- Cleveland Metropolitan School District
- Deficit Reduction Plan
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Financial Challenges
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Since FY2020-21, the American Rescue Plan/Elementary and Secondary School Emergency Relief Fund (ARP/ESSER) has funded a total of $465M in temporary CMSD expenditures.
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These funds allowed strategic enhancements in health/safety, technology, and other areas.
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With a 2024 ARP/ESSER sunset and an assumption that 100% of ARP/ESSER expenditures are picked up by the General Fund, the Nov. 2023 forecast projects a 2-year negative cash balance of $168M.
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Since being placed under a fiscal precaution status by the Ohio Department of Education & Workforce (DEW), District leaders have been working diligently to identify reductions that bring our budget in line with expected revenues/the end of temporary APR/ESSER funds and create a positive cash balance in the next two fiscal years.
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However, there is much work yet to be done to fully eliminate our deficit moving forward and realize financial health.
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The Board of Education will review the budget deficit plan and submit to the Ohio Department of Education & Workforce (DEW) by February 29th deadline.
Deficit Reduction Plan
Reflecting upon the financial challenges facing the district and the priority to protect school-directed budgets, Dr. Warren Morgan, Chief Executive Officer, and the Cleveland Metropolitan School District Board of Education adopted a goal to reduce central office by at least 10%. Central office budgets include staff, services, and programs whose budgetary allocation is aligned to a centralized administrative team and not allocated through a specific school’s budget. The district is currently reviewing staffing at 1111 and East Professional Center. Reflecting Dr. Morgan’s commitment to driving savings through central office budgets reductions, the central office budget process began in January – months earlier than is typical – and ahead of the school-based budgeting process, which begins in February 2024. The central office budget process is now midstream and concludes in April 2024.
As required by DEW, the district will monitor implementation of the plan and may revise the plan if warranted by significant changes in assumptions or priorities, while upholding our commitment to eliminating projected deficits. The spring Five Year Forecast will reflect the finalized and approved central office budgets and school-directed budgets.
Opportunities To Close The Gap
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- The pool of funds directed by school leaders (School-based budgeting) will not be reduced.
- Reductions will come from Central Office-directed budgets.
- With FY25 budget reviews and a Central Office restructuring still underway at this time, the plan includes two phases of Central Office savings:
- Phase 1 reflects a conservative, quantifiable commitment to minimum savings for certain categories
- Phase 2 reflects the balance of savings that must be realized to meet DEW targets by close of budget process.
- Phase 1 includes
- Minimum reduction of 25 FTE staffed at Central Office (1111 Superior and East Professional Center)
- Controls on Central Office travel, conferences and staff food.
- 2-yr. savings vs. forecast (phase 1): $5.3M.
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ARP/ESSER enabled the rapid expansion of summer learning (see table at right).
- With ARP/ESSER expiring, we are committed to investing at levels substantially higher than pre-pandemic.
- Current year allocation for summer learning has been adjusted, noted in plan as FY24 savings (see next slide).
- We are working closely with partners and city agencies to coordinate on summer opportunities for scholars through the CPL, Recreation Centers, summer jobs & internships. Please see current list here.
- 2-yr savings vs. forecast: $31.9M.
- 2023 Summer Learning Experience snapshot
- 4,225 average daily attendance
- 90 minutes instructional time per day, with balance of time on enrichment
- No mechanism for measuring impact
- Pending review of Summer Learning MOU with CTU, plans for 2024 include
- Capacity for 3,500 students
- Doubling amount of instructional time to 180 minutes per day
- Introduce MAP testing at beginning and end of summer learning to measure program impact
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OST budget did not exist prior to ARP/ESSER.
- Created to temporarily support external partners with funding to address pandemic-related needs.
- CMSD will continue offering extracurricular, athletic and other afterschool programming.
- With the loss of funding source that made OST possible, return to previous practice of supplemental providers securing own funding.
- 2-yr. savings vs. forecast: $34.1M.
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- CMSD currently operates with a high degree of calendar variance across our portfolio
- 8 schools with Year-Round Calendar (20 additional days)
- 13 schools with Extended-Year Calendar (10 additional days)
- 24 schools with Extra Minutes (30 additional daily minutes)
- CMSD currently operates with a high degree of calendar variance across our portfolio
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- ARP/ESSER funds enabled CMSD to make devices and wireless hotspots to all students, approaching a 1:1 student to device ratio.
- Our experience to date with 1:1 device implementation has varied across schools and grade levels, causing us to rethink our student device strategy.
- We are in the process of reviewing to ensure that we are investing responsibly while ensuring that all students have access to grade-appropriate technology.
