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Is Lake Oswego School District heading for a financial crisis?

My prediction: The Lake Oswego School District Administration is preparing to message another financial crisis for the next biennium (2013-2015). The proposed solution will likely be a debate between two untenable choices: 1) Sell school properties or 2) Move to a one high/junior high school structure.

Neither alternative addresses the underlying and corrosive problem: Expenses (outflows) exceed revenues (inflows). The current LOSD Administration has yet to demonstrate sound financial governance to address a proposed budget with annual projected losses. Instead, short-term myopic fixes are being compounded by a lack of long-term strategy. The idea of a long-term and sustainable annuity for the LOSD has been sacrificed by the narrow-minded focus on short-term cashflow.

My review of the proposed budget for the next biennium shows a $9.2 million shortfall, which assumes no Foundation funding. If I assume $1.5 million in annual donations to the Foundation, then the shortfall is still $6.2 million. The projected shortfall also ignores any capital expenditures increases that Dr. Korach outlined at the recent Coordinating Council meeting.

Although I have not heard the school board endorse this line of thinking, Dr. Korach seems confident that selling properties is the best way to supplement the operating budget, including the need to increase capital expenditures (Sept. 19 Lake Oswego Review article, “Placating the Parents”). However, this view continues the process of spending LOSD savings (by selling irreplaceable assets) without solving the unbalanced budgetary problems. Where is the governance to address the unbalanced budget rather than floating a plan that ultimately increases annual expenditures?

The administration appears to be confusing the LOSD income statement with the district balance sheet. The current LOSD budget shows the (approximately) $9 million savings war chest being consumed over the next three years as expenses continue to outpace revenue sources. The selling of school properties (assets) does not fix the annual budgetary shortfall; rather it is another short-term strategy that further destroys the district balance sheet. In short, the administration appears willing to deplete LOSD assets than to address and balance the LOSD income statement.

Moving to a one-school structure for all secondary education looks to be a very unpopular solution given the fostered culture in Lake Oswego for small schools. I suspect the administration will use this “culture” argument as a wedge to drive its position of selling existing school properties rather than forcing a one high/junior high school structure. I believe that a plan to consolidate the secondary schools will prove to be much more painful than the elementary school consolidation and doing so will remove the chance for half the population to participate in extra-curricular activities.

Community members must be guarded against weak short-term solutions that will ultimately damage and weaken the LOSD over the long term. I still have another 10 years of participation in the LOSD as my youngest child is not scheduled to graduate until 2023. With the superintendant scheduled to retire in June 2014, the repercussions of short-term solutions will be felt long after a replacement is in office. It is imperative that the current school board does not become an enabling mechanism to a short-term exit strategy.

Mark Bachman is a parent of three children attending LOSD schools: Westridge Elementary and Lakeridge Junior High. He is regular attendee of LOSD board meetings and authors a Facebook page at www.facebook.com/IonLOSD.

Editor’s note: Nancy Duin, director of communications for the Lake Oswego School District, responds: “A number of important corrections to this citizen’s view are warranted. LOSD, like other school districts across the state, is indeed continuing to face long-term financial challenges. As anyone who has been paying attention to school board deliberations in recent years should be aware, it has been stated repeatedly that the economic issues plaguing the state are not forecasted to magically disappear with the advent of a new fiscal biennium. ‘Predicting’ that the district is concerned about funding shortfalls is hardly prescient.

“School board priorities for the 2012-13 school year, approved in August, call for a demographic study and a real estate study for the purpose of informing the board as it plans for the optimal two high school, two junior high, six elementary school configuration that will best serve the community in the long term. The proposal to study the potential sale of property in the context of long-term objectives was initially brought forward last spring. ‘Predicting’ that the school board and administration will be pursuing this study is hardly prescient. The school board’s priorities make no mention of a single high school, single junior high school objective. Should the board determine that the sale of unused school property is warranted, proceeds from such a sale would not be used for short-term operating funds, as erroneously stated above, but for long-term capital investment in remaining facilities.

“Contrary to the characterization above, the school board and administration are looking to the long term as they investigate all options for preserving class size and instructional program, and continuing to provide students with an exceptional education.”




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