Districts put employees first as budget shortfalls threaten jobs

Texas school human resource administrators have a particularly tough job these days.

They’re caught in the middle as the Texas Legislature decides how (and how much) to fund schools for the next biennium. Districts don’t have their economic stimulus fund checks yet, either. So administrators are stuck making personnel decisions while potentially critical pieces of the puzzle are missing. Given that 80 percent of a school district’s budget goes to personnel costs, district leaders don’t have a lot of cost-cutting options before they get to people.

As a result, they have the unenviable task of planning for the absolute worst-case scenarios and sharing the news with employees, even when the worst may not come to pass. And they must help rebuild employee morale when the bad news is as bad as advertised.

In good company

Like their colleagues in Texas, school administrators across the country have to deal with budget deficits and uncertain funding futures. Earlier this year, the American Association of School Administrators (AASA) conducted a nationwide survey to find out where administrators were planning to make budget cuts. Respondents indicated that the economic crisis coupled with state budget shortfalls will result in deeper budget cuts for districts in 2009–10 than this school year:

• Forty-four percent of districts will increase class sizes (up from 13 percent)
• Forty-four percent of districts will lay off personnel (up from 11 percent)
• Twenty-two percent of districts will cut academic programs (up from 7 percent)
• Twenty-eight percent of districts will cut extracurricular activities (up from 10 percent)
• Thirty-three percent of districts will defer maintenance (up from 21 percent)

The American Recovery and Reinvestment Act (AARA) is intended to provide districts with funds to prevent the most devastating cuts. School administrators surveyed agree that stimulus funds will help, but they don’t expect to receive enough to fill all the holes in district budgets.

Preparing employees for the worst

The budget situation in North East ISD is not ideal but hasn’t become dire, either. At least not yet. But that hasn’t stopped Dick Smith, executive director of Human Resources, from developing detailed contingency plans for the next three years. Lots of factors will affect how deep the district’s cuts go, including the outcome of a tax-rollback election on the drawing board for November 2010. The plans have allowed the district to start small, taking a stepping-stone approach to cuts starting this year.

For example, since January the district has delayed the hiring process for noninstructional personnel. When a central office vacancy occurs, HR delays the posting of the position for three to six weeks to save money by avoiding salary costs from the time the departing employee leaves to when the new employee starts. The district only delays hiring for positions that have a minimal impact on the classroom. HR continues to post jobs and hire replacements when instructional personnel resign.

One thing the district is doing right now to help employees in the future is asking secondary teachers and coaches who are certified to teach a noncore subject to consider getting certified in a core area. The move will help the employees increase their value to the district in the event of future job cuts and offer the district more scheduling flexibility. The district will even pay the cost of the certification exam. Smith’s goal is to make them aware of the potential for future layoffs and then let them decide whether to pursue an additional certification.

Coaches don’t often have certificates outside of health and P.E., but HR wants to get them into the classroom the same way. Asking coaches to teach a couple of periods a day could help the district to staff its high schools more efficiently in the future.

Freezing hiring and pay

Employees will see the first significant consequences of budget cuts in 2009–10. The district has already announced it is freezing employee pay for the next school year. Employers that freeze pay run the risk of losing some of their top-performing employees. But Smith hasn’t seen a wave of retirements and resignations and notes that attrition is actually down from last year. “I think [employees] felt it was a sign of the times,” Smith said. “People are hesitant to retire in these uncertain times.”

The district also suspended its employee attendance incentive program for next year but may look at bringing it back in the future.

The district will freeze central office hiring for 2009–10. Should a vital position come open, HR would have to go to the district’s staffing committee to make a case for the position’s necessity to get approval to fill it. Beginning next year, when an employee resigns, administrators will take a hard look at future staffing plans before replacing them. “If a person leaves and we look at the proposed personnel allocation for 2011–12 and their position would be cut, we will not replace them,” Smith said.

Studying staffing patterns

Staffing patterns for next year are also being scrutinized. At the high school level, no significant schedule changes are planned but the district will look closely at the student/teacher ratios in different subjects and might consider “stacking” students in an AP subject into one class (e.g., Latin I, Latin II, and Latin III) with differentiated instruction for each group.

A district committee has just begun the task of looking at the district’s mix of registered nurses (RNs) versus licensed vocational nurses (LVNs). When two schools are in close proximity, the district will consider keeping an RN at the school with the greatest need and hiring an LVN for the second school. The district would make the change through attrition as RNs leave the district.

If there’s no relief by 2010-11, the district will hold the aforementioned tax-rollback election to shore up its budget. If it doesn’t pass, the district would have to cut expenses again. Administrators would look at additional alterations to secondary schedules, including the possibility of combining or dropping some magnet programs. Administrators also plan to consider reducing by four the number of days worked during the year by central office staff.

All of these cuts are part of the district’s strategy to avoid a reduction in force (RIF) for as long as possible, steps Smith knows employees appreciate. If the worst-case scenario comes to pass, Smith anticipates that the district would face a RIF in 2011–12. Until then, the district will cut as much as it can through attrition and the measures listed above.

