Q&A: Superintendent Murley Talks About Budget Challenges

Superintendent Steve Murley sat down recently with Patch to talk about his first year as head of the Iowa City Community School District. In today's installment, he talks about the district's possible upocoming budget crunch.

Iowa City Patch: Would you say that the budget this year and coming into the next year is your biggest challenge?

Steve Murley: Budgets are always a challenge. And I'll say that one of the reasons they are always a challenge is that if you look at the allowable growth increases over time in Iowa, there are only a few years in which the allowable growth percentage outstripped the average cost increase that we face in public education.

You look across the country, you look across the state, Iowa City is no different: on an average year, our overall cost structure goes up 3 to 4 percent, and that includes everything, that includes the increase in fuel cost, that includes the increase in food cost and the school nutritional program and it includes cost increases for benefits and compensation for employees.

Just like at home, everything that we purchase has an inflationary factor to it, and it's about 3 to 4 percent. You look at the historical allowable growth rate and they've traditionally been less than that.

So in education we have what would be considered a long term structural deficit — our costs will always increase at a rate that is greater than our income. Therefore, as we look at that as an annual basis, we've gotten pretty good at being able to trim around the edges to make sure we come in with a balanced budget.

With that said, the problem with that is that as we've done that we have not done a good job of publicizing that we're doing [the budget cuts]. Every year, we're learning to live with relatively a little less than what we've had in prior years.

Now, we come to a point in time where our state government tells us that they're going to look at a zero percent allowable growth rate over the next two years. For us, that's about $3 million lost.

In a normal cycle, that might be something that we could work with. But while our structural deficit is going to be about $3 million over two years, and on top of that we add $3 million in the change in allowable growth. So we take the story that was bad and it gets a little bit worse.

Now, on top of that, we add the fact that the federal government recognized, as we were moving into our recession, that public education was going to be hard hit, and so they allocated ARRA (American Recovery and Reinvestment Act) money into public education — many people refer to that as the stimulus funds. And in recognizing that last year that, even with those stimulus dollars in place. that many schools would be facing massive teacher layoffs, they put the Ed Jobs plan into place.

When you put those two federal funding sources disappearing together, that's another roughly $3 million that the district will lose over those next two years.

Any one of those issues individually, we could have managed by itself. Our problem is that we have all three of those to contend with during this two-year process. So we will have to deal with our structural deficit, we will lose our state allowable growth, and we will lose the money that is tied to those federal dollars.

So we could be looking at a total two-year deficit of as much as $9 million dollars.

We have one bit of good news. That is that because times have been good in Iowa, and good in Iowa City, from a financial aspect, there are areas of opportunity for us within our budget to make some changes and lower our costs without necessarily going to cuts in the classroom right away.

We'll be working with members of the board, the administrative team, the teachers and the community to look at areas such as our energy use, where we can work to conserve and potentially significantly reduce the cost that we use on energy. There are also opportunities to save on how we do things from an operational standpoint if we change the way we do business. 

Hopefully, as we go through that, many of those cost savings, many of those types of savings are the types that will continue year after year.

So we're going to be looking at that, but the downside is that operations make up only 20 percent of our federal budget. At the same time we look at that, we've got to look at people, too.

We know that our core business is teaching and learning, and that takes place between teachers and students so the likely analysis is that the greatest return on our investment is with the teachers remaining in classrooms. Therefore, we'll have to look first at those people who aren't teachers in classrooms and recognize that where we can be more efficient we'll have to find a way to do that.

Iowa City Patch: When you look at the fact that 80 percent of the general fund budget is represented by staff and programming, would you put a priority on keeping programs or keeping people?

Murley:  We're going to try to be a reflection of the community. As we go through that community engagement process in the fall, we are really going to be asking three sets of questions. One will be about core beliefs — what do you believe about public education?  And as we get a firmer handle on their view philosophically toward education, that will help us understand the broad, base level context that people have for the work that we're doing.

Then we'll be able to ask them more questions about what they want to students to know and do as they move through the system and as they graduate out of the system. That will help us understand the content, the work we should be doing.

Then the third set of questions we are going to ask, is going to be about what programs does community see that are particularly emblematic of the work we do in the district, that at all costs should be maintained. That will allow us to put other programs into second and third tiers that, while still important to some, are less important overall to the district population.

Recognizing that we are going to have to make some sacrifices in order to come in on budget, we'll have to start to looking at that second and third tier and start asking, "Are there programs that stay? Are there programs that go?" And those decisions will obviously have an effect on staff.

And we want to make sure that as we have those discussions, that we're doing it from a long-term perspective, and that we're doing it in a way that is reflective of those people that both work in and participate as community members in education.

Read the first in this series on Superintendent Murley's first year in the job. On Friday, the superintendent discusses the impact of population change on Iowa City district schools.