Leaders at John McDonogh High School are scrambling to find ways to make payroll on April 30 in the wake of lower than projected revenues.
Steve Barr, the head of the school’s management organization, sent an email to the school board members on April 11 describing “cash flow challenges” that stem in part from lower than expected enrollment at the school.
The school planned its $6.3 million budget around 480 students, but got nearly 390 as of an Oct. 1 headcount — a problem when a school depends on per pupil funding from the state.
Barr’s email warned that the school will require additional funding in order to pay its 45 employees.
“The school’s balance sheet is weak primarily due to high staff:student ratios,” read the email which, though sent from Barr’s email address, was signed by Future Is Now Schools chief operating officer Chris Lozier.
The email goes on to say that the school burned through its federal i3 grant and private funds — and that other funding is arriving late.
According to March figures, the school spent $237,541 on employees’ salaries and benefits for the month. That’s close to 68 percent of the school’s total monthly expenses. Salaries and benefits usually make up a school’s largest expense.
Barr confirmed in an interview with The Lens that the board is having budget problems, but said that he’ll look for private donations and turn to his national organization for money before withholding pay from employees.
“We’re not going to miss any payroll,” Barr said.
Also according to the email, the school never actually sent its current budget to the state for approval last fall, as law requires. Lozier wrote that he expects to submit a revised fiscal 2013 budget to the state by Friday, but that the state has granted the school’s board until May 7 to approve the document.
The new budget will be built around 362 students, he wrote.
Barr said the financial issues are par for the course in a turnaround school. Future Is Now is in its first year of management at John McDonogh, a struggling high school where 17.5 percent of its students were testing at or above grade level prior to Future Is Now taking the reins.
“The first year you’re kind of finding out who you are, how you’re providing services, and you’re going in kind of blind,” Barr said. “We were using a lot of private reserve. Next year we’ll have to have a more sustainable budget.”
According to budget figures given to the Lens, the school had a negative income balance of nearly $358,000 by the end of March, a hole that is about $154,000 larger than leaders expected this time of year.
John McDonogh was in the red on many of its more than 60 accounts, the budget figures showed. And total revenues — from state, local and federal government as well as private donors — was $1.4 million below what the school planned by the time March ended.
Schools around the city are feeling the crunch from lower than expected local tax revenue – overall, that pool came in at $181 less than education officials planned per student.
Among the areas where John McDonogh appears to already be over budget for the year: professional development was running $73,000 more than planned; purchased technical services cost $72,565 more than budgeted. The school spent $54,245 more than budgeted for grounds maintenance. And custodial services was in the hole $46,094.
The school was also in the red for student activities and field trips, travel expense reimbursements, liability insurance and more.
Lozier and Barr both said the lower than expected enrollment played a large role in the funding woes. Even though the school received only about 389 applications as of Oct. 1, the board retained a budget that was based around 490 students.
“The school had hired for that amount,” Lozier said, “but then the enrollment came in low. We continued to put money into those resources.”
Despite the low numbers, Barr said, the school kept low-demand classes such as cosmetology and hospitality, even though there were only seven or eight students in them at times.
“We could have cut back things like the services we are providing but we didn’t want to disrupt the culture,” Barr said, adding that the process “was a little bit of a moving target, to approve budgets and hire teachers based on assumptions.”
The school did end up laying off four employees mid-year, Barr said, none of them teachers. “In the middle of the year, we were faced with the reality that we probably had more staff than was probably needed,” he said.
The school laid off an activities director, an information technology director, a parent liaison and an intervention specialist, in addition to cutting back some hours for administrative staff.
Both Barr and Lozier said that they anticipate an April 25 injection of state per-pupil funds will help with cash flow. And if that isn’t enough, Barr said he’ll turn to the national organization for help.
Barr says the he plans to budget more aggressively next year.
“Next year, we’ll be a little tighter, and we’ll cut things,” he said.
This isn’t the first time Barr has encountered difficulties in his financial oversight of charter schools. When he was CEO of Green Dot Charter Schools, tax records showed that Barr had to repay the organization more than $50,000 after an internal audit determined that some of his expenses were too “extravagant” for school spending.
Frank Buckley, a 1982 John McDonogh graduate who attends many board meetings, said he thinks there’s a connection between the school’s management and its low enrollment.
Buckley has publicly expressed concern about the school’s student test scores, crumbling facilities and attendance.
“I think it’s a reflection of the overall performance of their school,” he said of the enrollment-related financial problems.
John McDonogh was recently featured in a reality television series called Blackboard Wars which aired on the Oprah Winfrey Network. Community members have expressed dissatisfaction with the show’s depiction of the school and its students, and some have opined that there’s a connection between enrollment and the school’s public image as a result of the show.
Barr said that while the hype surrounding the show has been negative, those who actually watched the series might walk away with a different perception. Viewers, he said, should have seen motivated students and hardworking staff.
“I think the show is very positive for kids,” he said.
As to the financial concerns, he said, it’s part of the ebb and flow of public school management: “I think if you look at school financing in most schools, there are periods where you tighten your belt and your cash flow is low.”