Michael D. Johnson is executive director emeritus of the Illinois Association of School Boards. This is part two of a five-part series.
Editor’s note: In September 2000, Michael D. Johnson became just the fifth full-time executive director in the 98-year history of the Illinois Association of School Boards. He retired from that role in May 2007 but returned in July 2007 as executive director emeritus to focus on the transition to a new executive and to help with fundraising for the Association. He will relinquish that role and end 11-plus years of service with IASB in June 2012.
This is the second of five articles Johnson will write for The Journal, outlining what he and the Association have done and where he believes both are heading. In this issue, Johnson reviews the Association’s finances and what members get for their dues and fees.
Are you feeling squeezed yet? The answer probably depends on how much your school district depends on local funding compared to state or federal funds for its revenue. It also depends largely on how well your EAV has been able to weather the storm of lost jobs, downsized or closed businesses, foreclosures, declining home sales and prices, and commercial property tax assessment challenges.
First and foremost, I want to assure you that IASB feels your pain.
The past three years have presented financial challenges unlike any that we experienced in my first eight years as executive director. In fact, we witnessed unparalleled growth in all services and operations after I joined the Association in September 2000. But while the demand for services continues — and as the associated costs for delivering those services increases — our revenues have not kept pace.
As we approach the end of my tenure, I wanted to share with you what the Association has done to reduce costs and expenses without sacrificing the quantity or quality of services that local member districts want and expect from us.
Expanding services
Eleven years ago, we employed 54 staff members in our Springfield and Lombard offices. Today, we have 78 employees (full- and part-time professional, support and/or consultants). The Springfield office space doubled in size when we built a new facility in 2003, and the Lombard offices were expanded to a second floor in the leased office space that serves our suburban and urban member districts.
What drove that expansion was membership; specifically, our members’ demand for more services, new materials and resources, and faster responses to local needs. Prior to this expansion, it was not uncommon for districts to wait three to six months for local in-district visits or training. We heard that need and adjusted or expanded staff so that we are now able to deploy the appropriate staff to local districts when they need it.
For example, creating a separate “executive searches” department in 2008 freed our six field services directors from those responsibilities. This move allowed them to spend more time with in-district work, including workshops, board self-evaluations and goal-setting.
Our sponsored programs have expanded from six to nine, giving districts new and better options for controlling unemployment claim costs, electric and natural gas purchases, Medicaid reimbursement claims and 403 (b) investments. Participation in these and other sponsored programs show that local districts are getting the services they want and need from their Association.
Association finances reflect the growth of these and other programs in its balance sheet and annual financial report.
In June 30, 2001, total assets amounted to $8.9 million. In June 30, 2011, total assets were only slightly higher, at $9.1 million. But whereas assets previously included a cash reserve of $7 million, the latest fiscal year showed cash and investments at $5.1 million. A large share of those assets are now reflected in the Springfield building, which we developed and built with member assets and without adding to dues or fees or incurring debt to finance.
At the same time, expansion of services, resources, staff and facilities means that expenses have also risen dramatically.
In FY 2001, expenses totaled $5.6 million. In FY 2011, expenses will top $9.8 million. Like your district, most of our expenses (66 percent) are reflected in salaries and employee benefits. But the cost of programs has also risen. Here is a brief comparison (FY 2011 to FY 2001) of some key programs:
• Annual conference, $654,500 ($419,200)
• Special services, $471,900 ($234,300)
• Publications, $282,000 ($230,000)
• Workshops, $251,500 ($149,200)
• Division meetings, $116,000 ($76,300)
Reducing costs
As demand for services and the cost of providing those services increases, we watch revenues and expenses very carefully. And where necessary or available, we reduce costs when possible.
Let me give you one example. Earlier this year, the Illinois School Board Newsbulletin was converted from a print to online publication. The annual savings from printing and mailing this member newsletter will exceed $50,000. We didn’t eliminate the service or the great information it provides members as an essential part of their dues; we merely reduced the production costs.
We continue to monitor and review all expenses and operations to determine where costs can be reduced without affecting services. The same diligence is given to revenues.
Over the past two years, we have substantially increased the number and types of sponsorships in order to generate new sources of income for the Association. This took a substantial change of heart for me, the board of directors and the executive staff of IASB. While taking care not to oversell our image or brand, we acknowledged that sponsorships were a legitimate way to offset rising costs without changing the member dues formula or substantially restructuring the fee schedules for services.
For example, this year’s annual conference will generate an additional $50,000 because of new sponsorships sold to firms and vendors willing and able to support public education.
That may not sound like a game-changer, but it really can help. Especially because it helps the Association to reduce the cost of providing services to hundreds of school districts that pay at the lower end of our dues scale. The IASB dues formula, in fact, has not changed in 20 years. Districts are charged based on their enrollment size (best three months ADA) and a weighted factor involving a percentage of annual operating expenses.
Dues for IASB’s 852 member districts this year ranged from a low of $583 to a high of $33,999. The median annual dues, however, is $3,525, which means that we have hundreds of districts at the lower end of the scale, compared to the higher end. And it’s many of those smaller, poorer districts that most need our services.
Non-traditional revenues, cost containment, staff redeployment, asset management and other tactics to improve efficiencies and effectiveness will play an increasing part of the Association’s financial planning strategy so that member services and the dues or fees charged for them retain their maximum value.
Yes, like you, we are being squeezed. But we will not let that deter our mission: excellence in local school governance in support of quality public education.
Next issue: IASB services.