Monday, September 10, 2012

SB 1016 - THE MANDATE BLOCK GRANT: An invention by the legislature to save the general fund millions presented as some sort of benevolent gesture to help schools?

By Jeff Owen, SI&A Cabinet Report |

Monday, September 10, 2012  ::  In the weeks since the initial parameters around the Mandate Block Grant (Senate  Bill 1016, Statutes of 2012) were rolled out, I’ve talked to dozens of superintendents and Chief Business Officers across the state. Much of what we talk about is how uncertain the program still appears and how many questions remain unanswered.

But what has become clear is that most districts are framing their decision about whether to join the block grant program or continue with the guaranteed reimbursement claims around two simple questions:

  • What is the dollar amount we would receive under the existing claims program versus what would be received under the block grant?
  • And, does it makes sense for our district to take the short-term block grant money – even though for most districts it’s considerably less – or accept another year of payment deferral tied to the claims program?

As such, this analysis overlooks an extremely important element that needs to be considered before making this decision. That is: Why is it that the state is working overtime to convince districts to take the block grant?

The answer, clearly, is that by opting into the block grant today, districts will be aiding the state in the dismantling of the constitutionally-guaranteed mandate reimbursement program tomorrow.

Before continuing let me address the question you may be wanting to ask me: Doesn’t your company make money filing mandated cost claims?

Let’s start by acknowledging the fact that I am vice president of operations for SI&A, the largest preparer of mandated cost claims in the state.

Some may view our stance on the mandate block grant as self-serving. We view what we do and the information we provide in the same vein as the service provided by your tax accountant or financial adviser. Yes you’re going to be charged for the work that is performed, but it’s done by a trusted expert with your best interests in mind.

It is because of my experience that I encourage you to look at your situation and ask yourself:

Do the dollars we get in the very short term benefit our district enough to warrant condoning the governor’s and lawmakers’ tactic of avoiding paying millions of dollars of constitutionally-owed monies by preying on the financial desperations of schools?

In my conversations with many of you, I’d suggest that the answer is no.

Most of you have already adopted a budget for the 2012-13 school year that assumes a worst-case scenario come November.

Most of you are completing Tax Revenue Anticipation Notes to bridge gaps that almost certainly will appear come mid-year.

The class sizes have been set and teachers signed for the year. Most of you are already carrying on the critical work of educating our children.

It is against this backdrop that I’m compelled to ask why districts are being herded toward taking the mandate block grant money?

Anyone knowledgeable of the history of the mandate program is well aware of the state’s dismal record in both owning up to the imposition of new requirements on schools as well as paying what is owed.

Did you follow the last-minute, end-of-session episode that the Legislature attempted in an effort to remove the state’s responsibility for supporting special education Behavioral Improvement Plans? Had it worked, schools would have been left with a new, billion-dollar unfunded mandate.

What makes anyone think the block grant will turn out any better for schools?

State officials have already indicated that the $28 per ADA grant offering is subject to reduction. What does that suggest the appropriation might be next year or the year after that?

Will the block grant ever cover actual costs? What happens when new mandates are approved?

There is no language in the block grant legislation that answers those questions. That should bother anyone who has witnessed state bureaucrats create rules and guidelines out of thin air to support budget agendas.

Many of you have conceded that if a district’s internal mandate claiming system is taken down and set aside, it will be difficult to put back into place.

In the end, what the Legislature is doing is taking advantage of a sense of crisis among schools.

They are betting that most of you will take a meager amount of cash today, giving the state’s general fund an enormous break on the actual amount of money owed.

In my discussions with many of you about how you would use the $28 per ADA, most have come to the same conclusion –it’s not worth the tradeoff for the uncertainty. It is also apparent that most don’t like the idea of giving in on mandates so easily – this is an area of the budget that schools have fought long and hard to protect. These are, after all, claims that the state is required to pay under the state constitution.

I am troubled that another invention by the Legislature to save the state general fund millions is being so misrepresented as some sort of benevolent gesture to help schools.

I, as an expert in the field of mandated costs and someone who has worked in education for over a decade, encourage school districts, to vote no on the block grant.


Do Mandates Still Make Sense? Answers to the FAQ’s

from SI&A |

Wednesday, August 01, 2012


Does choosing the block grant mean I no longer have to file mandate claims? Won’t this save me money?


The block grant was developed as a money-saving vehicle for the state and in hope that schools would be willing to carry out all the mandated activities without being fully reimbursed.

They are offering pennies on the dollar, with payouts of only 41 percent of what is owed. When you consider the costs tied to local audits and potential penalties, the block grant program will cost districts money – lots of it.

Isn’t the idea to make the block grant a simplified reimbursement process?

Maybe, maybe not.

The state doesn’t have a good record when it comes to following through on ‘intent’ to make life easier for schools. The block grant program is rife with uncertainty.

The audit requirements are a good example. Districts accepting the block grant must be in compliance with all the state mandates covered in the program – including those a district may not have in the past ever claimed for. If a district is found to be out of compliance with any one of the mandates, there is a good chance all the block grant money will be taken away.

Exactly how the audit process will work is still unknown since the state guidelines have yet to be issued and may not be before districts need to make a decision on joining the program by Sept. 30.

Also, the audit will be required every year for each mandated program with the cost of the review coming out of local money.

Our district needs money now, how can I justify passing on the block grant?

That’s a good question – but a better one might be how you can justify accepting $28 per ADA when your district is likely owed something north of $68 per ADA?

The state is still constitutionally obligated to pay for mandated claims and all unpaid claims continue to accrue interest until the balance is paid.

Remember – the block grant wasn’t created to help schools, but rather to save the state money.

The pool of money set aside this year for the block grant is likely to be the largest schools will ever see – so it’s a diminishing resource. On the other hand, schools are guaranteed to eventually be paid what they are owed under the existing mandate claiming process.

Our district is compliant so we don’t need to worry about the audit…

Not true.

Most districts only file claims on the mandates that they know they are in compliance with. The block grant programs will require compliance on all mandates – including those you’ve never claimed. As stated above, if a district is found to be out of compliance with any of the mandates, all their block grant money would be put at risk.

Do I have the option to choose between filing mandates or the block grant every year?

Yes. Districts will have the option to choose the traditional mandate reimbursement claims process or block grant process every year. For the first year of the program, districts will need to decide by Sept. 30, 2012.

Stopping and starting the mandate claiming process might be problematic, because once district staff becomes accustomed to the block grant system – reinstituting traditional mandate claiming might be difficult. That is exactly what the state is hoping.

It is important to know that the block grant program will not begin until the 2012-13 fiscal year, so districts will still need to file their 2011-12 claims. And remember, the cost of your mandate contract is 100 percent reimbursable while the cost of the block grant audit is not.

How does my district opt out of the block grant?

Current law provides that districts choosing to continue filing claims under the existing mandate reimbursement process will not need to do anything.  The 9/30/12 deadline is only for those districts that are choosing the block grant.  Instructions on how to declare have not yet been provided.

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