04-09-05 Special Item 11III
1 RESOLUTION NO.
2
3 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
4 CITY OF SOUTH MIAMI, URGING THE MIAMI -DADE LEGISLATIVE
5 DELEGATION TO PERSUADE THE FLORIDA LEGISLATURE TO
6 UTILIZE THE 2004 -2005 DISTRICT COST DIFFERENTIAL (DCD) UNTIL
7 SUCH TIME THAT A NEW AND EQUITABLE CALCULATION FOR THE
8 DCD MAY BE DEVISED BY A QUALIFIED, UNBIASED THIRD PARTY;
9 AND PROVIDING FOR AN EFFECTIVE DATE.
to
11 WHEREAS, the 2004 session of the Florida Legislature endorsed a new calculation of
12 the District Cost Differential which purportedly adjusts educational funding for school districts
13 both by cost of living and wage levels; and
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15 WHEREAS, the entire calculation through a statistical technique allegedly adjusts wage
16 levels for the value of amenities and trades wage levels for the imputed value of those amenities
17 for wage levels; and
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19 WHEREAS, the validity of this economic theory has not been independently reviewed by
20 peer economists and educational finance experts as well as the appropriateness of the statistical
21 technique utilized for such an adjustment; and
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23 WHEREAS, the Florida Legislature never explicitly changed the statutory basis for the
24 DCD calculation but merely implicitly endorsed the use of the revised calculation by the Florida
25 Department of Education; and
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27 WHEREAS, the use of the new amenities - adjusted DCD damages and decreases
28 educational funding for the Miami -Dade County Public Schools by over $26 million during
29 2004 -2005, $58 million during 2005 -2006, and $112 million when fully implemented in 2006-
30 2007; and
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32 WHEREAS, similar damaging effects result from the use of the revised DCD in 38 other
33 Florida school districts, including Broward, Palm Beach, Volusia, and Monroe Counties; and
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35 WHEREAS, the cumulative effect of this new version of the DCD will seriously impair
36 the ability of affected districts to hire and retain qualified teachers and to offer a sufficient
37 variety of educational programs to meet the diverse needs of its clients; and
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39 WHEREAS, the quality and viability of public education is a necessary component for
40 the economic well -being and development of a community and region; and
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42 NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND CITY
43 COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA:
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45 Section 1. That the Miami -Dade Legislative Delegation adopt as a major priority and
46 non - negotiable objective for the 2005 legislative session, freezing the calculation of the DCD at
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its 2004 -2005 level and the commissioning of a study by an unbiased, qualified third party to
review the validity of the amenities - adjusted DCD and to recommend a new more equitable
calculation methodology.
Section 2. This resolution shall take effect immediately upon approval.
PASSED AND ADOPTED this day of April 2004
ATTEST:
CITY CLERK
READ AND APPROVED AS TO FORM:
CITY ATTORNEY
JAMy Documents \resolutions \Resolution DCD04.09.05.doc
APPROVED:
MAYOR
Commission Vote:
Mayor Russell:
Vice Mayor Palmer:
Commissioner Wiscombe:
Commissioner Birts- Cooper:
Commissioner Sherar:
Talking Points
District Cost Differential Update
• The Florida Legislature modified the methodology used in the calculation of the District
Cost Differential based on a report published by the Bureau of Economic and Business
Research, University of Florida.
• The report raised serious questions as to the underpinning logic behind the economic,
political and mathematical assumptions used to develop the suggested funding
redistribution. The gist of the new economic theory is that the monies allocated to fund
real cost of living differentials between counties should be reduced because the value of
property is artificially driven up by the desire to live and work in certain counties. The
term used in the report is Amenity Adjustment.
• Other concerns with the methodology are as the use of average wages within counties
as the impact of immigration upon those wages and the average wages of teachers were
not factored into the calculation.
• There is a concern over discarding a tried and true index, the Florida Price Level Index
(FPLI), as the chief driver of the DCD calculation. The FPLI is based on the national
Consumer Price Index (CPI) calculation and has been modified several times over the
years by the Bureau of Economic and Business Research to make it a more
comparative tool between Florida counties.
• The DCD was created to rectify inequities among the districts related to their cost of
doing business. The DCD has been studied year after year and has been determined to
be an equalizing factor for all districts. In fact, as recent as two years ago, an outside
consultant hired by the State's task force, and chaired by then Senator Horne, studied
the DCD and substantiated its purpose. Furthermore, the policy has been validated by
the Florida Courts.
• The School Board of Miami -Dade County, Florida has sought legal relief through the
court system due to the draconian modification to the Florida Education Finance
Program (FEFP), which will have drastic fiscal implications to the district's students and
community. The District filed a temporary injunction to the implementation of the
amenities - adjusted District Cost Differential (DCD), in an attempt to delay any changes
to the formula pending the court ruling on the issue.
• The temporary injunction was denied by Judge Kevin P. Davey. Counsel advises that
the motion was denied based solely on the Defendant's representation that the
Department of Education has procedures in place to restore lost FEFP funds if the
District prevails. The judge agreed to expedite the trial and work with parties in
establishing a trial date as soon as practically possible. However, at this time, trial is not
expected until late May or June.
