Liabilities To Assets: A Revenue Solution for PA Schools
In 2003, as a school business administrator, it became clear that a convergence was underway between the growing difficulty in obtaining new revenues for district needs, and energy prices beginning an extended rise in cost to my community.
Fortunately for me, on my school board at the time were two learned men with considerable energy expertise and awareness that teamed with me to seek, and obtain, a funding solution to the converging challenges stated above. Mr. Jim Davis and Mr. David Shimmel, board president and vice-president, played a critical role in developing and refining the eventual grant submission.
Good fortune provided an opportunity to offer testimony at Penn State on the impact of natural gas price increases on the educational program in my school district. This opportunity to speak on behalf of taxpayers and students in my school district also opened the door to eventual Federal funding support for one of the four renewable energy projects that were included in my grant submission; wind, solar, geothermal, and biomass.
Of these four possibilities included in the grant, one, biomass was selected by US Cong. John Peterson for funding support. You can imagine my elation when the call came apprising me that $600,000 was going to be included in the Federal budget for my hometown school district!
As every school business leader knows, the relative wealth of his/her school district is measured by the Department of Education and is reflected in the market value/personal income aid ratio. Further illumination of a district’s financial strength can be measured by the changes in collections of local, state, and federal revenues received over the past five years, in particular.
My school district’s physical plant was aging, and our Middle School’s heating system was approaching failure. In my area of the Commonwealth, there is a plentiful supply of biomass that can be used for heating purposes provided that long-term commitments from one or more suppliers will insure that product is available when needed.
School leaders know that, to be successful, up front collaboration with the Department of Environmental Protection is a must if such a project of this magnitude is to be brought on line successfully. In addition, now that the system is operative and meeting DEP/EPA clean air guidelines, the new heating system permits the school district to enjoy several long-term benefits. One, heating costs have dropped significantly with savings up to 40% compared to previous years. Two, the air around the Middle School is cleaner, emission wise, compared to the previous use of heating oil. Three, in the heating season, both children and staff are warm and able to direct their energies to student learning. Lastly, the school district, with the biomass heating system, has recognized the importance of blending administrative awareness of good stewardship in controlling operating expenses with the ability to seek and obtain grant writing by a school administrator. This is but another example of productivity that most business administrators bring to the job every day!
WHAT WE LEARNED AND ITS LONG-TERM IMPACT ON TAXPAYERS AND CHILDREN
Several lessons regarding the ‘new normal’ of school finances were made manifest. First, with state funding becoming more difficult to obtain, school leaders today must be creative and look ‘outside the box’ of conventional revenue sources to be successful. Second, a comparative analysis of spending will illuminate the fastest rising district expenses and the need to contain those line items. Three, the ‘liabilities’ of one’s school district; static real estate tax base, falling collection percentages, and growing imbalance of revenues and expenses becomes ‘assets’ in the development of a compelling grant narrative. Four, no capital funds were needed for the replacement heating system, and 30 years of interest expense on such a borrowing was conveniently avoided. Five, and lastly, cost avoided can be as important as new revenue found!
The challenges of revenue shortfall, flat tax base, and rising operating expenses, along with an inclusion of the difficulty in funding critical educational needs, can become ‘assets’ when submitting a grant funding request. This effort only requires the willingness to combine these components into a well thought out funding request that warrants funding support.
What makes this effort important, beyond the success in my school district, is that any school district business administrator in Pennsylvania, with the right combination of facts, research, and when need be, outside expertise, can accomplish the same!
By: William I. Armstrong, RSBA, PASBO past president and ASBO International Eagle Award of Excellence Winner
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