Getting a RIF right

Some Texas districts are already in dire budgetary straits and have had to notify employees of the potential for a RIF. Julie Burton, Highland Park ISD’s director of Human Resources, knows how difficult those times can be. Several years ago, Highland Park had to declare financial exigency and make plans to reduce its workforce. She advises districts that may already be headed for a RIF to know and follow their policies.

Local policy (DFF) will detail a district’s RIF procedures. Some policies allow the district to consider eliminating underused programs (and their employees) first. Others spell out the order in which employees and programs can be eliminated. District RIFs don’t necessarily follow a “last-in, first-out” pattern. Teachers that lack the appropriate certification often are the first to be reduced.

In 2000–01, Highland Park ISD needed to reduce its staff by 40 employees. The district’s superintendent held staff and community meetings to explain the situation, a critical step for any district headed for layoffs. “When districts declare financial exigency, they need to have their communication plan ready to go,” Burton said. “It’s so important that the staff and the community understand the financial conditions that precipitated the need,” Burton said.

With regard to informing employees, news of this magnitude should be delivered in person. “Don’t send an e-mail telling an employee that their position will be eliminated,” Burton said. “A person’s livelihood is at stake, and we need to be personally and professionally compassionate and honest with individuals who are slated to be dismissed.”

Burton knows that clear communication is key throughout the RIF process to quell employee anxiety and uncertainty. The district must be absolutely sure employees understand the process that the district will follow in making cuts. Failure to provide information early and often could result in employees losing hope or believing the worst of the rumors that circulate.

Highland Park was fortunate in that, by the end of the process, the district didn’t actually have to cut any jobs. Administrators were able to reassign some of the affected staff members following the normal, end-of-year retirements and resignations. Others who couldn’t be reassigned chose to resign. The district made an effort to help them find jobs in other districts.

Burton indicated one thing that helped morale was letting employees know that the district was making every effort to fill open positions internally. “They needed to know the district [was] working hard to find a way for people to stay,” Burton said.

The calm after the storm

Few districts have had to deal with problems the magnitude of those recently faced by Galveston ISD. By fall of 2008, Galveston’s enrollment had been on the decline for several years, so much so that district administrators and the school board had already closed several schools.

Then, on Sept. 13, 2008, Hurricane Ike made a really big mess of things. The hurricane slammed the Gulf coast, leaving buildings (schools included) battered and putting the district out of business for weeks. To say employees faced uncertain futures would be putting it mildly. But throughout the ordeal, the district made sure it paid all employees without interruption.

Most Galveston schools were able to reopen on Oct. 7, with 4,500 of the district’s 7,625 students returning. In the storm’s aftermath, the board could have made some drastic personnel decisions, but instead voted not to lay any employees off for the entire school year.

The effort to help employees get through an especially tough time was generous but didn’t change the fact that the district was overstaffed, particularly following the storm. As district leaders worked on next year’s budget, the numbers on the bottom line were red and the outcome for employees was grim: A whopping 225 jobs would have to be cut.

But necessity proved to be the mother of invention. District leaders batted around ideas for a buyout program to help the district and its employees get out of a bad situation. Administrators came up with GISD’s Voluntary Early Exit Incentive Program.

The one-time incentive was offered to eligible full-time employees. The district gave employees 45 days to consider the program and limited the number of employees with the same job who could accept the offer. For example, of the district’s three assistant superintendents, just one would be allowed to take the incentive because the district could only afford to lose one. Applications were taken on a first-come, first-served basis.

The employees who chose to participate in the program applied for the incentive, signed a voluntary release and waiver agreement prepared by the district, and will receive a single, lump-sum payment, a percentage of their annual salaries based on years of experience with GISD, by July 1:

Galveston ISD Executive Director of Human Resources Dyann Polzin notes that the district didn’t have the money to make the program as enticing as it would have liked but still considers it a success. The district hasn’t calculated what it will pay in incentives yet, but 38 employees participated.

In April, Dickinson ISD, Clear Creek ISD, and Region IV worked together to organize a job fair for Galveston’s displaced teachers. Dickinson hosted the job fair and local recruiters offered letters of intent to some of the teachers Galveston planned to let go. Polzin was pleased that the teachers had the opportunity but acknowledged that it was hard to watch. “It was a double-edged sword for me to see some of our qualified teachers sign on with other districts,” Polzin said.

The district still has to reduce its workforce by 65 employees. But that’s a far cry from the 225 employees it initially thought it would have to eliminate, mostly due to a high number of resignations, retirements, and reassignments. As more employees retire or leave the district, the first place Galveston’s HR Department will look for replacements is the group of employees affected by the reduction.

The waiting game

In another month or two, school administrators will have a much better idea how much help they’ll get from state and federal governments to shore up their ailing budgets. In the meantime, they’ll have to keep making contingency plans and keep the lines of communication with employees open no matter how bad the bad news gets. One thing is certain: they’ll work hard to help employees get through whatever comes their way.