January 20, 2014
COLUMBIA — State Superintendent Dr. Mick Zais issued the following statement after testifying before the House Ways and Means Education and Special Schools Subcommittee.
“I want to thank Chairman Kenny Bingham and members of the subcommittee for the opportunity to testify about the Education budget for fiscal year 2014-15,” said Dr. Zais. “Working together with Governor Nikki Haley and the General Assembly, I am confident we can develop a successful budget next year that increases opportunities across the board for South Carolina students,” concluded Dr. Zais.
Below is the text of Dr. Zais’ testimony as prepared:
Chairman Bingham and members of the subcommittee, thank you for giving me the opportunity to highlight proposals contained in the South Carolina Department of Education’s budget submission to Governor Nikki Haley as part of your consideration for the Fiscal Year 2014-15 Executive Budget.
Our spending recommendations were made considering the current state of our economy. Governor Haley, our congressional delegation, the South Carolina Chamber of Commerce, members of the General Assembly and economic development leaders across the state, have done incredible work bringing new jobs to every county, despite the challenges coming from Washington in the form of increased taxes, more regulations and uncertainty brought on by federal government’s control of health care.
Given the economic times and political realities, we seek to direct as much funding to classrooms and teachers.
Governor Haley’s Education Reform Plan
Governor Haley has proposed improving bandwidth to schools, increasing wireless connectivity within school walls, and enhancing 1-to-1 technology initiatives. These are initiatives I have strongly supported since my election. Under her plan, school districts will be allocated funds based on their poverty levels; the poorest districts will receive twice as much per-student as the wealthiest.
Governor Haley proposes keeping in place the $10.2 million for technology within the Education Improvement Act. She has tripled the current fiscal year’s $4 million in one-time funding for digital instructional materials to $12 million and also proposed $4 million in one-time funds for technology-related professional development.
Additionally, the Governor and I both agree we need to focus on third grade reading. We both support measures including reading gates, summer reading camps, and increased educator professional development.
Governor Haley has proposed streamlining funding. She has proposed changing weightings to calculate funding through the Education Finance Act. I believe the General Assembly should seriously consider her proposals.
Education Finance Act
The Base Student Cost estimate provided by the Bureau of Economic Advisors for next fiscal year is $2,742. However, with economic challenges and competing demands in state government, it is unlikely state revenue will be available to fully fund the bureau’s estimate. Last fiscal year, Base Student Cost was $2,012 per pupil. For this year, the General Assembly increased the estimated Base Student Cost to $2,101 per pupil, an increase of $89 per pupil or 4.4 percent.
Respectfully, I once again request the budget use recurring dollars to fund the Education Finance Act line. Furthermore, I request that you maintain, as a minimum, the current Base Student Cost of $2,101 for next fiscal year.
Maintaining a Base Student Cost of $2,101 requires an additional $28.9 million in recurring general fund dollars to the Education Finance Act appropriation line and $5.97 million in recurring general fund dollars to the Employer Contributions line. The total increase of recurring general funds requested to maintain Base Student Cost of $2,101 is $34.5 million.
K-12 Initiative Broadband Internet Connectivity Improvements
The current budget appropriates $10.2 million in Education Improvement Act funds for educational technology through the K-12 Initiative. Of that, over $7.8 million is used for Internet bandwidth to all schools and public libraries. We have allocated $1.15 million for virtual education and other related costs, and about $719,000 for software licensing, professional development, and maintenance to support the PowerSchool data system for all districts.
Our schools and districts face increased demands on their hardware and Internet access. Without technology upgrades, districts cannot accommodate new mobile devices, meet “Technology Readiness” standards, and handle online testing that schools will begin implementing next year.
I initially requested $5 million in non-recurring EIA funds for the K-12 Initiative, specifically for school and district infrastructure. I now support the increased funding for these improvements in Governor Nikki Haley’s budget.
South Carolina Virtual School Program
The South Carolina Virtual School Program served 16,800 students last year. Ninety-three percent of them passed their courses and earned high school credit toward graduation. The current budget appropriates $2 million to cover salaries and benefits for teachers and staff within this program.
As in previous years, demand for virtual school courses continues to grow. This year, the Virtual School Program had 24,000 requests for courses, but due to a shortage of teachers and staff caused by current funding levels, we could accommodate only about half of those requests.
Increased recurring funding is requested to hire 16 additional full-time teachers, so more students can be served. The additional funding needed to cover the salaries and benefits of these teachers is $1.2 million. This will enable the department to serve all students next year. This will also allow us to expand the number of advanced and elective courses, thus enabling students in smaller school districts to have access to courses available in larger districts.
