Orleans Parish School Board and

Local Financial Experts
Work Together on Debt Challenges

The Orleans Parish School Board Debt Working Group was formed in October 2008 to explore possibilities for reducing the debt of the Orleans Parish School Board (OPSB). As part of its initial analysis, the group conducted research and met with experts to develop an understanding of the financial issues facing the School Board. The Working Group presented recommendations to all current
members of the Orleans Parish School Board at its March 18 meeting. The Board agreed to accept the recommendations and pledged to work with them to further explore these financial challenges and develop workable solutions.

“While our school system is challenged by events of the past, this school board is focused on the future, both academics and finances,” said Woody Koppel, President, Orleans Parish School Board. “We look forward to continuing to work with the Working Group to develop effective and transparent solutions to these very real fiscal problems.”

The Working Group determined from preliminary work that the School Board faces significant financial challenges in the immediate future. The Board is saddled with significant costs related to retiree health benefits, workers’ compensation, and other litigation and pre-takeover obligations (Legacy Costs) of about $6 million a year and lacks the capacity to pay for them out of operating revenue. Additionally, the School Board will deficit spend another $6-8 million to operate its schools and its central office. It is clear that the other expenses for the school system will far outpace revenue next year unless the School Board makes major changes.

The Working Group encourages the OPSB to take the following actions as the first steps to address these fiscal challenges:

• Make the tough decisions to balance the budget. The School Board should begin making the tough
  decisions required to balance its 2009-2010 operating budget (exclusive of Legacy Costs). The School Board
  should start the budget process now to allow time to adequately consider and implement needed changes.
• Utilize funds reserved for the payment of the CDL to cover Legacy Costs. The School Board should use
  the funds reserved for the Community Disaster Loan (CDL) to pay for Legacy Costs, while also managing
  these costs to reduce them. The School Board received a CDL from FEMA following Hurricane Katrina.
  There is currently a fund balance in place for the repayment of this loan should FEMA not forgive the loan.
  However, if forgiven, the CDL funds would provide a repayment source for Legacy Costs over the next ten
  years at least.
• Require fiscal impact statements. The School Board should require the administration to provide fiscal
  impact statements for all proposals that come before them. Fiscal impact statements allow the School Board
  to make an informed analysis by weighing the need for the proposal against the proposal’s effect on the
  OPSB budget.

“Reducing OPSB’s operating deficit is critical to the financial health of the system,” said Leslie Jacobs of
EducateNow!

The Working Group members are:

• Grover Austin, contractor for Louisiana Department of Education
• Rick Conway, Frantzen, Voelker, and Conway Investments, LLC
• Leslie Jacobs, Educate Now!
• Janet Howard, Bureau of Governmental Research
• David Marcello, The Public Law Center
• Farhad Patel, Jenner & Block, LLP—Counsel to the Cowen Institute (Chicago, IL)
• Cleland Powell, Whitney National Bank
• Lee Reid, Adams and Reese, LLP
• Pete Rosenbaum, Jenner & Block, LLP—Counsel to the Cowen Institute (Chicago, IL)
• Nash Molpus, Tara O’Neill, Andrea Caldwell, Cowen Institute.
  

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