Since my last post, I have been getting back to doing project work. For the last several years I've directed our consulting engagements and interacted mostly with client executives; project teams would report to me from the field. Now I'm leading a Lean improvement project in rural Minnesota while also negotiating a contract on some operations initiatives on the west coast and in Asia. Like everything else, this arrangement has its good and bad points.
On the downside, the travel stinks. Flying around to clients and racking up Hilton points was pretty cool when I was in my 20's and had no kids, but at this stage the Monday-Friday trips are a drag. I miss Carolyn and the boys, I miss my house and my bed. Fortunately there's Skype, so my family and I have a free nightly video conference to do homework and catch up on the day's events. It's not the same as being there, but it's better than nothing.
On the upside, apart from the airplane commute and long drive, the work itself is fun. The folks in Minnesota are open to new ideas and eager to improve. They value our ideas and facilitate our progress, so we can roll up our sleeves, dig deep into the toolbox and design big improvements to all aspects of their workplace. The plan will address workflow, materials and scheduling, management processes and departmental layout improvements all at the same time. Usually we don't get such latitude at the outset, so this is a great opportunity to do some things fundamentally right. That alone makes the work very rewarding for us and beneficial for our clients.
Later I'll probably write something describing the work itself, but that's not the point of this post. My point is that these back-to-basics assignments are exercising essential career skills that get rusty as management duties take up more of my time. It brings all the high concepts back down to a practical level, while reminding me of the daily challenges our project teams face.
And maybe best of all, as Steven Covey said, sharpening the saw reminds me of why I do this for a living, and what I hope to gain by continuing in this field. It's nice to be reminded this stuff can be fun.
Thursday, May 13, 2010
Wednesday, March 3, 2010
Repealing the Rubber Stamp Act
On Monday evening, a certain former school board member chastised us for delegating deliberations over facilities expansion and land acquisitions to our Finance and Facilities Committee. Citing the "classic battles" between John Adams and Thomas Jefferson on the "Kentucky Purchase" and the Alien and Sedition Acts, this individual argued that these matters should be taken up by the entire board in a public forum.
I won't repeat my arguments for curtailing facilities and land discussions until the economy straightens out. But the accusation that we are removing important matters from the public scrutiny is entirely inaccurate. In fact, this board has done more to make public our conversations on finance and facilities than any prior board that I can recall. We deliberately chose to hold these committee meetings entirely in public, with written minutes and audio records available to anyone, so any question of transparency sounds suspiciously like posturing. If a previous board was so concerned with airing these discussions, they could very well have done so.
If I'm not mistaken, John Adams was back on his farm in Massachusetts when Andrew Jackson purchased part of Kentucky in 1818. I do know, however, that the Alien and Sedition Acts came to represent Adams' preference for centralized federal authority against Jefferson's promotion of individuals' and states' rights. While as a libertarian I generally prefer Jefferson's position, I also realize that this whole topic has absolutely nothing to do with our responsibility as school board members.
As representatives of the public, school boards are responsible for governance over the public school organizations. These organizations are not granted any constitutional rights; they merely work for the people as directed by their school boards. In this sense, public schools are not different than any private sector service provider, despite an unusually heavy burden of regulations and mandates. Schools must operate and school boards must govern in much the same way as any corporation and board of directors. The school boards may delegate, but must never transfer, and should be ultimately responsible for, performing their fiduciary public duty.
If this seems obvious, then why is weak governance so critical a problem in U.S. public school systems? Unlike boards of directors in the private sector, school board members are usually unpaid and are often not elected for their management acumen. Lacking resources and expertise, board members must rely to an extraordinary extent on the judgment of their superintendent and administration with few opportunities for external management reviews. Administrations have become adept at managing their boards within an established public education industry operating model, and school boards have become rubber stamps for the organizations they govern.
