Economic Crisis Summit A NEW FUTURE FOR EDUCATION FUNDING DECEMBER 11-12, 2009 Washington, DC

1. The American Recovery and Reinvestment ActARRAAssociation of School Business Officials InternationalLeader in School Business Management for 100 yearsJohn D. Musso, CAE, RSBAExecutive Director

3. Economic Crisis SummitA NEW FUTURE FOR EDUCATION FUNDINGDECEMBER 11-12, 2009Washington, DC

4. Economic Crisis Summit 20 leading school business officials from the United States and Canada met to discuss the current economic environment and the effects on current and future budget cycles. They were joined by representatives from several education, nonprofit, and government organizations who presented case studies about public private partnerships (PPS) and venture philanthropy/education foundations and reviewed federal and state government reactions to the economic crisis.

5. Economic Crisis Summit Summit intent… Share the information presented at the two day summit To provide a point of reference for the difficult conversations now taking place in school districts throughout the country. Create an awareness of a “new normal” in the economic underpinnings of public education Provide models and a process for moving toward a sustainable future of support To anticipate and foster the qualities and skills that will enable school business officials to lead their districts to that future

6. Economic Crisis Summit Was NOT intended to… Provide a comprehensive to do list Road map to climb out of the financial difficulties

7. Economic Crisis Summit Known: 40 states had reported severe revenue deficits or budget shortfalls for 2009 New administration was preparing economic stimulus plan Any decisions we make now must be made with the future in mind Low Hanging fruit gone Short term solutions = long term consequences More than one budget cycle Shift in local, state and federal financing Growing competition for all resources Foreign direct investment will be a driver Any recovery will reinforce the role of small business Increased labor mobility Looking for resources, not giving out funds

8. Economic Crisis Summit Unknown: 1. Economic Stimulus Package Amount of dollars to education Guidelines Timeline 2. Full impact of economic crisis 3. Recession-depression 4. Politics

9. Economic Crisis Summit Results Managing Expenditures Most reductions have been made Revenue Generation/Cost Sharing The generation of revenue to offset long-term shortfalls and funding ongoing projects will have to be significant and sustainable

10. Economic Crisis Summit Public Private Partnerships (PPP) Venture Philanthropy

11. Economic Crisis Summit Public Private Partnerships (PPP) Contractual agreement between a public agency and private sector entity. Skills and assets of each partner are shared in delivering a service or facility for the use of the general public Shares resources Shares risks Shares rewards

12. Economic Crisis Summit PPP Used successfully for years to leverage taxpayer funds with private sector investments to reduce the public sector’s costs and transfer some risk involved in infrastructure projects. Transportation Athletic facilities Computer/business labs Co share facilities Utilization of skilled employees as trainers Parking lot services

13. Economic Crisis Summit Venture Philanthropy Use of education foundations to provide additional funding for local school districts. Used for years around the states

14. Economic Crisis Summit Venture Philanthropy Local Education Foundation (LEF) Fundraising: Raise funds from the community, business and foundations to provide funding for programs and projects that can no longer be supported by the school district. Advocacy: Helps ensure that the general public and other stakeholders are aware of and motivated to support these programs

15. Economic Crisis Summit Venture Philanthropy Local Education Foundation (LEF) Goals: Build a stronger alumni support, begin to partner with business and corporate leaders, and encourage the citizens of the community to take a more active role in education of the next generation.

16. Economic Crisis Summit PPP & VP only possible solutions Myriad of other opportunities to build a sustainable framework There is no silver bullet or one size fits all solution to the problems school districts are facing. Balancing cost cutting against revenue generation/cost sharing will be the formula for success.

17. Economic Crisis Summit Process for the difficult discussions that school districts must engage in. Engaging all stakeholders; school officials, board members, teachers, support staff, parents, students, business sector, community members Discussions about the future. NOT discussions about cuts “New Normal”

18. Economic Crisis Summit Alternative Futures SUCCESS… Any decisions must be made with future in mind. Discussions… Redefining the core curriculum, prioritizing extracurricular activities and renegotiating contracts.

19. Economic Crisis Summit Discussions… In order to effect long term change may be necessary to engage lawmakers on both local and state levels {POLICY} Because: Cost cutting, budget trimming, looking for cost efficiencies and economies of scale, eliminating some ancillary programs may not be enough to balance budgets.

20. Economic Crisis Summit Key to success and a warning Achieving a reliable new foundation of support will require well-designed strategies for revenue generation and cost shifting/sharing. Opportunities for increasing revenue and sharing costs abound, but may be less recognizable than those for cost cutting.

21. Economic Crisis Summit Alternatives Futures Process A point for beginning the difficult discussions

22. Economic Crisis Summit Alternative Futures Process Uses the principles of scenario planning to help organizations, from global businesses to local non profits make decisions when the future is uncertain and maintaining the status quo is no longer an option. Becomes a relationship/partnership

23. Economic Crisis Summit Scenarios Stories about how the future might look Meant to be hypotheses, NOT predictions. Created in sets of stories, usually 3 or 4 that envision a range of futures and the opportunities and threats they present. Each story about the future models a distinct, plausible world in which we might someday live and work

24. Economic Crisis Summit Scenario planning not forecasting You don’t predict a single outcome; you pose several potential futures, none of which will probably come to pass as presented but, all of which will challenge the prevailing mindset and make you aware of the forces that will affect your current decisions. It provides a way of thinking about and managing change.

