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Administrator Magazine: Budget/Finance
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Budget cuts

Austin's Perfect Financial Storm

Austin ISD is creating a blueprint that just may help schools nationwide.

Meria Carstarphen enters the room and immediately gets to work. The superintendent of Austin's 86,000-student district has an appointment, but before she starts, she rushes around the room turning off lights.

Facing a $94 million budget shortfall that could mean school closings, teacher layoffs, redistricting, and larger class sizes, Carstarphen hasn't taken to rationing energy yet, but she's not above trying to save whatever money she can, wherever she can.

There are many ways to show the fiscal crunch that has hit the fifth-largest district in Texas. Austin, which hasn't faced a year-to-year reduction in education funds since before World War I, is presently expected to lose 10 percent of its funding from the current fiscal year. More than 1,000 employees, out of 12,000 total, may either lose their jobs or be reassigned. Thirteen of the district's 124 schools are being considered for closure. But of all the indignities Austin ISD is forced to consider, none speak louder than this: The district's human resources chief, Michael Houser, has had to pink-slip himself not once, but twice.

"He gets a letter saying, ‘Michael, you don't have a job.' Signed, Michael," Carstarphen says. Houser, who as of press time was still employed, receives the letters because the way the law is structured anybody in a certain job title has to be notified of a potential layoff.

While some of the forces conspiring against Austin are unique, the district's message to try to do more with less is resonating across the country. And after spending some time with Carstarphen and others, it becomes clear that while you may fervently hope your district never faces a crisis of this size, there are some lessons to be learned. "It's terrible, and at the same time I actually believe with the wealth and knowledge of people in Austin, we'll have new models that are groundbreaking for the rest of the country," the superintendent says.

Austin's Perfect Budget Storm
School budget crises are nothing new. The recession and lagging economic malaise has forced many states, and in turn school districts, to face a new year with less money than they had in the previous year. California, always seemingly on the budget front lines, has already cut $19 billion in education spending in the last three years. One district's per-pupil expenditures have dropped $1,400 in that time.

Oregon has faced past crises by shortening the school year, and more than one district is considering that again. A school board member in Florida's Pasco County is floating the idea of a four-day school week to help erase a $60 million shortfall.

But Austin's situation is unique because the bad news comes from all sides. Carstarphen admits the district was poorly run in the past, overhiring teachers and keeping some half-full schools open while portables were built at other campuses to handle transfer students. The state's so-called Robin Hood law, designed to equalize funding, has cost property-rich Austin $1.3 billion in the last decade, with $127 million in local tax revenue given to the state this year. Now that the economic crisis has landed in the Lone Star state, estimates put Texas's budget shortfall anywhere from $15 billion to $27 billion.

"I inherited a structural deficit, then the state went south," Carstarphen says, with resignation. "It just keeps accumulating. It's shocking to people."

Carstarphen admits she began austerity planning even before she officially started in July 2009. "I did a lot of forewarning," she adds.

Once she arrived, she discovered the district had hired 115 more elementary school teachers than were needed, and that 20,000 students were taught in portables while some schools in less populated areas sat half full.

"The need for the conversation is long overdue," says the 41-year-old leader, who came from St. Paul, Minnesota. "The timing couldn't be less ideal."

Tapping Into Expertise
If Austin's circumstances are somewhat rare, so is the way the district has engaged its community during this budget debate. There were four meetings alone the night before I visited. The meetings come with parent groups, business groups, staff, and even students, and they typically include Carstarphen or one of her top-level administrators.

"I am more than willing to stand in front of whatever group and have them ask me whichever questions," the superintendent says. With meeting requests multiplying, and to get the district's experts in front of various groups, this is no one-woman show. Cabinet-level officials coordinate schedules daily to hit as many vital gatherings as possible.

The superintendent has boosted the district's social networking efforts to try to include more people and more opinions, and it's been working. Carstarphen is on Twitter (AISDSupt), she regularly holds student advisory meetings, and she even used Skype to include students in her last "State of the District" speech. Polls have sought input from staff and residents alike. Where the district used to get 200 to 300 responses, she says, now there are 10,000.

And by two distinct measures, the outreach is working. This spring, the district was awarded the Meritorious Budget Award from the Association of School Business Officials for creating an excellent budget presentation for 2010-11. Even better is the level of discussion occurring in the community. "I have to give Austin credit. We're going to have the most well-educated community from the budget to facilities," Carstarphen says. "We have grandmothers talking about buildings, and students who can explain the importance of the student-teacher ratio."

While early signals of budget woes went unheeded by residents, that all changed in a hurry when school closings were mentioned, says Mark Williams, school board president. "As soon as we put options on the table with a school name on it, everybody came out of the woodwork." The board president says ultimately the district decided to hold off on any closings until next fiscal year and use some of the district's discretionary fund to balance the budget.

With Robin Hood, Austin only keeps about 60 percent of the money it raises. And even with the area's track record of strong public school support, Williams says asking for more tax money now isn't a consideration. "We passed bonds in 2008, when most people couldn't do that. Our residents have said, ‘We want to help, but new taxes are not necessarily what we want to do.' "

"What I've seen, after people reacted to the shock, is they move very quickly to ‘We need a solution,'" the superintendent says. At a meeting about school closings, a parent told the Austin American-Statesman the question isn't "about how to save my school, but how do we support our school system?"

"I know there are enough good, really smart people who want to be part of the solution," Carstarphen says. "There's tons of expertise, and they are more than happy to share."

Communicating Bad News Clearly
With so many districts facing budget cuts, other superintendents agree the best way to present bad fiscal news is to be straightforward, accessible, and clear about priorities.

"The more you engage the community in the process, the more defensible your actions are," says Chip Kimball, superintendent of Seattle's Lake Washington School District. His district underwent major cuts in 2009-10, but is planning to use local tax levy money to fill in for state reductions this year.

Through many meetings, Kimball says the public emphasized the importance of protecting class sizes. The district listened, instead choosing to charge students to participate in sports, to cut other programs, and to reduce both administrators and vice principals.

Maryland's Montgomery County Public Schools superintendent Jerry Weast favors transparency and communication, up to a point. "My job isn't to do all the work with a paper and pencil, but to build the structure and culture that causes people to become so engaged that they want to get involved. You need everyone: unions, board, public. There can't be any mysteries; you have to let people know there's no little black box where you have the extra money," he says.

But he says leaders must know when to end the debate and make a decision. "Sometimes you can overkill by just talk, talk, talk, or what they call in the South, fixin' to get ready. What you have to do as a leader is have enough discussion as to what the issues are, then propose a solution that meets the problem."

Weast and his Virginia counterpart, Edgar Hatrick, warn against trying to please everyone with every decision. "There's always a vocal part of the public that doesn't want taxes raised, period," says Hatrick, superintendent of Virginia's Loudoun County schools.

Carstarphen says meetings with students have strengthened her resolve. "I had middle school students asking the same questions I hear from my cabinet," she says. "They are so thoughtful. That inspires me to stay focused, be honest with them, and make the best choices for them, even if those choices are unpopular. If we do this right, it will make the district so much stronger."

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