None of this matters until the established system fails, and unfortunately that's what is slowly happening in many local school districts. The rapidly increasing property values that drove decades of revenue increases seem to be over, economically stressed communities resist new taxes, and in many cases state funds are also at risk. If nothing changes, expenses will eventually exceed revenues, creating deficits and draining reserves. However, the usual solutions are no longer viable options. Increasing taxes isn't going to happen in a bad economy, and personnel cuts will postpone deficits but won't solve the core problem.
This is where our school boards must engage in constructive intervention. Instead of allowing the system tom follow the old playbooks, we must raise expectations and guide districts to better processes. We must change the system before it fails.
I won't repeat my arguments for curtailing facilities and land discussions until the economy straightens out. But the accusation that we are removing important matters from the public scrutiny is entirely inaccurate. In fact, this board has done more to make public our conversations on finance and facilities than any prior board that I can recall. We deliberately chose to hold these committee meetings entirely in public, with written minutes and audio records available to anyone, so any question of transparency sounds suspiciously like posturing. If a previous board was so concerned with airing these discussions, they could very well have done so.
If I'm not mistaken, John Adams was back on his farm in Massachusetts when Andrew Jackson purchased part of Kentucky in 1818. I do know, however, that the Alien and Sedition Acts came to represent Adams' preference for centralized federal authority against Jefferson's promotion of individuals' and states' rights. While as a libertarian I generally prefer Jefferson's position, I also realize that this whole topic has absolutely nothing to do with our responsibility as school board members.
As representatives of the public, school boards are responsible for governance over the public school organizations. These organizations are not granted any constitutional rights; they merely work for the people as directed by their school boards. In this sense, public schools are not different than any private sector service provider, despite an unusually heavy burden of regulations and mandates. Schools must operate and school boards must govern in much the same way as any corporation and board of directors. The school boards may delegate, but must never transfer, and should be ultimately responsible for, performing their fiduciary public duty.
If this seems obvious, then why is weak governance so critical a problem in U.S. public school systems? Unlike boards of directors in the private sector, school board members are usually unpaid and are often not elected for their management acumen. Lacking resources and expertise, board members must rely to an extraordinary extent on the judgment of their superintendent and administration with few opportunities for external management reviews. Administrations have become adept at managing their boards within an established public education industry operating model, and school boards have become rubber stamps for the organizations they govern.
None of this matters until the established system fails, and unfortunately that's what is slowly happening in many local school districts. The rapidly increasing property values that drove decades of revenue increases seem to be over, economically stressed communities resist new taxes, and in many cases state funds are also at risk. If nothing changes, expenses will eventually exceed revenues, creating deficits and draining reserves. However, the usual solutions are no longer viable options. Increasing taxes isn't going to happen in a bad economy, and personnel cuts will postpone deficits but won't solve the core problem.
This is where our school boards must engage in constructive intervention. Instead of allowing the system tom follow the old playbooks, we must raise expectations and guide districts to better processes. We must change the system before it fails.
Monday, February 15, 2010
Transforming Your Business with Lean Operations
Transforming Your Business with Lean Operations Here's a link to my December 21, 2009 presentation to the University of Chicago Booth School of Business Entrepreneurial Roundtable. I look like my front teeth are missing.
Thursday, January 14, 2010
Does innovation create happiness?
I am in the innovation business, leading our clients through Lean Six Sigma improvement projects, occasionally running parts of their businesses, and even teaching them to do these things for themselves using our techniques. Our work exists because our clients rely on innovation, and Lean is a proven tool. We also innovate our own work by examining our performance, adjusting our methods, learning and improving. Like our clients, we must continue to build better mousetraps before somebody else does.
Whether you realize it or not, you are in the innovation business too. Unless you're oblivious to the outside world, you opportunistically adapt to change and adopt new habits in every aspect of your life. You might use a computer in your work; your parents can tell you about typewriters and slide rulesComputers are better, even if they do pose a whole new set of problems. You probably use a mobile phone, and if you still have a home phone it's not likely to have a curly cord connecting the base and handset. You might lust for a new HDTV, or a new hair style, or the latest Times best seller (or a Kindle to read it.) Every habit broken serves a common purpose: better, faster, cheaper.
