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By Gretchen Keiser, Staff Writer
ATLANTA—When the three new Catholic elementary schools of the
archdiocese were being prepared for opening, principals were apparently using
one staffing model, while the Finance Department had developed its budget
projections based on much more modest staffing.
More staff were being hired and, in some cases, at higher salaries
than budget projections developed by the Finance Department anticipated,
according to Michael McNamara, chief financial officer.
In addition, the Finance Department projections looked at the
three schools as one consolidated project and anticipated cash flows from the
two 500-student elementary schools, located in Roswell and Alpharetta, to
offset a projected deficit at the third school, which was a 250-student school
located in Tyrone. But this information was not disclosed publicly, McNamara
acknowledged.
The principal of Queen of Angels School, Roswell, Sister Patricia
Clune, CSJ, who was hired in January 1999, said she used an organizational
chart that envisioned 26 teachers, 11 teacher aides and additional positions,
including an assistant principal, nurse and counselor.
The Finance Department had developed “budget
projections” that were considerably more modest. The chief financial
officer said that his projections, which began in 1998 or earlier, ultimately
provided for 17 teachers for the 500-student schools, anticipating two classes
from kindergarten through seventh grade and one eighth grade.
Eight additional positions for teachers were also budgeted for in
the projections, which would have resulted in 25 teaching positions, including
those who would have taught music, art, language, etc.
However, the projections did not budget for teacher aides or for a
school nurse or an assistant principal, a position which was not projected to
be filled until the 2001-2002 school year, McNamara said.
The two separate models contributed to the current crisis in which
the schools opened with operating expenses that are exceeding the schools’
income. When the principals in Roswell and at Holy Redeemer School, Alpharetta,
were asked to cut their budgets for 2000-2001 by approximately $300,000 and to
continue cutting their budgets over the next several years, Sister Clune
tendered her resignation. She has since withdrawn her resignation at the
request of Archbishop John F. Donoghue, following changes in leadership in the
Office of Education.
“I did very detailed projections for all three schools,”
McNamara said in an interview April 17. He said that he gave a budget
projection to two newly hired principals who were on site at the Catholic
Center in July 1998 and expected feedback.
But the staff configuration that is actually in place in the new
schools does not correspond to the projections, he acknowledged.
“There was more staff hired than was projected at all three
schools. And the average salary was higher than projected. Why that happened is
speculation on my part. I know it happened. It was never approved by the
Finance Council or the Finance Office ... I asked many, many times where are
the budgets.”
“Budgets are supposed to be prepared at the lowest level and
approved by the Department of Education and Finance Office. It is a very simple
process. I think the principals were never properly guided.”
Mary Reiling, principal of Holy Redeemer School, Alpharetta, was
hired in July 1998 and said that she was given a budget projection by McNamara
that was “very tentative and preliminary” and that, at that time,
projected kindergarten through sixth grade with one class of each.
From that time forward, she said, discussions about the elementary
schools were carried on with the Secretary for Education, a role which was held
first by Bertha Martin through December 1998 and then by Msgr. Terry Young from
January 1999 until this April.
A typical conversation involved how the enrollment figures were
going, how that would impact class size and how that would impact hiring.
“It was free-flowing,” she said. Principals interacted with the
Secretary for Education in these discussions, Reiling said, particularly with
Martin, but did not interact directly with the Finance Department. It was her
assumption that changing information on the schools, the enrollment and the
faculty was reaching the Finance Department through the Secretary for
Education, she said.
Sister Clune says that she was never asked to prepare a budget for
the opening year of school. She said she was given an organizational chart and
had conversations by phone, fax and in writing with the Department of Education
and Human Resources as she hired an estimated 52 to 54 people to work at Queen
of Angels School. Sister Clune was hired in January 1999, but continued to work
as assistant superintendent of Catholic schools in Wilmington, Del., until May.
She moved to Atlanta in June 1999.
The organizational chart was developed by Marcia Taylor, director
of administrative services in the Education Department. Sister Clune said that
she also received a letter in which Taylor said she was working on developing
an operating budget for Queen of Angels School.
“We asked could we have some input” in the development
of the operating budget, Sister Clune said.
While the chief financial officer may have anticipated that she
would develop the first operating budget, “we were not given any
authority” to do that, Sister Clune said.
The principals did develop proposed budgets for the 2000-2001
school year.
Sister Clune also said that she “had no knowledge” that
Queen of Angels School was projected to have a cash flow to offset an
anticipated deficit at the 250-student Our Lady of Victory School.
As far as the salary scales, McNamara said his projections
“used an average.”
“If you use the top end (of the salary scale) it would blow
it right out of the water,” he said.
