Financial Foresight: Jefferson R-VII School District - Local and State Funding - Spring 2024 Budget Preparation - Part 1

Navigating the complex tides of school district budgeting has never felt so urgent. That's why, as your host David Haug, I take you on a journey through the financial intricacies and challenges we face in the Jefferson R-7 School District. Expect an unflinching look at the delicate interplay of local and state funding, corporate contributions, and the pressing need for transparency as we assess the potential impact of Ameren's closure on our community. With a dedication to integrity, reminiscent of my esteemed mentor Bob Shannon, this episode unearths the realities and solutions essential for safeguarding our children's education and our district's fiscal health.

Shedding light on the lesser-known aspects of district financing, we unravel the complexities of our dependency on corporate benefactors like Ameren and Buzzi. The conversation takes a critical turn as we scrutinize the state funding formulas, surprising revelations, and the stark differences in per-pupil allocations. But it's not all numbers and forecasts; at the heart of this episode lies a steadfast commitment to our children's future. Joined by experts and community leaders, we engage in robust dialogues that challenge our preconceptions and pave the way for a brighter educational horizon for the young minds we serve. Tune in for an informative session that promises to arm you with knowledge and inspire collective action for the betterment of our schools.

Transcript

David Haug: 0:06

Hey, my name is David Haug, superintendent of Jefferson R-7 School District and always proud to represent this community kids, taxpayers, everybody involved here. I struggle a little bit how to maybe go about this this spring, and the reason what I'm going to do is I'm going to break this up into like four videos, as planned right now to address, because I think there's a lot to digest as we go into not only next year's budget but future budgets with different things going on in our community. It's always very important to me to have integrity and I think part of this process too is for you to get me know a little bit better. I'm going to share a few things just so you know about me.

David Haug: 0:44

You know I had a great fortune one time. I had a mutual friend that was a coach at the St Louis Rams years ago, just after they won their first Super Bowls, when we kind of met, I used to go out to Rams Park and watch their practices and there's some other special guests out there at times, and one of them was Bob Shannon, for those of you older. Well, no, bob, he was the head coach at St Louis and then later CBC, and I got to speak with him almost all day and I'll never forget. He was talking about all the trials and stuff they were dealing with at St Louis and somebody warned him earlier. They said you know you're going to burn yourself up working this hard at what he did. And he said something to me I'll never forget and I feel like I really resonate with it was I don't know that I ever worked a day in my life. I truly did what I wanted to do and I really feel like I'm in that position in education. I think there's a difference. I work hard at what I do, but this is who I am and this is what I love to do and it's an honor to serve you all but also to through my doctorate process and kind of.

David Haug: 1:40

Our board of education is kind of intertwined. One of the nice compliments I got as we were reviewing the dissertation is that they said how little fluff they had to pull out of the dissertation and when I speak I speak very directly and concisely. I took that as a compliment and so when I interviewed for the board I kind of shared that. But I also let them know that sometimes there's things I say that people don't want to hear. You know my daughter actually asked me a question the other day for her interview. You know I was at Missouri Southern to is a quarterback and, long story short, we had beat the eighth ranked team in the country as a starting quarterback. And I came out and my roommate even was out there. There was a little secret practice going on, for I got out and they were working the backup quarterback out and told me after that they were splitting time and really I was a passer three or four or 5,000 yards in high school and nine early nineties and they were going to an option off and so it really didn't fit me. I get what they were trying to do, but I really just my daughter asked what did you take from that? And I said don't mess around, just let people know what's going on, even if it's not what they want to hear. And I think as we move forward here, some of the stuff for me was hard to hear, but there's been a lot of good come out of it too.

David Haug: 2:51

I think I just want to have that honest conversation over the next couple of podcasts about kind of where we are in our future budgeting. It's important to me to have integrity, have accurate information that I possibly can. I don't like the boy who cried wolf scenario and I don't want you to take that as this because, honestly, this is just an analysis that I'm providing for you. The difference is we're usually at a board meeting when we do this, but I just feel like taking this directly to our community. I will stand corrected if any of this information, as I begin to present it over the next couple of weeks, is incorrect, and I welcome and invite anybody, any elected official, anybody that in this business, can give me better insight if I have something that's incorrect. I like getting factual information out there. You can come sit next to me. I do want to ask a few questions. If whoever's here, I think I reserve that right, but I would love to have anybody that could provide some of the analysis that I'm looking at for our district.

David Haug: 3:48

I think it's important as a taxpayer at this time that you forward this to all taxpayers in the district. Most of our parents get this, so if you get this to anybody, I would appreciate it, and I'm just asking for a few minutes of your time to kind of go through it and give you a better picture of where we're at. I will also apologize up front if any of this information is incorrect. I'm working hard daily with a lot of different people to get as accurate as I can, and if I'm not and some of the stuff never plays out in our future, I will be happy. But I'll be super happy for the school district beyond belief if things really work out like they could work out. But I also think you have to kind of prepare for the worst sometimes, to make sure and be honest about that.