Innovation is in our DNA. Better products and processes. Faster, cheaper transportation. New systems for communicating and collaborating. Cleaner energy. Cures for disease, and softer pillows on hospital beds. Billions of humans reaching for a better life. Untold million minds recombining knowledge in novel ways to create new industries overnight. If knowledge is power, then innovation is wealth.
But what is the nature of this wealth? Adam Smith speaks of marginal utility, the unending question of what an idea can do for us. Psychologists and philosophers debate the relationship between material wealth and happiness. As the juggernaut of innovation rolls across the world, many ask whether human happiness is a function of wealth and power. Are we really better off? Do we lead happier, more fulfilling lives? Is all this innovation good for us?
Technology is neither a blessing nor a curse, but merely a set of tools. The determinant of good and evil is what we do with our tools. We may all possess the same creative spark, but one person will use it to attack cancer while another creates the Improvised Explosive Devices that turn Iraqi roads into killing fields. We may indeed create toys too dangerous to entrust to our own childish hands. This reveals no inherent truth about innovation per se, but much about our species.
Any talk of progress must include a comparison of human suffering. Any assertion, for example, that American life in the 1850's was happier than present times must also address sticky details like dentistry, where modern innovation has surely reduced the average person's pain. So that seems like a good thing.
On the other hand, those 1850's folks had to depend on each other in different ways than we do nowadays. In fact, sometimes it seems that our rush toward convenience is leading us into an ironic state of hyper-connected isolation. We have 4-door cars, but most of the time we drive them by ourselves. We have 24/7 email access, but we seldom meet face-to-face. We can download movies to our phones, but we watch them alone. Isolation is the "i" in i-Tunes. Why? Because we can. Self-service gas stations weren't invented because people dislike interacting with others, but that's why they flourished.
So maybe progress is both a blessing and a curse. Where we might gain convenience and ease suffering, we may also lose our close connections to others and perhaps breed extremism. But that's not a matter of innovation, but of human character and frailty. In the end, for better or worse, we will be judged for what we are as people.
Whether you realize it or not, you are in the innovation business too. Unless you're oblivious to the outside world, you opportunistically adapt to change and adopt new habits in every aspect of your life. You might use a computer in your work; your parents can tell you about typewriters and slide rulesComputers are better, even if they do pose a whole new set of problems. You probably use a mobile phone, and if you still have a home phone it's not likely to have a curly cord connecting the base and handset. You might lust for a new HDTV, or a new hair style, or the latest Times best seller (or a Kindle to read it.) Every habit broken serves a common purpose: better, faster, cheaper.
Innovation is in our DNA. Better products and processes. Faster, cheaper transportation. New systems for communicating and collaborating. Cleaner energy. Cures for disease, and softer pillows on hospital beds. Billions of humans reaching for a better life. Untold million minds recombining knowledge in novel ways to create new industries overnight. If knowledge is power, then innovation is wealth.
But what is the nature of this wealth? Adam Smith speaks of marginal utility, the unending question of what an idea can do for us. Psychologists and philosophers debate the relationship between material wealth and happiness. As the juggernaut of innovation rolls across the world, many ask whether human happiness is a function of wealth and power. Are we really better off? Do we lead happier, more fulfilling lives? Is all this innovation good for us?
Technology is neither a blessing nor a curse, but merely a set of tools. The determinant of good and evil is what we do with our tools. We may all possess the same creative spark, but one person will use it to attack cancer while another creates the Improvised Explosive Devices that turn Iraqi roads into killing fields. We may indeed create toys too dangerous to entrust to our own childish hands. This reveals no inherent truth about innovation per se, but much about our species.
Any talk of progress must include a comparison of human suffering. Any assertion, for example, that American life in the 1850's was happier than present times must also address sticky details like dentistry, where modern innovation has surely reduced the average person's pain. So that seems like a good thing.