Sister Clune said that she was given a salary scale to use and, in
gray areas, asked the director of human resources to give her a specific salary
figure to offer. In two cases, Sister Clune said she offered less than was
approved in light of the experience of the person being hired.
Taylor, who became part of the Education Department in February
1999, said she wrote an organizational chart in order to keep track of the
positions that the principals had already filled and those that were to be
filled, but the chart was not static and was not a staffing model.
“It grew as they hired people,” she said. “It was a
way to keep track.”
In July 1999, a new employment form was implemented for the
schools that required six signatures, including those of the Secretary for
Education and the chief financial officer, before an individual could be hired.
Taylor said this was in response to hiring that was outside the salary ranges
of the archdiocese, a claim countered by principals.
On the other hand, she said, some positions that were originally
planned were reduced from full to part-time, or eliminated entirely. For
example, a contract was obtained with a food service organization instead of
hiring cafeteria workers.
She said that principals provided her with a list of teaching
positions that needed to be filled and that, in meetings with the public
seeking student applicants, the schools were characterized as
“state-of-the-art” and this contributed to the decision to add
teaching aide positions.
“I think there was a lack of communication by all parties. I
think it was frustrating for everyone,” Taylor said.
Principals were buying furniture, fixtures and equipment for the
new schools, testing and admitting children and hiring staff and faculty, she
pointed out. “I think they had an awful lot to do, more than they had time
for.”
“This is the first time in the history of the archdiocese
that something of this magnitude has been done,” Taylor said. “It is
unreasonable not to expect that there will be some adjusting and tweaking. But
we didn’t handle that well.”
McNamara acknowledged that Sister Clune, who was working in
Wilmington, was not one of the principals to whom he gave his projections and
said that he was not trying to assess blame, but to seek a solution to the
financial problem.
“It is a situation which cannot go on,” he said of the
gap between income and expenses at the schools. “I have never tried to
blame Sister Patricia.”
Sister Clune, who has 30 years of experience teaching and
administering Catholic schools, said that the larger staffing model, while not
the minimum required for accreditation from the Southern Association of
Colleges and Schools, is appropriate for Catholic schools.
“SACS guidelines are the minimum requirement,” she said.
For example, SACS guidelines require an aide if there are more than 28 children
in a kindergarten and if there are more than 30 children in a first-second-or
third-grade classroom.
However, Sister Clune said, in the younger grades, even with fewer
than 30 or 28 children in a class, “You do need an aide. In terms of
education, you absolutely need help in there.”
Similarly, Sister Clune said, an assistant principal is not a SACS
requirement, but said she was not aware of any 500-student school that did not
have an assistant principal.
“The pure logistics of overseeing 52 to 54 people”
require the help of an assistant principal, she said. “There is absolutely
no way one person can wear all the hats you have to wear.”
Reiling said that Holy Redeemer, with 51 employees, has aides in
kindergarten through third grade only and uses a number of part-time employees.
In addition to the conflicting staffing models, McNamara also
disclosed that the financial feasibility of the three new Catholic schools was
always interdependent.
Our Lady of Victory School in Tyrone is a 250-student school,
rather than a 500-student school, and because of its small size it is likely
that it will always operate at a deficit, McNamara said. The fixed costs to
operate a school are made more economical the larger the student body.
“It does not appear that it will ever be able to run on a
break-even basis, according to the projections that were done,” he said.
“Whereas ... on the 500-unit schools, because of a smaller
fixed cost per student, it was projected that they would have cash flows of
about $400,000, which would be used to fund the deficit on the south side
school.”
He said that instead of looking at the project as three separate
schools, it was looked at as one consolidated project serving 1,250 children in
three schools.
“You look at the total system and you say the three schools
are economically feasible ... It is feasible to serve 1,250 kids in three
different schools, while if they were considered individually it would be
feasible to serve the two schools on the north side, but not the school on the
south side,” McNamara said.
The tuition at all three schools is the same and the three schools
are all part of Catholic Education of North Georgia, Inc.
“One is at a disadvantage because it is a smaller school and
it has to absorb more fixed cost. The larger schools are at an advantage
because they have more students to absorb the fixed costs.”
Although the projections anticipated cash flows at the two
500-student schools, all three schools are operating at a deficit in their
opening year, McNamara said. In fact, as of March 31, 2000, Queen of Angels had
a deficit of $580,995 and Holy Redeemer had a deficit of $657,120.
This deficit reflects more than the different staffing models. At
each school, the Finance Department also projected a $150,000 annual
contribution to the tuition assistance fund of the archdiocese and a $150,000
annual contribution to a capital replacement fund at the school. This accounts
for $225,000 of the deficit at each school as of March 31, 2000. Both
contributions are now being reevaluated in light of the schools’ deficits
and questions raised about the amount for capital replacement.
