Community School "Business Plan" Observations

Not the Community School AGAIN !!!!!!!!

DISCLAIMER: I think the Community School provides a very valuable service to members of our Community. I am not disputing the need for, or the quality of, the programs offered. I have taken several courses there, as have several members of my family. My only issue is that the cost of offering those programs, including any costs incurred by the School District for the benefit of the Community School, be paid by the Community School -- not with local property taxes intended for K-12 education.

I briefly reviewed the Community School Business Plan/Budget that was discussed at a recent School Committee meeting. The report was certainly long on data, but very short on real information. I also believe the Business Plan was missing one important component - an actual PLAN.

I have several serious issues with it; but here are some of the most glaring concerns that jumped off the page at me:

1) It appears that the Auditors' suggestion to adopt the accrual basis of accounting has been ignored. As a result, program revenue includes almost $78,000 for camps which were not actually held until the following year -- FY '12. It's important to note that although the income was recognized in FY '11 - the expenses won't be recognized until FY '12. This distorts the true operating results for FY '11 - it also ignores Generally Accepted Accounting Principles (GAAP). This makes it impossible to determine the actual operating results of that program. Matching income and expense is a basic (but crucial) accounting concept.

2) $86,000 was budgeted for pool energy costs in FY '11, yet only $10,000 was actually reimbursed to the District. Did the Committee take a vote to divert District funds to the Community School program by NOT requesting utility reimbursements for FY '11? It appears that there is $57,000 budgeted for this line in FY '12 - why the difference?

It seems bizarre (and unfair) that parents are forced to pay for Full Day Kindergarten, as well as purchase paper towels, pencils and crayons for classrooms, yet there seems to be no concern about using dwindling school funds to subsidize Community School Pool costs. Its even more ironic, given that the Community School's own report shows that only 40% of its users actually live (and pay taxes) in Sandwich.

Based on these two issues alone, it appears that the actual operating loss for the Community School was grossly understated for FY '11.

3) It also appears that the auditors' suggestion to allocate General & Administrative (Central Office) costs across the various programs has been ignored. In determining the economic viability of a program, it's important to look not only at whether its revenue covers its related costs - but also a proportionate share of the general overhead costs of running the Community School. There also needs to be a discussion of the fairness of cost allocations. 

Why should users of the Adult Ed, Early Learning, and Drivers Ed programs pay higher fees to generate profits in their programs in order to offset costs which are not paid by pool users?

4) On a more basic level, the pool is budgeted to almost break even in FY '12 - BEFORE any allocation of overhead costs. The pool energy issue has not been addressed at all in the FY '12 Budget --- $86,000 was budgeted for FY '11 pool energy costs BUT only $11,000 was actually reimbursed to the District. Approximately $57,000 is proposed for FY '12. Is there any plan to reimburse the District for FY '11 energy costs? Why are School District tax dollars still being used to subsidize Community pool operations?

5) The FY '12 budget presentation is deceiving because it compares the FY '12 budget to the FY '11 Budget (not FY '11 Actual Costs). In fact, the only actual numbers for FY 12 are only through March 31. Why aren't a full year's actual results included for a realistic (and relevant) comparison?

6) There is no discussion of the cost of any of the pool cabana renovations discussed at the last meeting - or any discussion of the impact the current pool restrictions have had during the final quarter of FY '11 - or are expected to have during the coming year.

7) There is no discussion of how the upcoming capital repair work to re-grout the pool will be handled. This cost will likely reach $30,000 and will result in additional loss revenue during the period the pool is drained, repaired, and refilled.

8) There is also no discussion of how the upcoming costs of replacing/repairing the aging filtering equipment will be handled. Presumably, there will be a plea to Town Meeting for funding for the re-grouting, filtration equipment - but given the precarious nature of municipal finances, and the current public sentiment, this funding source can hardly be guaranteed.

9) I didn't review individual line items for reasonableness or inconsistent cost allocations between years (ie. Shifting costs from unprofitable to profitable programs). I also didn't look at Community School Admin staffing and how those costs should be fairly and realistically allocated between various programs. 

10) There does not seem to be any plan to continue the audit for either FY '10 or FY '11. Given the ongoing controversies with this issue, I strongly believe continuing the audit process (particularly if the report was not ignored) would help build critical local support. 

11) Local support is critical - particularly since the Plan shows that 60% of Community School revenue comes from non-residents. While these folks may be willing to attend School Committee meetings and yell, they do not pay local taxes, attend Town Meeting, or vote for either School Committee members or tax overrides. There should be no perceived obligation for Sandwich taxpayers to subsidize residents of surrounding Towns with tax dollars intended for K-12 education. 

Dr. Canfield has made a giant step toward resolving these issues by calling for an independent three member Board of Trustees with financial and managerial experience to advise his office on Community School operations.  The attention of the school administration needs to be on providing the best education possible to the K-12 students whose parents pay taxes in Sandwich -- not providing a subsidized pool membership for the nice old man from Cotuit.