On the other hand, those 1850's folks had to depend on each other in different ways than we do nowadays. In fact, sometimes it seems that our rush toward convenience is leading us into an ironic state of hyper-connected isolation. We have 4-door cars, but most of the time we drive them by ourselves. We have 24/7 email access, but we seldom meet face-to-face. We can download movies to our phones, but we watch them alone. Isolation is the "i" in i-Tunes. Why? Because we can. Self-service gas stations weren't invented because people dislike interacting with others, but that's why they flourished.
So maybe progress is both a blessing and a curse. Where we might gain convenience and ease suffering, we may also lose our close connections to others and perhaps breed extremism. But that's not a matter of innovation, but of human character and frailty. In the end, for better or worse, we will be judged for what we are as people.
Friday, January 8, 2010
Shopping with the children
Happy New Year! I hope everyone had a great holiday. For many people, last year was like the bad hangover that follows an all-night binge, so I'm certainly looking forward to a brighter 2010. But before we turn the page on 2009, I have one last story to relate from last month.
A few weeks before Christmas, I took my two boys shopping for gifts. We stopped at Best Buy and they immediately took off for the video game aisles. When I went to find them a little while later, they began asking why we couldn't buy ourselves some games. So I tried doing the dad thing and patiently explained that Christmas is about sharing with others, not getting stuff for us, et cetera. Besides, I told them, we can't just spend all our money on treats or we might get caught short if something bad happens.
My 10 year old son, who can talk a rabid dog out of a stew bone, wasn't about to give up on a new Wii game so easily. He told me he'd heard a news station encourage people to spend money and help the economy. "You do care about the economy, right Dad?"
I was immediately glad to discover he pays more attention to current events than I thought. However, this new tack disturbed me, so I asked him how spending money would make the economy better. He replied that if everybody bought lots of things, then people would get jobs making the stuff we buy. I told him to look closely at a nearby box of earphones, and he read "Made in China" on the back. I asked him who would get jobs if we bought that. He thought about it and replied that the Chinese would get jobs, but we might get some too. Fair enough. So I asked him where we would get the money to buy the earphones, and he smirked and said we have enough to cover the $27 price. I said ok, but one $27 set of earphones won't create enough work to fix the economy. How do we get enough money to buy stuff so everyone has a job?
Now he was closing in for the kill. He arched his eyebrow and replied, "that's why you and Mom have credit cards." He stood there, smug, waiting for my capitulation. See, the lad had sass.
I mentioned that we'd have to buy a few thousand boxes of earphones to pay for a single new job. Who would pay $27,000 back to the credit card company when all we created was one job? He looked at me quizzically and asked, "We have to pay them back?" Checkmate.
I shouldn't have been surprised that society is prompting my kids to spend money. Politicians, columnists and even some otherwise reasonable economists enjoy reminding us that consumer spending accounts for about 70% of the U.S. economy. CNBC regularly rants about how retail sales affects the S&P 500. Now, that's all technically true; Gross Domestic Product is the value of all the goods and services we create, and bigger GDP means more wealth. Economists will tell you that the easiest and best way to measure that value is by counting all the dollars we spend on stuff. They reason that if you buy it, somebody had to make it and that's what it's worth. That makes sense, sort of.
But as most parents must eventually explain to our kids, what we produce and what we consume are two very different things. Production, the value we create, puts money into our pockets. Consumption is the opposite of production, and takes money out. (You might argue that some spending is really investment, but few of us would successfully argue that their new 54-inch flat screen HDTV "investment" is creating anything except a bigger Visa bill.)
Calling the wealth we create in a given period equal to what we spend is like assuming that we bought a new house with last week's paycheck - it's simply not realistic. We don't just spend the cash in our pocket. What we have available to spend relates not only to what we created in any single year, but also to wealth accumulated from the past and to loans we take that are payable into the future.
And that's where the whole idea of stoking consumer spending to increase GDP gets hairbrainy. Spending versus making will prop up GDP in the short run, but spending anything more than the real value created eventually dissipates wealth and leaves a pile of bills to pay. So by mortgaging our homes to buy HDTV's, we make the economy look good today but deplete our assets and future wealth. In short, GDP only looks at the income statement without checking the balance sheet. Managing a household on that basis would put us onto the street; managing the whole country that way is bad policy leading to bankruptcy.