David Haug: 4:30

So the next four videos next few weeks, I have four planned videos for you. The first one today we're gonna talk about local and state funding scenarios that affect this district and I'd like for you to kind of process that. The second one is specifically related to the Ameren enclosure. Later this year that's scheduled for closure, as crazy as it sounds. I think the point, if you don't take anything away from these four videos, that if the funding culture, funding process and mechanisms in Missouri stay the same, I believe we withstand the Ameren enclosure with all the potentially great things we have going on in this district. Down the road we have new business coming. I think there's a lot of opportunity for growth. I think we have such a better tie with the county and kind of where we're at.

David Haug: 5:18

Then I go back to that date of September 10th, the date before I got the chapter 353 abatement, where I was a superintendent. How few people I was connected to. And it's completely changed for our school district. I've seen many great leaders starting to emerge out of this district. I've seen people in the county reaching out to us to make this a good place for our kids and that's really what we're trying to build going forward.

David Haug: 5:38

So the second one will be about the Ameren, to give you more specific about that. The third one is the one that actually has me the most concerned. And listen, I get it. Taxes are tough and I've got a quote from Ronald Reagan I'll share when I get to this podcast about inflation. How hard it is, I get it. But I do know if the personal property stuff goes through the Missouri legislature that's gonna be a really tough blow on our school district and I'll get to that in the third podcast. And the last one is what can we do as a community for our kids? Those are the four podcasts I have lined out.

David Haug: 6:09

I'm gonna shift gears and get back to why I'm really meeting with you today and that's the local and state funding formulas and really how it affects our districts and things you can be looking for to better educate you as a constituent of the district and know what's going on. First of all, one of the things I think I do pretty well kind of going back to an analysis is I do take the names off things. I try to pull all the emotion out of it and I'm asking you to do the same. Since the chapter 353 abatement, it is what it is, but as I was working with attorneys and advocates for us and then I start hearing about the Amron closure and getting deeper into that, all the people that I've spoken with keep coming back to one thing we're a very unique school district and let me explain why we're a very unique school district and I will challenge anybody and I won't stand correcting on this. I will just accept the fact that somebody can find this because I haven't looked for it. But here's how unique we are.

David Haug: 7:03

There are three major corporate holdings in our district. You have Ameren, you have Buzzi Unicem and you have the future James Hardie Industries. They already own property in our district. We also have a school district that resides in a community that's unincorporated. I think that's about, as I keep going through this. That's about as unique of a scenario as you can come Three major corporations that do fund our school district or will be funding our school district. It's a unique situation and I think we just need to have a better understanding of that. Who we are as a community, which kind of takes me to my first point. I'm going to kind of talk to you in terms of 2022 numbers and give you an idea. We are such a heavily locally funded school district About 80 percent let's say 80 percent of we get local funding. The two main drivers of that are Ameren and Buzzi.

David Haug: 8:05

I'm going to segue here for just a moment and if you go out to invest things as a personal, you kind of have this as a person. You meet with somebody or you've got something. You want to have a portfolio that's kind of robust and there's a lot of pieces to that pie, and you do that for a couple different reasons to have a healthy, long-term investment portfolio. You may not be as aggressive as you want through it, but if one of the pies collapses and goes south, that you're not taking a huge hit. What I'm about to show you, and I will send another document with this to have you take a further look at it. This isn't a good thing. It's not a bad thing, it just is what it is. So you understand. This is actually our local funding portfolio.

David Haug: 8:51

Let me throw some numbers at you In 2022, and this does not include all local funds. What it includes is personal property for everybody in the district businesses, homes, everything real estate and then also I included for my purposes and analyzing where we are with Ameren it does include the Ameren Railroad and Utilities. There's another chunk of monies that are out there, but roughly 9.6 million in 2022 on a $14 million budget and again, that's not all the local, so I know it's not quite 80%, but this for the purposes of this analysis. This is our local funding pie. There's only three chunks in it and you can see how precarious it is. If Ameren goes away and that is significantly reduced, whoever owns the property will play some real estate, so there would be some taxes, and part of that 23.9 is the real world utilities which we will still receive. That's a countywide thing and I was told that would not be affected, but there would be a good chunk of our Ameren going away. So you can see of the 9.6 million from 2022, if a chunk of Ameren goes away, it will have a great impact on our budgets. Again, I will send a copy of this for you to look at the monster to me, though, I didn't realize this, and it's talking to longtime constituents and our board members.

David Haug: 10:10

I kind of kept asking the question I'm looking at some numbers here how much do you think Buzzi kicking into our most people camp? Around a million or so, it's. The number I've got is three point, almost a little over 3.1 million. They're a monster. They do great things back that, back there, and I'll talk about that in another podcast. But you know they really add a ton, substantially more really than Ameren, okay, than everything else. On the other side here is the housing and business other small business in our community. So I wanted to show that to you because, as I go forward in some of these podcasts, it's important to remember our local funding has been great for this district for a long time and kept us very solid. But it's also very risky. It's it's kind of precarious really to no choice of anybody. It just kind of is what it is, but it's a risky kind of investment portfolio if you look at it that way.

