Democrat Photo by Dan Hust
Sullivan West High School
SW May Have
Blueprint or Not
By Dan Hust
LAKE HUNTINGTON September 29, 2006 Twelve months and $25,000 later, the Sullivan West Central School District has a five-year financial plan.
Actually, it’s more of a proposal a series of proposals, in fact which the board can adopt or reject in part or in whole.
Consultant Robert Pierce pored over reams of financial forms, correspondence and newspapers to produce what SW and the State Education Department (SED) agreed was sorely needed: a financial long-range plan.
Indeed, according to Pierce (who was recommended by the state), SED is just as anxious as anyone else to make SW the success story the community has long wanted it to be.
“Privately, some of the rank-and-file people I spoke with [at SED in Albany] indicated that they had heard talk in the halls that this particular merger (and I believe one other one) and its problems have actually caused a substantial rethinking of what the department needs to do in the future to avoid similar situations,” Pierce wrote in the report, which is available for public review at the district clerk’s office in Jeffersonville.
So what went wrong at SW?
“The newly formed Sullivan West school district neglected to require the administration to formulate and maintain a detailed, accurate, multi-year financial plan which could show the impact of decisions being considered,” said Pierce.
He identified nine specific areas of concern:
• The “disconnect issue” saying SED, the board, administrators and the public fell away from offering the needed support and guidance of the merger during and after the merger and construction votes in 1999 and 2000.
Pierce believes the SED stepped back from its supervisory responsibility, leaving inexperienced administrators and board members to deal with complex issues. When those people ran into SW’s now-infamous difficulties, the public, said Pierce, lost confidence and understanding.
“A professional title does not guarantee a level of expertise,” he wrote, “nor does the appearance of a State Education bureaucrat mean that they are going to be engaged in your process for the long haul.”
• Timing issues saying the physical merger was rushed, being squeezed into just three months during the summer of 1999.
• School closings and financial stability saying that while the closings of the Delaware Valley and Narrowsburg campuses helped stabilize finances, debate remains on whether or not that was the best decision and if the schools should be reopened.
• Program enhancements saying that promises for new and better classes have only been partially kept, and continuing financial pressures will make it difficult to add programs without cutting somewhere else or raising taxes.
“Without significant increases in state aid and/or reductions in appropriations in other areas of the budget, the tax levy could continue returning to double-digit increases,” he wrote.
• True value rates saying the true (market) value of the district’s taxable properties has increased about 8 percent for the past several years, which could help keep the true value tax rate (as opposed to the assessed value) flat for the next few years. He advised that the district learn how to effectively explain this to the public.
Regardless, he said the tax levy could continue to rise by 5-10 percent in future years.
• Debt burden saying that few in the public or the district understood that the building of the high school would only be 68 percent aided by the state, with the local tax share coming in at 32 percent.
Overall, Pierce felt that the explanation of the state aid percentage was accurate back in the days before the high school project was authorized, but obviously it did not come in at what a majority of people erroneously thought it would: 95 percent.
• Demographics saying that enrollment is projected to drop by up to 24 percent in the next decade, a significant impact on the current population of slightly over 1,400 students. And Pierce feels that the promise of casinos and other sources of employment to attract families is extremely uncertain.
• Available student capacities saying that the district has an estimated capacity for more than 3,000 students in all four campuses, but of course, enrollment is likely to drop.
• Long-range financial plan saying that the district never had one, “in part due to the rapid turnover in its business management position.” Pierce feels that such a plan is critical to the future financial success of SW.
Toward that end, he offered a model that can be incorporated into the district’s financial projections to more accurately predict finances up to five years out.
Indeed, that was his first of seven remedies recommended to the board, which received the report earlier this month.
The other remedies included:
• Aggressively resolving design and construction issues of the capital project advising that the district focus on completing its legal affairs in this arena (lawsuits over the high school are wending their way through the court and arbitration systems).
“However, there appears to be a developing need to spend some additional money in safety and structural issues on some of the buildings,” he wrote. “In order to receive additional state building aid, the district will have to clearly show that the costs are for safety/health reasons and were not created because of current project design and/or contractor failures.”
• Maximizing the building aid via proper reporting advising that the district carefully analyze and allocate costs to seek an improved bond percent.
• Seeking legislative action advising that the district gain Albany’s help in reinstating all or a portion of the incentive operating aid to pay the high local debt costs.
• Establishing a rational, legal and conservative plan for future fund balance management advising that administrators and the board seek to avoid the extreme fluctuations in the district’s past fund balances (the part of the budget which remains unspent and undesignated at the end of the fiscal year). Such fluctuations can have the same effect on tax levies and rates, he warned.
• Restructuring the debt and offsetting building aid advising that the district enlist state legislators to petition SED and the governor to help cut SW a special deal on financing and current bonds.
• Better utilization of excess building capacity advising the district that a community panel should be created to discuss the matter (which the new board has done).