So with that in mind, how does a few points of GDP growth look against the $1 Trillion of new debt we spent to get it? Are you any more confident in your job prospects? Are you better off financially?
Like my kids, sometimes even reasonably intelligent adults will trade reason for immediate gratification. But perhaps we'd be less inclined to spend if someone reminded them that the trillion dollar credit card must eventually be paid.
A few weeks before Christmas, I took my two boys shopping for gifts. We stopped at Best Buy and they immediately took off for the video game aisles. When I went to find them a little while later, they began asking why we couldn't buy ourselves some games. So I tried doing the dad thing and patiently explained that Christmas is about sharing with others, not getting stuff for us, et cetera. Besides, I told them, we can't just spend all our money on treats or we might get caught short if something bad happens.
My 10 year old son, who can talk a rabid dog out of a stew bone, wasn't about to give up on a new Wii game so easily. He told me he'd heard a news station encourage people to spend money and help the economy. "You do care about the economy, right Dad?"
I was immediately glad to discover he pays more attention to current events than I thought. However, this new tack disturbed me, so I asked him how spending money would make the economy better. He replied that if everybody bought lots of things, then people would get jobs making the stuff we buy. I told him to look closely at a nearby box of earphones, and he read "Made in China" on the back. I asked him who would get jobs if we bought that. He thought about it and replied that the Chinese would get jobs, but we might get some too. Fair enough. So I asked him where we would get the money to buy the earphones, and he smirked and said we have enough to cover the $27 price. I said ok, but one $27 set of earphones won't create enough work to fix the economy. How do we get enough money to buy stuff so everyone has a job?
Now he was closing in for the kill. He arched his eyebrow and replied, "that's why you and Mom have credit cards." He stood there, smug, waiting for my capitulation. See, the lad had sass.
I mentioned that we'd have to buy a few thousand boxes of earphones to pay for a single new job. Who would pay $27,000 back to the credit card company when all we created was one job? He looked at me quizzically and asked, "We have to pay them back?" Checkmate.
I shouldn't have been surprised that society is prompting my kids to spend money. Politicians, columnists and even some otherwise reasonable economists enjoy reminding us that consumer spending accounts for about 70% of the U.S. economy. CNBC regularly rants about how retail sales affects the S&P 500. Now, that's all technically true; Gross Domestic Product is the value of all the goods and services we create, and bigger GDP means more wealth. Economists will tell you that the easiest and best way to measure that value is by counting all the dollars we spend on stuff. They reason that if you buy it, somebody had to make it and that's what it's worth. That makes sense, sort of.
But as most parents must eventually explain to our kids, what we produce and what we consume are two very different things. Production, the value we create, puts money into our pockets. Consumption is the opposite of production, and takes money out. (You might argue that some spending is really investment, but few of us would successfully argue that their new 54-inch flat screen HDTV "investment" is creating anything except a bigger Visa bill.)
Calling the wealth we create in a given period equal to what we spend is like assuming that we bought a new house with last week's paycheck - it's simply not realistic. We don't just spend the cash in our pocket. What we have available to spend relates not only to what we created in any single year, but also to wealth accumulated from the past and to loans we take that are payable into the future.
And that's where the whole idea of stoking consumer spending to increase GDP gets hairbrainy. Spending versus making will prop up GDP in the short run, but spending anything more than the real value created eventually dissipates wealth and leaves a pile of bills to pay. So by mortgaging our homes to buy HDTV's, we make the economy look good today but deplete our assets and future wealth. In short, GDP only looks at the income statement without checking the balance sheet. Managing a household on that basis would put us onto the street; managing the whole country that way is bad policy leading to bankruptcy.
So with that in mind, how does a few points of GDP growth look against the $1 Trillion of new debt we spent to get it? Are you any more confident in your job prospects? Are you better off financially?
Like my kids, sometimes even reasonably intelligent adults will trade reason for immediate gratification. But perhaps we'd be less inclined to spend if someone reminded them that the trillion dollar credit card must eventually be paid.