25. Economic Crisis Summit Begin Process Identifying the focal issue or decision that needs to be addressed and determining they key drivers at work in the current environment.

26. Economic Crisis Summit Process These drivers fall into four categories: Social Dynamics-How influential will the senior population be in the next 10 years? Economic-Will we be able to find the skilled workforce that we need? Political- How will changes in the tax structure affect my business? Technological- Will the widening availability of wireless technology negate the need for landline phones?

27. Economic Crisis Summit From these driving forces there will be certain “predetermined” elements that are largely outside of our control The number of high school students in 10 years will be more or less determined by the number of children in elementary school now.

28. Economic Crisis Summit After the predetermined elements are identified, we are left with a number of uncertainties. These must be narrowed to the few that are most important to the focal issue or decision needing to be made. Commonality among uncertainties can be simplified to form a matrix that will define the 4 very different, but plausible, quadrants of uncertainty. Each of the 4 corners becomes a logical “future”.

29. Economic Crisis Summit Cost Control Strategies Matrix based on the current trends influencing traditional sources of school funding. Social Entrepreneurship Government Sovereignty Revenue Generating Strategies

30. Economic Crisis Summit Matrix based on current trends influencing traditional sources of school funding Systemic decline in key sources of state and local government revenue Growing dichotomy between schools and labor markets caused by increasingly mobile workforce, reducing the return to education for local municipalities Downsizing of American/Canadian businesses, making assessing employer needs more difficult Growth in virtual work environments Growing role of private and nonprofit participation in public school services

31. Economic Crisis Summit Scenarios took place in 2012 Longer scenarios produce more wildcards that muddy the process-more unknowns-lower chance of success and predictability.

32. Economic Crisis Summit Scenario questions fall into two categories What would we do if…? What needs to happen if…?

33. Economic Crisis Summit Address the following questions for each of the futures outlined Who provides school services? What new partners are engaged? Who are the new gatekeepers? What kinds of new organizations are involved?

34. Economic Crisis Summit What has changed for school business management and financing? What new practices have emerged? Who sets the rules for such practices? What new kinds of relationships have emerged? – How does managing those relationships differ from traditional practices? Are there new competitors for school business management? Who are school business officials’ new partners and peers

35. Economic Crisis Summit 3. What infrastructure changes need to be effected to ensure that school business managers can succeed? What laws need to be changed? What financial rules need to be developed? How has authority shifted and to whom? What new public relations problems have arisen and how are they managed?

36. Economic Crisis Summit Attendees were organized groups to conduct and document discussions and evaluation of the alternative futures scenarios. Examples such as PPP and Venture Philanthropy were the attendees ideas examples of potential solutions to fiscal challenges

37. Economic Crisis Summit Focus… Prioritizing the district’s essential needs Exploring potential resources Creating an implementation plan Enlisting individuals to execute the plan Creation and implementation of a communications plan

38. Economic Crisis Summit Have a post recession plan The economy eventually will rebound and we will want to sustain some of the changes made while discarding others. As cost cuts/reductions are reviewed, it is imperative that school officials think ahead and include a rebuilding effort into their plans.

39. Economic Crisis Summit Have a post recession plan For example, increasing class sizes will not be something that most school systems will want to sustain… …Increased numbers of teachers will be needed to fill those once-vacant slots. Planning for those eventualities must occur now when the cuts are being made.

40. Economic Crisis Summit Have a post recession plan Use the economic crisis to your advantage Programmatic “Sacred Cows”

41. Economic Crisis Summit Have a post recession plan Your post recession plan then becomes a PR tool. Essentially telling the school community that some of these unattractive solutions are temporary. Become part of solutions-not problems Become your advocates Avoids “killing the messenger” syndrome Enlisting their support throughout the process is critical.

42. Economic Crisis Summit 3. What infrastructure changes need to be effected to ensure that school business managers can succeed? What laws need to be changed? What financial rules need to be developed? How has authority shifted and to whom? What new public relations problems have arisen and how are they managed?

43. Perfect Storm for Reform Obama effect Leadership on the Hill and the Unions Proven strategies for success The Recovery Act--$100 billion

44. Saving and Creating Jobs and Reforming Education “In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity - it is a pre-requisite. The countries that out-teach us today will out-compete us tomorrow.” - President Barack Obama, 2/24/09

45. Historic, One-time Investment • Over $100 billion education investment • Historic opportunity to stimulate economy and improve education • Success depends on leadership, judgment, coordination, and communication

46. Guiding Principles

47. Advance Core Reforms: Assurances

48. Balance of Speed and Effectiveness • Balance speed and stimulus with careful planning and effective reforms • States should award funds to LEAs as quickly as is prudent and LEAs should use funds expeditiously but sensibly • LEA obligation timelines: • State Fiscal Stabilization Fund (SFSF): must be obligated by September 30, 2011 • Title I, Part A: in absence of a waiver, 85% by Sept 30, 2010; any remaining by Sept 30, 2011 • IDEA, Part B: majority during school years 2008/09 and 2009/10 and remainder by September 30, 2011

49. Short-term Investments that Produce Lasting Results; Avoid “The Cliff” • Maximize short-term investments with lasting results for: • students • teacher, school, and district capacity for improvement • Minimize unsustainable ongoing commitments • Integrate coherent improvement strategies that are aligned with the core reform goals

50. State Fiscal Stabilization Fund for Government Services • States may use for education, public safety and other government services • May include modernization, renovation, and repair of public schools and public and private college facilities