South Carolina Public Charter School District
I believe that a permanent solution to funding public charter schools should require all dollars associated with a student to follow them to the public school of their choice. The current budget appropriates $42.4 million in recurring general funds for public charter schools sponsored by the South Carolina Public Charter School District. I support this budget line item until the General Assembly is able to develop a more fair and permanent solution.
I also support Governor Haley’s budget request increasing per-student allocations for those attending “brick and mortar” public charter schools from $3,250 to $3,600 and students at virtual public charters from $1,700 to $1,900. I also appreciate the governor funding the Charter School Revolving Loan Facility Program with $4 million in one-time funding to construct, purchase, maintain or renovate school facilities. Finally, I agree with her that public charter schools receiving the lowest performance rating three years in a row should be closed.
South Carolina maintains the only-state run school bus fleet in America. It’s also the oldest. To meet maintenance requirements and expected fuel and fluid costs for next fiscal year, I respectfully ask for replacement of one-time general fund appropriations in the amount of $6.4 million with recurring general funds. Additionally, projected increases in repairs parts and fuel will require an additional $5.5 million, making the total requested increase $11.95 million.
The department respectfully asks that Proviso 1A.35, which provides flexibility to the agency to use excess Education Improvement Act funds for bus fuel, be maintained in the budget. But, I also ask that this proviso be amended to remove earmarks for other programs that have been added by the General Assembly.
Here is a snapshot of our statewide bus fleet and associated costs to maintain it.
We have 5,505 buses:
over 26 years old – 90
21-25 years old – 1,127
16-20 years old – 2,114
11-15 years old – 507
6-10 years old – 1,323
0-5 years old – 344 (all under warranty)
In other words, over 60 percent of our fleet is past the 15-year lifespan anticipated by the General Assembly, and about 94 percent are no longer under warranty. I don’t expect that many of you are driving a car that’s over 15 years old. But if you are, you understand that it’s not very fuel efficient and is expensive to maintain. Replacement bus engines, for example, cost about $20,000.
Last month, the cost of fuel was $3.12 per gallon and we use approximately 12.2 million gallons of fuel per year. At current costs, this represents an expenditure of $38 million.
The average bus is estimated to drive 15,700–16,400 annually. We project next fiscal year that the mileage per bus will be 16,600.
The projected maintenance cost next year is $12,060. With 5,505 buses, this represents a cost of $66.3 million.
Our statewide school bus fleet is safe and we intend to keep it that way. But, as long as the department is responsible for student transportation, a consistent and reliable source of funding for replacing old buses is essential. If the General Assembly provides adequate funds over the next few years to update our fleet, it’s possible that school districts or private contractors may be willing to assume responsibility for district transportation. But it is unlikely that any district or any vendor will want the burden of operating and maintaining our current aged fleet.
I stand ready and willing to provide any data or information to legislators who want a safe, but more efficient student transportation system that may include decentralization.
This fiscal year, the General Assembly appropriated $23.5 million for bus purchases. So far, we’ve received $15 million of that. We hope that the remaining $8.4 million will be available this year.
For the coming fiscal year, I request a Capital Reserve Fund appropriation of $34 million in order to replace approximately one-fifteenth of the fleet. This is what is recommended by state law. These funds will allow us to replace buses that are at least 23 years old.
In 2010, the State Board of Education and the Education Oversight Committee adopted the Common Core State Standards for English and Mathematics. In 2011, they also adopted new standards for Social Studies.
To meet our commitment to students, parents, and teachers, the State must purchase new instructional materials, mostly textbooks, that match these new academic standards. The increased funding I request for instructional materials is $35.9 million in general funds and $14 million in Education Improvement Act funds for a total of $50 million. I also ask that the recurring funds of $20.9 million for instructional materials in the Education Improvement Act be retained in the coming budget. To put this total of $71 million for instructional materials in context, this represents about $100 per student. Bear in mind that a single textbook typically costs between $70 and $150 dollars and is programmed to last six years.
IDEA Maintenance of Effort
Special education students deserve the same access to a quality education as every other student.
Because the State underfunded education for special needs children and did not meet the federal Maintenance of Effort requirement for the three consecutive fiscal years prior to my election, the U.S. Department of Education notified us they would withhold, in perpetuity, over $111 million per year in special education funding.
As you all know, this would be a devastating cut to special education programs, which are mandated by the federal government. Working cooperatively with the General Assembly, the department was able to provide $75 million for special education to school districts before Fiscal Year 2010-11 ended. This reduced the federal cut to special education to $36.2 million per year, in perpetuity. I appealed that decision to the U.S. Department of Education.
