-3 CSR, having a class or two above cap and taking penalty may be advantageous

The average district that ceases to participate in K-3 CSR has to raise class sizes considerably to realize any savings

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Eliminating Class-Size Reduction

To calculate the impact for your district:

Compute incentive gain: $1,071 (Option 1), $535 (Option 2) x # students per class

Example: 100 3rd grade students with 5 teachers = $107,100

Convert the incentive gain into an FTE (districts with higher compensation will have a smaller FTE)

Example: Average teacher compensation = $64,260 This is equivalent to 1.67 FTE

To realize any savings, this school would have to increase class sizes above 30 students

5 teachers – 1.67 FTE = 3.33 teachers for 100 students ratio of 30.0 to break-even

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QEIA and the State Budget

While QEIA funding is not directly affected by the horrible state budget and decision to alter class size rations impacts QEIA budget picture

State K-3 CSR Incentive Funding

$1,071/student

General Fund Contribution$189/student

Total Cost to Implement K-3 CSR,

$1,260/Student

Assumptions: Based on (1) Kern County Average Teacher Compensation of $72,000 per teacher and (2) pre-CSR Class Sizes of 27:1

If District Drops K-3 CSR for nonQEIA

schools

State K-3 CSR Incentive Funding

$1,071/student

QEIA Contribution$189/student

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QEIA and the State Budget

The impact also extends to other grades – take 4th grade for example:

# Teachers Based on Staffing Formula

8 teachers(208 ÷ 26 = 8)

# Additional QEIA Teachers

2([208 ÷ 21] - 8 = 2)

Cost/Teacher $72,000

Cost Charged to QEIA

$144,000

Initial Budget Assumptions: (1) Kern County Average Teacher Compensation of $72,000 per teacher, (2) 2008-09 Class Size ratio of 26:1 (208 students – 8 teachers), (3) QEIA target of 21:1

Revised Budget Assumptions: (1) Kern County Average Teacher Compensation of $72,000 per teacher, (2) 2008-09 Class Size ratio of 30:1 (208 students – 7 teachers), (3) QEIA target of 21:1

For this example: 15% change increase in class size ratio results in 50% increase in cost to QEIA

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# Teachers Based on Staffing Formula

7 teachers(208 ÷ 30 = 7)

# Additional QEIA Teachers

3 ([208 ÷ 21] - 7 = 3)

Cost/Teacher $72,000

Cost Charged to QEIA

$216,000

Options to Consider: Staff are Mobile

Or, at least, they are theoretically mobile

Consider:

Are there positions that can be shared between sites?

Are there positions that may be shared within the county?

Is it time to consider combination classes?

Are there alternatives to small elective classes at high schools?

Distance learning

Partnerships with community college

Do we need the position long term?

Contract with County or other provider for short-term needs

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Options to Consider: Leverage Other Resources

Since unrestricted general fund dollars are “easier” to spend than restricted general fund dollars, they are often sought before all options are explored

When unrestricted general funds are used to provide support that otherwise could have been funded with a categorical fund, undoing this can be hard

Supplement, not supplant rules affect many categorical programs

But, wait –

When there are cuts to state funding, there is a valid argument that funds have gone away and, absent the use of categorical funds, the functions would not be possible

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Options to Consider: Leverage Other Resources

This argument is particularly plausible at a time when state and local education budgets are being cut nationwide

Documentation is important (i.e., budget information, planning documents, or other materials)

Example: Extra counseling support has been provided at the high school and paid for from unrestricted funding

For 2008-09, clearly document the budget reduction that eliminated unrestricted general fund and consider funding the position with Supplemental Counselor, Economic Impact Aid, or School and Library Improvement Block Grant, just to name a few

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Options to Consider: Split Funding Positions

With reductions expected across the board, it may be necessary to consider how specially funded positions can be maintained

Using multiple funding streams is okay if the positions support areas within the uses of the funds

But be aware that time accounting may be required

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Closing Thoughts

Consider implementation details now:

Phased implementation versus immediate full implementation

1/3 across all grades, or a grade level at a time

Single-grade classes versus combination classes

Enrollment forecast

Overall district funding outlook

Time taken to thoughtfully plan now is guaranteed to reduce frustration later

Budget assumptions may change so be prepared to react

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