Tuesday, April 18, 2006

Northwest Allen County School Board Candidates

I attended the Northwest Allen County School Board Meet the candidates at Perry Hill elementary last night. One question from the audience was about how Mike Sylvester's answers were more business than education oriented. Mike focused on Budget and the questioner was concerned about education. The School Board should focus on financing and let the administrator focus on education. You need good financing and practices to ensure a good education.

Mike repeatedly brought up the lack of planning in terms of five and ten year plans. These plans would cover when a new school would be needed, what projected maintenance costs would be over the life of the school, how large an enrollment should be in anyone school and more. Mike is a planner. He looks at costs with accrual accounting. That is you factor in the total cost of the school which includes heating & AC, new roofs, maintenance, the building of the school, grounds care, teachers & administrator pay and all costs associated with this school. You then factor in how many students will be attending the school in any given year and how much revenue you might receive from the state and federal government for each student. In the end you end up with a cash flow that is not linear, but has spikes and you project a constant level tax rate to cover the total cost.

What the school board now does is obvious. They use cash flow accounting. They look not into the future, but look at only today and the money coming in and going out. What this does is spread the construction cost of a new school out over 30 or 40 years (issue a bond), but not factor in routine maintenance costs. For example a new roof will be needed every 15 to 20 years; new heating and AC every 10 to 15 years; paving the parking lot every nine years; painting the building every five years; and the list goes on. What happens it appears you have little cost after you build a school, but with each passing year you consume the life of some items and thereby accrual a cost for replacing them each and every year. Under cash flow accounting you end up with incremental tax hikes.

Under accrual accounting and using plans, you can get a better handle on costs. Carroll High School was built with a utilization rate of 85% capacity. This means that when enrollment reached 85% capacity, the school was revenue neutral. When Carroll reached 100% capacity, the school system had 15% more revenue than needed to run Carroll. My question is what happened to this 15%? It should have been set aside to pay for a new school or addition. Accrual accounting is the way to go. Mike Sylvester has the background, logical thinking and is a problem solver to get Northwest Allen County Schools moving in the correct direction.

I support Mike Sylvester for School Board.

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