Our Lady of Victory School, where principal Sallie McQuaid began
in December, has submitted a budget for 2000-2001 which anticipates less of a
deficit than the Finance Department projections. “I’m encouraged
because her budget was less of a deficit than what was projected,”
McNamara said. “Time will tell on that.”
In other questions raised by the events at Queen of Angels,
McNamara said the following:
The Capital Campaign of the archdiocese, “Building the Church
of Tomorrow,” set out to raise $32 million for Catholic education. Of that
amount, $31 million has actually been funded as of March 31, 2000. Twenty
million dollars was used to fund the tuition assistance endowment fund for
Catholic school students whose parents cannot afford the cost of education.
The remaining $11 million is being used for Catholic school
construction projects. In addition to the three new elementary schools, two new
Catholic high schools are being built and a $4 million addition to St. Pius X
High School, Atlanta, has been completed.
The Capital Campaign raised only building and endowment funds for
Catholic schools. The campaign provides no operating funds for Catholic
schools. Operating funds come from student tuition payments, school
fund-raising activities and from the support of parishes, which is assessed by
the archdiocese and then reallocated for schools.
The archdiocese has also issued $51 million in tax-exempt bonds to
obtain additional funds for the construction of the new Catholic high schools
and the addition to St. Pius High School. These tax-exempt bonds were planned
from the time of the Capital Campaign to fund Catholic school construction.
There were three bond issues to date:
A $26.9 million bond issue for the construction of Blessed Trinity
High School in Roswell; a $4.28 million bond issue for the St. Pius High School
addition; and a $20.035 million bond issue for Our Lady of Mercy High School in
Fayette County. The rate on the bonds is 3.95 percent as of March 31, 2000,
approximately 3 percent less than money borrowed by the archdiocese on its line
of credit, McNamara said.
The building of the three Catholic elementary schools has been
financed by conventional debt until such time as they can be refinanced by a
bond issue. This is because Catholic parishes are currently using the new
elementary schools to hold Mass and this creates a separation of church and
state issue in relation to government-issued bonds. When the parishes begin
holding Mass in other quarters, bonds could be issued in relation to the
elementary school construction projects, McNamara said.
At the same time as the new schools were built, a new system was
created for parish support of schools. Under the old system, feeder parishes
paid a per-child subsidy for any parish student attending a Catholic school.
This subsidy varied from year to year and from one school to another.
Under the new system, all parishes of the archdiocese will
contribute 15 percent of parish income over $250,000 to the tuition aid
endowment fund and education investment fund. Families apply to the fund for
help paying the cost of Catholic school tuition for their children. The old
system is being phased out over a five-year period from fiscal year 1998-99 to
fiscal year 2002-2003.
The Department of Catholic Education determines who receives
tuition assistance and the amount of assistance and then informs the Finance
Department and the individual schools. The Finance Department, which oversees
the $20 million endowment fund, then sends the total amount of tuition
assistance awarded directly to each school. The tuition assistance is drawn
from the interest on the fund, not the principal.
The new Catholic schools were being asked to contribute to the
tuition assistance fund, McNamara said. Queen of Angels and Holy Redeemer were
each asked to contribute $150,000 this year. McNamara said that, since the
construction debt for the new schools is being paid for by parish subsidies, it
was a matter of fairness for the schools to put some money back into the
tuition assistance/education investment fund for future schools. However, in
light of the deficit at the two schools, this line item will be eliminated for
the 2000-2001 school year, following an April 18 meeting at Queen of Angels
with archdiocesan officials from Finance, Education and the two schools.
Including land acquisition and site improvements, Queen of Angels School cost
approximately $10.1 million and Holy Redeemer cost approximately $9.2 million
to build.
Queen of Angels and Holy Redeemer were each expected to put
$150,000 into a capital replacement fund in 1999-2000 for their schools, and
that amount is now part of each school’s operating deficit.
In light of questions raised about setting this much aside per
year at brand new facilities, Catholic Construction Services, Inc., has hired
an outside professional to review the amount and determine what is an
appropriate amount, McNamara said. Capital replacement refers to major items
such as new heating and air conditioning systems, a new roof, new carpeting,
major repainting and new computers, McNamara said. The fund was intended to set
aside money per year to prepare for each school’s future capital needs.
The two new high schools were projected to operate in a
consolidated way, with the smaller Our Lady of Mercy High School in Fayette
County operating at a deficit and the larger Blessed Trinity High School in
Roswell operating with cash flow when both schools were at full capacity.
However, actual budgets for the new high schools done by Sister Dawn Gear,
GNSH, founding principal of Our Lady of Mercy, and Judith Mucheck, assistant
superintendent of Catholic schools, indicate that both schools will have
opening year deficits and the amount will vary depending on the size of the
first student body. |