David Haug: 11:03

The next part has to deal with the state funding formula and I think that this keeps coming up in conversation with the many people I've spoken with spoken with is that this funding formula came about in 2004 and 2005 and, as a whole, the funding formula has actually benefited the school district and it's benefited the state of Missouri, and I'll explain that in just a second. But it's antiquated and it's important to know that if Ameren encloses and what you need to know as a community is there will be no additional funds coming from the state of Missouri based off the school funding from formula. We're stuck at the rate from 2005, 2006. And what I keep being told by people in the world of school finances we just happen to be one of those unique school districts again that the school funding formula has benefited for a long time but in this case would harm us because we could not go and recoup monies through the state and, again, it would never been a dollar for dollar ratio with Ameren. However, there's really no way for us to recoup monies as the formula currently sits and I'll have it cited in there for you to look at. You can click on it and look at the Missouri school funding formula.

David Haug: 12:09

But let me just kind of go through and I want to be very transparent as I possibly can and also understand. I'm in my first year of school finance so there's a lot of things, but essentially we draw about $2,016, a little over $2,000 per student that attends our school district. The Missouri per pupil reimbursement is $6,350. So, long story short, we're about 4,000 less off the Missouri funding formula. This is where I want to be transparent. I don't know if there's a school district in the state that actually gets that $6,350.

David Haug: 12:48

And to look at that whole formula, it's a lot to look at. But essentially when you take that number then you put your local numbers in, then you come up with a number. So just from the formula alone this year the two entities that are Buzzi and Ameren and that just drive our local funding they have saved the state of Missouri $4 million off the Missouri school funding formula, which is a pretty big number. We get about $2 million from the funding formula roughly. But for an honest comparison you even look at the districts around us and I took an average of five districts. I did not want to single out one district and I thought it was healthy to look at five and average them together. They were all actually very close, but about $4,400. Again, there's an exact number I'll share with you on there. And so we're saving the state right now just locally. If you look at the school funding formula that way, still about $2.2 million just this year alone that we're not drawing off the school funding formula. That can go to other entities in the state. So on some level the school funding formula is a healthy thing. It's preserving money for others to use and we've still been able to do what we need to do in the Jefferson R-7 school district. But I can't stress enough the two things, this thing, how precarious we are if something closes and then we can't recover money from the state, and I'm going to address some of this in other podcasts as well. I'm going to close with this.

David Haug: 14:17

There has been one thing that's been bothering me as a superintendent of schools and again it goes back to that voice for the students. We make a lot of decisions in the state. It's not only my job but my passion to think about kids on an everyday basis. So I'm just going to lay this out there. My greatest concern in my job is to speak for those that can't, and that's the children. They can't vote, most of them. I was sat there talking about some college recruiting stuff the other day, and the gentleman asked me if I had emailed my stuff to college. I said well, too old Email didn't even exist. The kids, in other words, the world the kids live in today. They don't know any different. They only know what's in front of them, and it's our job to speak for them. And so I'm just going to say this my greatest concern as superintendent, and also as a father, is the future we're providing for our children.

David Haug: 15:10

As I look at my own kids and what I would consider my kids in the school district, how are they going to afford college without going into debt? How are they going to purchase a car without going into debt? How in the world are they going to buy a house? Think about the trillions of dollars they will inherit as kids, as adults, as they transition in, and, ultimately, what are we doing as adults to ensure their futures? I'm just going to leave that out there, and I just want to think about every person for just a minute, because I know this district is just wonderful at taking care of their kids. It's been one of the great traits since I've been here and one of the things I love about this place the most.

David Haug: 15:56

May not always agree, but I've always felt like people are coming from the best interest of kids at heart. I'm really proud of our Board of Education I think they've kind of gotten ahead of this a little bit in our discussions last year and also our staff. It's all kind of intertwined when we look at the mission and vision. But I'm so proud of our district leadership, our Board of Education, our principals at top to bottom. But we adopted an academic model and I think this serves our kids well and this is from Margaret Mead that is, teach students how to think, not what to think.

David Haug: 16:33

I think we have to do that for our kids, for the world they're going to inherit. We have got to do that, moving forward Again. Really, we need to be watching out for our kids. Not only is it my job, it is my absolute passion to do that. Secondly, we need to teach them how to think because they're going to need it. I'm just going to follow up with this. I will stand corrected. I look forward to reaching out to you with some other podcasts. I stand corrected. I invite anybody on here that has a deep knowledge of the area, any elected official. You can sit right next to me and give you all the time you need to explain something. If I'm wrong about something, I'll own it, but we have a great school district. There's a lot of great things in our future. I look forward to some other podcasts here in the near future. Thank you.