Auditor: City committed to charter school system
City Auditor Margaret Krym has only a few days left before she retires, but she remains adamant that the financial health of the city’s Charter School System can be fixed if the city and the schools can work things out together.
“Right now we have a dysfunctional relationship between the city and the schools,” said Krym. “It’s causing friction and operational difficulties.”
Ultimately, City Council is the school system’s governing body. At the root of the matter is that council asked city staff to look into building a sustainable model for the charter schools to continue to thrive and grow and become financially sustainable. City Manager John Szerlag charged Krym, the finance department, the city attorney and others to sit down with school administrators and come up with a best practices plan to reach sustainability, just as he did with the city’s own operating budget with a three-year forecast.
“In doing this budget model we were alerted that action is needed,” said Krym. “This forecast is a best practice to fix what is broken. It is an unfortunate decision that shows it is not a unified, joint undertaking. We need to be one voice about this.”
The model that was presented at a recent council meeting is based on factual numbers, not opinions, and has gotten off track and emotional, Krym said. Some people are being defensive about it even though the model is a calculated possibility for the future of the charter schools, she added.
The Charter School Board has its next monthly meeting on Feb. 14.
“No one on staff, not the city manager, not the finance department, not my office, no one wants to let the charter system fail,” said Krym. “The city manager is passionate about this. He wants to fix this problem. It can’t be fixed in the media.”
City staff has been helping by providing services to the charter schools from the very beginning, when there was only one school. It was easy and not expensive back then. As one school became four the need for more staff support has grown with it, just as the number of students has grown. Assistance, which could be called an “implicit” subsidy has included building maintenance, HR, finance, engineering and much more.
“Over the last 12 months if we charged all costs it would be around $600,000,” said Krym. “They are paying it back at the rate of $55 per student, or about $250,000 a year. That’s where we are not in compliance with the ordinance. In my opinion, the ordinance must be changed first.”
The ordinance referenced states: “The city shall charge a fee or fees for those services; the fee or fees shall be equal to the cost of providing those services.”
“To come into compliance would be the second scenario of the model,” said Krym. “We would be robbing them of the money they need to operate and stress the finances much sooner, the worst case scenario. Council needs to recognize that. My recommendation is to change the ordinance. The original intent of the ordinance was that no tax dollars would be used to fund the schools, but that is not reality. The city needs to give the schools additional support.”
Krym said she attended all meetings with the charter school administration in order to build the city model.
“I asked the superintendent point blank if he saw any opportunities for revenue growth. He said he might get more state grants and private donations. The county school district refuses to share the capital improvement funding it gets with the Cape charter schools.”
Krym said the charter schools have no options to get more revenue. They are not allowed to borrow money. They can’t levy a tax. They can apply for grants. There is no money for capital improvements in their budget.
“They have to depend on the city for that,” Krym said. “The can’t charge a tuition because then it becomes more of a private school. Their Public Education Capital Outlay (PECO) funding has been going down the last couple of years even though the state still allots the same amount for charter schools. They got $600,000 less this year and there is no guarantee it won’t continue to go down. (It’s because there are more charter schools in Florida and more students.) We built our model showing no decreases in PECO funds.”
Krym added that the school system superintendent, Nelson Stephenson, inherited this problem. He didn’t create the ordinance. He did nothing on his own to bring this on.
“Some critics have said the numbers are wrong,” said Krym. “How could they be wrong unless you are making them up?”
Szerlag has now authorized paying $27,000 to a consultant to assist with the sustainable budget model, the same consultant he used for the city budget – Michael Burton of Stantec, formerly Burton & Associates. He said Burton can forecast budgets out as far as 10 years, which is seven years more than the city’s charter model.
“The nice thing is Burton can tweak the model and show the result in real time,” said Krym.
While some see the city model forecasting bankruptcy by 2020, Krym says that will never happen.
“Every one, and I mean every one, on staff and the school system wants the same thing – to have a thriving, sustainable system. No one ever said the schools would go bankrupt. We won’t let it. We will make adjustments and fix it before it does.
“We are just trying to get a fix on where we are,” she adds. “You have to do that so you can plot a course to get where we need to be, so we can plan an intentional future for the school system.”
The “baseline” budget model developed by city staff drew criticism last week at with at least three city council members calling for a joint meeting with the school authority governing board and superintendent to exchange thoughts and ideas to discuss the report.
That report showed, on its present course, expresses would soon outstrip revenues.
City Councilmember Jessica Cosden, who is the Council liaison to the authority governing board where she also serves as chair, took particular umbrage with the report.
“Some numbers were used and some were not,” Cosden said in an interview last week. “I think the numbers are being used to fit an agenda by the city manager.”
She said the city is rushing to judgment because it wants to resolve the issue before Krym retires at the end of the month.
A joint meeting has been set for Feb. 27 at 4:30 p.m. in the Cape Coral City Council Chambers during Council’s regular monthly workshop session.
The meeting is open to the public.