Revenue Sharing

First of all, Merry Christmas!  I did manage to survive the Mayans and "Duck Dynasty" is all caught up on!  I'm not sure why but I love that show.  Some of my fraternity brothers from back in the day totally remind me of those guys.  It's also hard to believe that those guys have managed to make themselves rich selling duck calls.  Who knew there was such a market!  I also watched an episode or two of "Shah's of Sunset" about an Iranian enclave in LA.  That show's beyond trashy but, growing up, we had some family friends who were Iranian.  30 years after and the kids in that show still remind me of our friends.  Couldn't stomach more than an episode tho. 

In any event, nothing brings out the Christmas cheer like a good old-fashioned public policy debate so gather 'round the hearth and grab some Egg Nogg!  Lets have a quick discussion before Uncle Joe gets drunk and starts a fight with half the family!  Ha! Ha! Ain't Christmas with the family grand!

There is, in the wide world, much discussion and concern about the "revenue sharing agreement".  The revenue sharing agreement indicates the schools will receive a fixed percentage of all General Fund revenue.  Recall that General Fund represents a specific subset of tax revenue and there's a longer discussion here.  We share 58.5% of General Fund revenue with the schools.  When I was first elected the percentage was about 56%.  We increased the percentage when we removed money from the General Fund for the Fire levy so that the amount of money going to the schools was about the same.  It was a pretty fair thing to do at the time.  Now, I'ma give you the pro's, con's and then what I think.  Actually the pro's and con's are also what I think but I'll attempt a neutral view….so, before the yule log runs out:

Pro's:  The following items are generally described as positive attributes of the agreement: 

1.  Keeps the peace: back in the bad old days the SB and Council passed separate budgets and then fought it out over how much money the schools would get.  Council chambers would be packed with citizens, teachers and children.  This was a combative process that many felt was counter-productive and kept the boards from working together.

2.  "It's about right": the argument has been made that the historical average of appropriations was somewhere in the middle 50% range.  Why bother dickering over 1% and enduring the long meetings and acrimony for such a small difference?  It's a distraction, fuhgetaboutit.

3.  When revenue increases come to the General Fund, they flow through to the schools.  It is reasonable that the costs for both organizations, absent some fiscal anomaly, increase naturally over time.  Raw materials and labor rarely get cheaper.  Also, more residents will mean more staff, especially when you undergo a demographic shift as we have experienced.

Con's: The following are identified as con's.  Some are just "inverse arguments":

1.  Removes "accountability" from the Council for the schools budget.  The argument goes that the Council is more accountable if they have to plow through the school budget at a finer level of detail.

2.  Removes the notion of a true "needs based budget" being presented.  After all, if the SB is just getting a split of the money doesn't it preclude an honest discussion of need?

3.  Gives the schools too much money.  They don't have to justify anything, just hold their hand out.

4.  Gives the schools too little money.

5.  Removes any push for more critical review – "who cares?  We're getting 58%!"

 

There are a couple of other arguments and, doubtless, someone will post some examples but these seem to be the main ones.  Now, here's what I think:

The revenue sharing agreement has to go….but not this year….before you start howling that I'm kicking the can down the road allow me the following:  it's too late in the budget process this year and there are way too many moving parts.  The Council has given no guidance (well $0) on how much they might be inclined to spend on CIP projects, you have a new Superintendent and City Manager who are working together trying to get budgets done, strategic plans finalized and build a coherent CIP.  Oh, and they both are working to gain a deeper understanding of their respective organizations.

I think the agreement needs to be eliminated in time for next year's budget season and here's why:  the agreement suppresses a very natural and necessary tension between the schoolboard and the Council.  This tension manifests itself in several ways not the least of which would be a healthy debate each year over the needs of the schools.  "Needs" means money.  I think that, no matter how painful, we need to have the discussion and the public needs to be more fully involved.  Those of you that rub your hands with glee at the prospect of getting our hands on the schools budget need to consider carefully.  There are restrictions in VA code about how deeply the Council might become involved in SB budgeting.  I've read the law and there is more control but it's at a pretty high level.  This move also makes the construction of the budget far more political.  I know, seems hard to imagine, but imagine a "Schools constituency" that is fully motivated instead of completely sidelined.  I don't look forward to sitting through public hearings with a line of people out the door but the agreement unnaturally sidelines one of the most important groups of people in the City: parents.  If you don't believe that, you've never been to a City budget hearing.  There are 10 people there usually.  Half of them are staff.  There are those that would rather keep that group on the sideline and quiet – after all, if they aren't involved there isn't more pressure to provide additional funding for the schools but I've come to the conclusion that we can't get to Great Schools without making this a community-wide debate and the underpinning of everything the Council does is the budget.  The schools might get more money or they might get less – we all pay for this enterprise – but it's time to kick this artifact to the curb and sort out the needs of the community and the schools.

 

Copyright 2012 Andrew Harrover. No part of this work may be reproduced in whole or part without written permission of the author.