Message From the Interim Chief Administrator

Follow-up on AEAs in the News
Last week we sent a communication about the proposal made by a State Government Reorganization Committee to move AEAs under the Department of Education. We now have confirmation that the proposed language has been eliminated from the Senate Study Bill (SSB) 3030. New language is under development which could call for a study of the AEA system for possible areas of savings and/or some changes in board governance. I will keep you informed as to how this develops. Please be sure to watch the Connection for updates. We remain confident that we will continue to provide quality services to our local school districts as a strong, vital AEA system.

Agency Budget Update
As you know, we are facing challenging economic conditions locally, in our State and across our nation. The governor has already implemented an across-the-board cut, and while we want to be hopeful as we move into this legislative session, we realize further reductions are possible. This is an update about the plans for 2010-11 and beyond. The Agency will continue to look for ways to reduce spending, add efficiencies and protect staff and clients as much as possible. We are mindful of the standards to which we are held accountable as an Agency, and we will stay focused on our mission.

FY 2010-11 budget:
We have just completed the process of building the FY2010-11 budget, which Dave King, Director of Finance and Business, discussed with the Board of Directors at their January meeting. Dave reported about the recent budget cuts which have been disappointing and have caused the Agency to review its resources carefully as they become more limited. While staff members have played a strong role in building a “culture of austerity” to assist with conserving our resources, the ability to cut costs won’t occur as quickly as revenue is reduced. Furthermore, our budget is further affected by increased costs of operation, compensation and infrastructure issues.

We are fortunate to have funds from the American Recovery and Reinvestment Act (ARRA). They have helped offset the impact of the reductions we experienced during this 2009-10 year, and they will help again in 2010-11. ARRA funding is primarily used for special education; however, a provision in the law allows for a reduction in the required federal maintenance of effort level. So, some ARRA funds will be “freed up” to support general education and infrastructure expenditures. Over the next two years, in addition to using ARRA funds to cover gaps in the budget, $850,000 will be used from fund balance. Unfortunately, 2010-11 is the second and final year the Agency will receive ARRA funding.

FY 2011-12 budget:
At times, we wish we could have a crystal ball to look into the future. It's difficult to predict what the economic climate will be like in two years, and what legislation might be passed to alleviate financial factors for the 2011-12 budget. Right now, given what we do know, we believe the Agency will face additional funding reductions. Here are some things we do know:

• Typically, the legislature would take action to set the growth rate for 2011-12, but they have put that decision off until they have more information upon which to base their decisions.
• ARRA funds will sunset.
• It will be more difficult to make non-personnel cuts in the future beyond what is already being done to reduce costs and be more efficient.
• Based on growth and enrollment, it is unlikely the Agency will receive full funding for the next few years.
• The Agency will likely experience a $3M gap, which equates to roughly 40+ FTE. This is not to say reductions in force would occur at that level, but rather to provide staff a scope of measurement about the impact of the projected shortfalls.

So what are we doing?
The Board expects us to maintain services and minimize impact on staff. As part of the budget development process, Heartland AEA’s leadership staff created the statements below as the foundational principles for budget preparation, monitoring and control.

• Resources will be prioritized, aligned and allocated for maximum results.
• Resources will be allocated to support the greatest positive impact on student achievement.
• Resource allocations will be transparent, defensible, data-driven and aligned with Agency goals.
• Resource allocations will reflect the Agency’s mission, vision and guiding principles.
• Responsibility for resource allocation, budget preparation and expenditure monitoring lies with the administrative team.
• Relevant budget input will be sought from clients, partners and staff members.
• Federal and state statutes, rules and regulations will be followed.
• A minimum of 5% Unreserved/Undesignated fund balance will be maintained.

The Cabinet is working together and actively looking for ways to keep our costs down while moving forward with our work. Members of Cabinet, District Services Council and Operations Support Council are working on processes that will help the Agency respond to the budget challenges, including:

• Developing processes for decision-making about our programs and services
• Implementing a review of our post-employment policy
• Implementing a study of our compensation and contract structures throughout all Agency employment groups, including management.

I am very pleased with how well our leaders and staff members have been working to address these budget concerns. It is always disappointing to face budget cuts, but we remain focused and optimistic about moving the work of the Agency forward knowing that often challenges offer opportunities. One thing for certain is that we will remain committed to our mission to provide quality educational services to children, educators, schools and communities.

As always, thank you for all you do to serve children, families and educators. Please contact me if you have any specific questions.

Sheila King
Interim Chief Administrator