What About the Financial Plan?
Pierce created four scenarios in his report which estimated the district’s financial future from now through the 2010-2011 school year.
In two of those scenarios, he modified the fund balance immediately and also gradually, dropping it from $1.6 million to $800,000. In another scenario, he maintained the status quo, and in the fourth one, he offered a scenario where programs, supplies and benefits were increased, along with revenues.
Using the status quo scenario (leaving things as they are currently), he predicted that the 2007-2008 tax levy would be around 5.1 percent, while the following year it would jump to 10.4 percent (due to debt service costs).
The other scenarios projected tax rate increases of between approximately 5 and 10 percent.
While he repeatedly stressed that all figures were estimates and needed to be revised by the board and administration, Pierce added that the plan “is superior to blindly making a decision with no clue to its future impact.”
Pierce concluded, “The board of education, administration and the public all needed to be more connected to and interact with the financial issues and projections beyond the immediate budget year. But that was then. It is my belief that a corner has been turned.”
Plan Is Panned
By Dan Hust
JEFFERSONVILLE Ask several of Sullivan West’s administrators and board members what they think of Robert Pierce’s financial long-range plan report, and the consensus is clear:
That’s also the response one gets when asking the same people what they plan to do with the report.
“It was a bit disappointing,” remarked Superintendent Alan Derry yesterday.
“I wasn’t impressed,” added Board Vice President Shawn Bailey.
“It’s almost a [fiction] novel, an Oliver Stone version of what took place,” said Board President Arthur Norden.
“I think there are some financial presumptions made that may or may not be correct,” remarked Derry, joined in that sentiment by Business Administrator Robert Miller.
“In a lot of ways, it was a restatement of things we already knew,” explained Bailey. “It really was a waste of our money.”
“Many assumptions he makes are just an opinion,” added Norden. “He actually misses many things.”
So after a year’s worth of effort and a price tag of $25,000, all the board has done so far with the report is accept it and file it.
And that very well may be as far as they go with it.
“Will we follow Pierce’s figures? I seriously doubt it,” said Derry, who praised Miller as being “brighter and more facile” on the budget than Pierce.
Derry said he had no problem with Pierce himself but explained the report doesn’t offer enough to chart the district’s financial future.
Derry, Bailey and Norden all pointed out that while the report gives a financial plan, there is no corresponding operational plan.
“It really doesn’t address the issues we’re struggling with now,” said Bailey, referencing the ongoing discussions about what to do with SW’s four campuses, two of which are closed.
And without incorporating building uses into Pierce’s four scenarios regarding the district’s future financial situation, all three men indicated that the numbers just wouldn’t be useful.
Plus, said Norden, “his building aid figures are just plain wrong,” in addition to other figures.
Norden, however, went a little farther.
“I had always called him a Trojan horse,” he said, referring to his ultimately accurate prediction early in 2005 that the State Education Dept. (SED) would handpick Pierce as the consultant. “SED flat-out lied when they said they’d have nothing to do with the selection of this guy.”
Both Norden and Derry said Pierce had worked with a top-level SED official, and Norden in particular intimated that “good old boys” politics and a desire to shift blame away from SED played a role in Pierce’s involvement at SW.
The board did officially hire Pierce, but Norden said it was not given any other choice.
“He’s not an expert he’s a friend of someone up in SED,” Norden complained angrily.
Bailey lamented, too, that Pierce met with the board and community initially but never met with any of them again, especially after the report was released.
Norden added it was delivered late and avoided laying much blame on SED. He said it didn’t take SED to enough task for not stopping SW from overbuilding.
“SED should have said [during the high school’s construction], ‘You don’t qualify for anymore space,’” he explained.
He charged SED with “just walking away from Sullivan West and saying, ‘Don’t blame us it’s your fault.’”
Bailey felt the district wasn’t overcharged for Pierce’s time, but he could not conclude that the money was spent on something worthwhile.
Norden did grant that Pierce included “prudent management practices” in his report, but “it wasn’t $25,000 worth of information.”
That $25,000 came from $50,000 appropriated for the district by Assemblywoman Aileen Gunther last year. The remaining $25,000 hasn’t yet been used or designated, said Derry.
So where do the board and administration go from here?
“I think the board will try to have the smallest fund balance possible and the smallest tax levy increase possible and will be very aggressive about it,” remarked Derry, adding that the administration and board are already working on that goal.
“I think we’re trying to get things under control,” added Bailey, who said the board and administration are focusing on building consensus and erasing tensions between each other.
While admitting that finances are the district’s “Achilles heel” currently, “educationally, our district is in incredible shape,” said Bailey, the father of two SW students. “I think it’s phenomenal how students have pulled together.”
And with Miller in place as the district’s chief of finances, Norden is confident SW is headed in the right direction.
“I think Bob Miller has an excellent handle on what needs to be done,” he remarked, saying the board is working with the administrators “every week, every day.”