In March of 2012, I requested the U.S. Department of Education delay this cut an additional year. A month later, they denied our request for a delay. A month after that, Secretary Duncan denied us a hearing on the matter. In June, we filed a motion for a stay of the Secretary’s order and petitioned for a review with the U.S. Fourth Circuit Court of Appeals. In August, the Fourth Circuit Court denied our motion for a stay, but also deferred a motion by the U.S. Department of Justice to dismiss our appeal, and directed both parties to submit legal briefs for review.
In April of 2013, the Court overturned the Secretary’s denial of a hearing and ordered the U.S. Department of Education to hear our appeal. To date, no hearing date has been scheduled.
To further complicate the matter, in March of 2013, the U.S. House of Representatives and Senate approved H.R. 933, a bill which funded the federal government until the end of September. This bill also included language that repeals the perpetual penalty. For this, we thank the South Carolina Congressional delegation, which led this fight. This meant the state’s current budget did not need to set aside $36.2 million because the perpetual penalty no longer exists.
But the one-time penalty has still not been imposed. The U.S. Department of Education has indicated it will work with the State if our General Assembly will appropriate an additional $36.2 million for special education students and if the U.S. Department of Education ultimately grants our appeal. This would ensure the State does not artificially raise the IDEA Maintenance of Effort in future years.
IDEA Contingency Reserve
Because we are uncertain whether the Administrative Law Court within the U.S. Department of Education will overturn the Department’s decision to deny South Carolina’s request for a waiver of the one-time penalty of $36.2 million, I am requesting that the General Assembly appropriate that amount in capital reserve funds. Those funds would be distributed using the same method as federal IDEA funds and would only be distributed in the event that the U.S. Department of Education withholds funding from South Carolina’s 2014 IDEA Part B allocation.
I have consistently informed the General Assembly and public about this issue. Working together, we have met the IDEA Maintenance of Effort the past three fiscal years and will meet it again this year.
National Board Certification
The current budget appropriates $54 million in Education Improvement Act funds for the National Board certification program. Without carry-forward authority provided to us by budget proviso, this amount is insufficient to meet expected costs. The General Assembly appropriated this amount based upon the recommendation of the Education Oversight Committee, which underestimated the requirement.
Given current information about the number of new entrants to the program, we estimate an increase of $3 million in funding will be needed next fiscal year. This will fund all current commitments. However, I have two proposals: (1) we close the program to new entrants and (2) participants should receive this bonus for only one 10-year period. I do not support the continuation of this program because research has shown that it does not increase teacher effectiveness as measured by student learning outcomes. Many of our best teachers have the work ethic and ambition to become Board Certified, but they are no more effective because of it. But until the program is closed to new entrants, the General Assembly has an obligation to fund it. If the General Assembly chooses a lower appropriation level, carry-forward authority would be necessary to make payments.
SC School Leadership Executive Institute
The South Carolina School Leadership Executive Institute gives serving principals the insights, knowledge, and competencies to more successfully lead South Carolina schools.
Partnering with the International Center for Creative Leadership in Greensboro, North Carolina, the department has implemented a one-year program with a curriculum that is designed to improve a principal’s skills in three areas: leadership, management, and educational best practices. The program has three sessions at the Greensboro campus; the rest are in Columbia. Each class has about 20 principals.
I am asking for increased recurring funding of $129,000 for next fiscal year so we can add another class of 20 principals to meet the demand from the districts.
To conclude, we have requested the following increases in Fiscal Year 2014-15:
$83.9 million in recurring general funds, which is directed almost entirely to maintaining the Base Student Cost, at a minimum, at the current level of $2,101 per pupil; for the purchase of instructional materials; and to safely operate and maintain the nation’s oldest and largest school bus fleet. This request is a 3.7 percent increase over the current fiscal year’s general fund recurring base.
I initially requested $5 million in non-recurring Education Improvement Act funds for technology and broadband expansion for the K-12 Initiative. Today, I support Governor Haley’s increased funding requests in her budget for these improvements.
$34 million in capital reserve funds to purchase school buses.
$17.2 million in recurring Education Improvement Act funds for instructional materials, maintaining the National Board Certification program, and the South Carolina School Leadership Executive Institute.
$36.2 million in capital reserve funds for the IDEA Contingency Reserve.
The total increase in recurring general and Education Improvement Act funds requested is $101.2 million. This represents a 3.4 percent growth rate of total recurring funds for Section 1 of the annual appropriations act.