- Expected to include elimination of free wireless hotspots, and more shared technology in earlier grades.
- We will continue working with the city and external partners to find ways to help our families with connectivity.
- Preliminary estimate of savings vs. forecast: $6.4M.
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- Recap of adjustments described thus far:
- Changes to assumptions reduce the forecasted deficit by $36.1M over 2 yrs.
- Reductions in expenditures described thus far save a total of $91.4M over 2 yrs.
- Division Chiefs will designate at least $41M in additional 2-yr savings during FY25 budget to ensure a positive cash balance by FY26; identified in the plan as “Phase 2 reductions”
- To be reflected in both final FY25 budget and May 2024 5-yr forecast.
- Phase 2 savings will be realized in both personnel and non-personnel categories.
- Proportions for categories are estimates only; we anticipate a greater proportion of savings from professional services contracts, which grew disproportionately during ARP/ESSER era.
- Thank you to our partners, staff, community members and others for contributing your ideas to identifying savings.
- Recap of adjustments described thus far:
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Expenditure Reductions for School Year 2023-2024
The following cost savings measures will commence in SY23-24 and carry through the remaining forecast years:
- Summer Learning – continued expansion of the Summer Learning Experience (SLE) without ARP/ESSER funds is not sustainable. However, our planned reductions still allow for continued SLE programming at levels higher than those pre-pandemic. Wages and benefits are a reduction in supplementals, not positions.
- Wages and benefits – $9.0 million
- Services (net savings) – $1.0 million
Total Savings School Year 2023-2024: $10.0 million
- Summer Learning – continued expansion of the Summer Learning Experience (SLE) without ARP/ESSER funds is not sustainable. However, our planned reductions still allow for continued SLE programming at levels higher than those pre-pandemic. Wages and benefits are a reduction in supplementals, not positions.
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Expenditure Reductions for School Year 2024-2025
The following cost savings measures will continue from SY23-24:
- Summer Learning
- Wages and benefits – $10.3 million
- Services and (net savings) – $0.6 million
The following additional cost savings measures will commence in School Year 2024-2025:
- Phase I Central Office Staff – Reductions will be made to the number of staff positions at central office, here referring to positions based at either 1111 E. Superior or the East Professional Center. The first phase of this work, completed at the time of this writing and reflected in the workbook, has identified 25 positions. This process will continue with a second Phase, described in the plan as Phase II, concluding by April 2024.
- Wages and benefits (net of separation payments) – $2.2 million
- Out of School Time – ARP/ESSER supported the use of contracted Out of School Time (OST) providers. Upon expiration, the contracts will be discontinued rather than assumed by the General Fund. The district will continue to provide traditional after-school extracurricular and athletics activities.
- Services, supplies, capital outlay, and other – $17.0 million
- 1:1 Device and Internet – The investment in 1:1 technology and internet was supported through ARP/ESSER funds. We will maintain grade-appropriate access to 1:1 technology and internet with a more cost-effective deployment.
- Services – $1.3 million
- Equipment – $1.9 million
- School Calendar Alignment – A more aligned academic calendar across schools will mean improved operating efficiency and financial savings that enable us to preserve our investments in all classrooms across the district. This estimate reflects only direct staff differential savings achieved through reduction of hours.
- Wages and benefits – $6.8 million
- Central Office Employee Travel and Food for Meetings – New restrictions will be put in place for central office employee travel, conference, and food expenses, focusing professional development on internal and local resources.
- Services – $0.3 million
- Phase II Central Office Reductions – These are reduction targets that, in the aggregate, will be met through the school year 2024-2025 budget process, which will be complete in April. The total represents a minimum reduction threshold, but the category amounts are estimates only. Final amounts may be expected to vary between spending categories.
- Wages and benefits (net of separation payments) – $2.0 million
- Services, supplies, and other – $18.2 million
Total Savings School Year 2024-2025: $60.6M
- Summer Learning
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Expenditure Reductions for School Year 2025-2026
The following cost savings measures will continue from SY24-25:
- Summer Learning
- Wages and benefits – $10.4 million
- Services – $0.6 million
- Phase 1: Central Office Positions
- Wages and benefits – $2.5 million
- Out of School Time
- Services, supplies, capital outlay, and other – $17.1 million
- 1:1 Device and Internet
- Services – $1.3 million
- Equipment – $1.9 million
- School Calendar Alignment
- Benefits and wages – $6.9 million
- Employee Travel and Food for Meetings
- Services – $0.3 million
- Phase II Central Office Reductions
- Wages and benefits – $2.4 million
- Services, supplies, and other – $18.4 million
Total Savings School Year 2025-2026: $61.8 million
- Summer Learning