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Tim on: Expense Control

For 10 years, I have been a financial consultant in the private sector. In my current position I manage a multi-million dollar budget of a 700 member Fraud Prevention Team. Given the “New Normal”, where pressures on revenue are causing etreme pressure on “reducing expenses”, I have extensive experience in controlling expenses and balancing budgets.

Here are some ideas I have for the Mounds View School District.

School Budgets MUST Be Better Balanced!

At a recent board meeting, the current school board approved a 2011 operating budget that is out of balance by $7 million dollars. They approved revenue of 106M and expenses of 113M (see page 8 of this document for the details). This is a fiscally irresponsible for these reasons:

• This reduced the fund reserves (intended for financial emergencies) from $25M to $18M, a decrease of ~28%.
• This simply pushes the budget problem over to the next year, it solves NOTHING and only creates LARGER problems for Mounds View in future years.
• If you look at page 8 of the document I linked above you’ll see that the projected 2012 deficit is $11 million. To solve that problem the reserve would have to be lowered from $18 million to $7 million. In 2013 the reserve is projected to be empty and the district is still left with a HUGE deficit of $8 million.
• If you ran a budget like this in the private sector, you’d be looking for a new job! The 2011 budget received unanimous school board support, this is a clear indicator that change is needed!
• If elected, I will do everything in my power to stop this financial mismanagement of resources, by voting AGAINST budgets that are this far out of balance.

Health Insurance: Create an “Economy of Scale”

An “Economy of Scale” is a business theory which proposes that the larger you are, the more “cost advantages” you will have.  In other words, the larger you are, the better deals you get. I believe that the Mounds View School District should consider partnering with other districts and negotiate with healthcare provides as one “larger” force. This should drop rates below the levels that each district could achieve working alone.

Budgeting 1 year at a time = shortsighted

Mounds View needs to move away from the practice of planning their financials (revenue and expenditures) 1 year at a time. Contracts that are agreed upon have language that often carries forward to all future years. I have extensively analyzed the financials of Mounds View and it is difficult to see the long term impacts of the decisions being made if only 1 year is looked at in a vacuum. The practice of looking at just 1 years worth of revenue and expense is almost never done in the private sector and it shouldn’t happen in the public sector either.  We need to plan, at least, 4 years ahead and before various contracts and budgets are voted on, the school board should be presented with the long range, 4 year, implications of their votes.

Be done with high cost, frequently refreshed, textbooks

There are tons and tons of low cost, or even open source, textbooks such that we no longer have a dependence on the standard “hardcover textbooks” that most of us are used to. I propose we immediately reduce the textbook budget by 10% and start exploring ways to leverage technology (e-books, class blogs, etc) for our educational needs.