Friday, December 18, 2009
A few more reasons to celebrate
Even though winter has set in on Chicago, there's been a few reasons to believe we could have an early thaw in January. By most accounts the last fifteen months have been rough for the economy, but a couple of unexpected customer calls are raising my hopes that we may see some improvement after the new year. That's a welcome change.
On Monday night I will be presenting "Transforming your business with the Lean Six Sigma toolkit" to the University of Chicago Business School's Entrepreneurial Roundtable in Naperville, Illinois. Some people believe that these techniques don't apply to small and midsized businesses, especially those that are not making or moving products. They might say something like, "We're in sales, not operations." My usual response is to ask them if they ever think about how they serve their customers. I then ask them if they're concerned about the value of their work. If they answer yes, then I shrug and tell them we're all in operations businesses.
It's good to do these presentations periodically, because it reminds me of why I do this for a living.
On Monday night I will be presenting "Transforming your business with the Lean Six Sigma toolkit" to the University of Chicago Business School's Entrepreneurial Roundtable in Naperville, Illinois. Some people believe that these techniques don't apply to small and midsized businesses, especially those that are not making or moving products. They might say something like, "We're in sales, not operations." My usual response is to ask them if they ever think about how they serve their customers. I then ask them if they're concerned about the value of their work. If they answer yes, then I shrug and tell them we're all in operations businesses.
It's good to do these presentations periodically, because it reminds me of why I do this for a living.
Tuesday, December 15, 2009
For what kids?
For several years my community has been debating the cost per student of our K-8 school district. In fact, the rising costs of public education seems to be a growing topic of debate in many parts of the country.
There are those who would simply raise taxes to fund school systems, because "it's for the kids" and besides, public education to our democratic society and economic power. Opponents argue that teachers, administrators and a burgeoning educational-industrial complex are bilking the taxpayer while school performance declines nationwide. Who is right?
We can argue back and forth about bang for the buck, but it’s pretty clear that there is indeed some bang going on here. Despite all the challenges that our culturally-inclusive society foists on the education system, our schools still manage to compare pretty well even against smaller, homogeneous countries. We aren’t without issues, but with the glaring exception of schools in poor environments, quality education isn’t an immediate concern. On the whole, OUR kids are getting a good education here in the USA.
But what about tomorrow’s kids? Will they find the same good schools, or will their experience be something less than ours? It is in preserving that quality education for future students where the system breaks down, and that’s where the “buck” comes into the conversation. In many communities, key components of the expense budget are growing faster than tax revenues.
For example, our local school district's 5-year financial forecast projects salary increases of around 5% per year, health insurance benefit increases of about 10% per year, and increasing retirement fund contributions of about 10% per year. Adding to this problem, changing demographic factors, such as additional instruction for growing numbers of English-learning students, will continue to drive up costs for a given standard of educational performance. On the other side of the ledger, our tax revenues are projected to increase only 3% - 3.5% per year.
That's not a sustainable fiscal situation, and sooner or later we will be forced to either raise tax rates or run out of money.
This isn’t axe-grinding or posturing, it’s just simple math.
Someone recently explained to me that Illinois' current education system relies on tax increases to cover rising costs. However, I fear that our local communities may be approaching the “peak oil” of taxation, a tipping point where new revenues will be increasingly difficult to find. Continued tax hikes will eventually change the fabric of our communities and place greater burden on households. Likewise, job cuts and other cost reductions may buy us some time but won’t solve year-over-year cost increases that exceed tax cap mandates. Besides, in case someone slept through the last 15 months, most government agencies and many communities are already flirting with insolvency. We can't expect to tax our way out of this problem.
A community member suggested that our local school board should do more than "just listen to the whims of the public." That's actually not true in the strictest sense, as school boards have fiduciary responsibility to serve the public by assuring that the district educates well and operates efficiently on an ongoing basis. Those responsibilities usually extend beyond the scope of any narrow constituency, and I believe most school boards are honest enough to keep it that way. School boards must be good stewards of a quality public education system for their entire community: the kids in the schools, the adults who fund them, and future generations of families who hope to find the same educational opportunities as we enjoy today.
We school board members must address this situation quickly, or the problem will continue to grow until it’s too big to fix with reasonable solutions. We must find a way to align our expenditures with sustainable tax revenues. That requires frank discussions with administration, teachers, and the public. It means cooperation, fiscally responsible behavior and good choices about the programs we offer. If we avoid these realities, we risk declining school performance or an eventual tax revolt.
To those of you who resist any notion of cost containment, you are living on borrowed time. This is a matter of leadership and duty. If we see this trouble on the horizon, then it's our responsibility to avoid it while we can. We can't continue to allow our problems to snowball onto future genertions.
After all, public education is for ALL the kids, and it’s unconscionable to sacrifice their future for our own benefit.
There are those who would simply raise taxes to fund school systems, because "it's for the kids" and besides, public education to our democratic society and economic power. Opponents argue that teachers, administrators and a burgeoning educational-industrial complex are bilking the taxpayer while school performance declines nationwide. Who is right?
We can argue back and forth about bang for the buck, but it’s pretty clear that there is indeed some bang going on here. Despite all the challenges that our culturally-inclusive society foists on the education system, our schools still manage to compare pretty well even against smaller, homogeneous countries. We aren’t without issues, but with the glaring exception of schools in poor environments, quality education isn’t an immediate concern. On the whole, OUR kids are getting a good education here in the USA.
But what about tomorrow’s kids? Will they find the same good schools, or will their experience be something less than ours? It is in preserving that quality education for future students where the system breaks down, and that’s where the “buck” comes into the conversation. In many communities, key components of the expense budget are growing faster than tax revenues.
For example, our local school district's 5-year financial forecast projects salary increases of around 5% per year, health insurance benefit increases of about 10% per year, and increasing retirement fund contributions of about 10% per year. Adding to this problem, changing demographic factors, such as additional instruction for growing numbers of English-learning students, will continue to drive up costs for a given standard of educational performance. On the other side of the ledger, our tax revenues are projected to increase only 3% - 3.5% per year.
That's not a sustainable fiscal situation, and sooner or later we will be forced to either raise tax rates or run out of money.
This isn’t axe-grinding or posturing, it’s just simple math.
Someone recently explained to me that Illinois' current education system relies on tax increases to cover rising costs. However, I fear that our local communities may be approaching the “peak oil” of taxation, a tipping point where new revenues will be increasingly difficult to find. Continued tax hikes will eventually change the fabric of our communities and place greater burden on households. Likewise, job cuts and other cost reductions may buy us some time but won’t solve year-over-year cost increases that exceed tax cap mandates. Besides, in case someone slept through the last 15 months, most government agencies and many communities are already flirting with insolvency. We can't expect to tax our way out of this problem.
A community member suggested that our local school board should do more than "just listen to the whims of the public." That's actually not true in the strictest sense, as school boards have fiduciary responsibility to serve the public by assuring that the district educates well and operates efficiently on an ongoing basis. Those responsibilities usually extend beyond the scope of any narrow constituency, and I believe most school boards are honest enough to keep it that way. School boards must be good stewards of a quality public education system for their entire community: the kids in the schools, the adults who fund them, and future generations of families who hope to find the same educational opportunities as we enjoy today.
We school board members must address this situation quickly, or the problem will continue to grow until it’s too big to fix with reasonable solutions. We must find a way to align our expenditures with sustainable tax revenues. That requires frank discussions with administration, teachers, and the public. It means cooperation, fiscally responsible behavior and good choices about the programs we offer. If we avoid these realities, we risk declining school performance or an eventual tax revolt.
To those of you who resist any notion of cost containment, you are living on borrowed time. This is a matter of leadership and duty. If we see this trouble on the horizon, then it's our responsibility to avoid it while we can. We can't continue to allow our problems to snowball onto future genertions.
After all, public education is for ALL the kids, and it’s unconscionable to sacrifice their future for our own benefit.
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