• An action plan has been developed in an attempt to overturn the current amenities -
based Florida Price Level Index (FPLI) used for the District Cost Differential (DCD) for
fiscal year 2004 -2005 and distributed to the Board on July 23, 2004. The proposed plan
has several facets including academia, legal, administrative, legislative, and grassroots.
The plan entails obtaining experts in educational finance and economists to provide an
analysis and recommendations related to the University of Florida's Bureau of Business
and Economic Research report; contracting with legal counsel; engaging the South
Florida business community in our plight; a public relations campaign; as well as periodic
meetings with the Miami -Dade Legislative Delegation.
• Since filing the complaint, Volusia County School Board, Broward County School Board
and Palm Beach County School Board have voted to join the lawsuit.
• Financial Impact:
Year 1: 2004 -05 $26,857,146 loss for M -DCPS (includes CSR)
Mitigated by $14,231,828
One -year fix of approximately 50%
Yearn: 2005 -06 $58,604,842 loss for M -DCPS including CSR (no fix)
Year 3: 2006 -07 $102,778,181 loss for M -DCPS including CSR (no fix)
Superintendent of Schools Miami -Dade County School Board
Rudolph F. Crew, Ed.D: Frank J. Bolanos, Chair
Dr. Robert B. Ingram, Vice Chair
March 14, 2005 Agustin J. Barrera
Evelyn Langlieb Greer
Perla Tabares Hantman
Dr. Martin Karp
Ana Rivas Logan
The Honorable Mary Scott Russell Dr. Marta P$rez
City of South Miami Dr. Solomon C. Stinson
6130 Sunset Drive
South Miami, FL 33143
Dear Mayor Russell
The 2004 Florida Legislature passed a modification to the District Cost Differential (DCD)
component of the Florida Education Finance Program (FEFP) formula which resulted in a reduction
of funding to high -cost districts. The FEFP is the funding formula that funds public education in
Florida. Since its inception in 1973, the formula has contained a variable to adjust each district's
share of funding to reflect differing costs of living or price level differences faced by each school
district's employees. In the past, the Florida Price Level Index was annually calculated by the
Commissioner of Education measuring the cost of purchasing five specific market basket of goods
and services in each county such as food, housing, transportation, ;apparel 'and health, recreation
and personal services.
The modification to the calculation of the DCD was based on a report prepared by the University
of Florida: In lieu of the traditional market basket of goods approach to determine differences in
costs of living among Florida's 67 counties, the methodology uses average wages, excluding
teachers, along with some "statistical smoothing." These modifications are referred as an Amenity-
Adjusted Index.
The new Index is based on the premise that, even with higher costs of living, teachers will offer
their services at lower salaries in order to remain in a high amenity community. Amenities are
characterized as beaches, sunshine and nightlife. The modifications do not include teacher
salaries in the computations because it was viewed as a variable which school boards could control
through collective bargaining and potentially artificially increase in order to generate a higher DCD.
The modifications are being phased in over a three -year period beginning with the current school
year. This change will result in high cost districts losing millions of dollars that would have flowed
to them under the traditional DCD. In year 1 of its implementation, 2004 -2005, the District
experienced a net loss of $12.6 million. The initial loss was $26.8 million, however, due to the
leadership of the Miami -Dade County Legislative Delegation a hold harmless was applied mitigating
the loss. If the ,policy continues as it currently exists, the District will lose $58.6 million in year 2
(2005- 2006), and $102.7 million in year 3 (2006 - 2007).
RECEIVE D
MAR 14 2005
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CITY CLERK'S OFFICE
School Board Administration Building - 1450 N.E. 2nd Avenue - Miami, Florida 33132
305- 995 - 1430- Fax 305- 995 - 1488 - www.dadeschools.net
The modifications resulted in a fundamental fiscal policy shift which will have long range impact on
the ability of high cost districts to provide an education for each of their students that is "equal" to
that provided in lower cost districts. The Florida Constitution mandates that every child have access
to an "equal" educational opportunity regardless of where he /she lives in the State. In order to
provide equity of educational opportunity, as required, the funding formula, FEFP, was developed
to recognize varying local property tax bases; varying program cost factors; varying costs of living;
and varying costs due to sparsely dispersed student populations. To review one variable of the
formula in isolation would compromise the equity of funding among the 67 school districts. The
School Board of Miami -Dade County has filed a lawsuit against the Florida Legislature challenging
the constitutionality of this modification.
1 sincerely appreciate your commitment to the welfare and education of the children of this County
and respectfully request that your governing body adopt the attached Resolution supporting the
District's and the Miami -Dade Delegation's efforts in restoring equitable educational funding to
Miami -Dade. Similar resolutions are currently being adopted by the Greater Miami Chamber of
Commerce (GMCC) as well as a number of municipalities within Miami -Dade County. For your
information, a Talking Points sheet is attached for use to present the Resolution. Additionally, staff
is available to make a presentation to your governing body, if needed.
Should you have any questions or need additional information, please contact Mr. Alberto M.
Carvalho, Associate Superintendent, Office of Intergovernmental Affairs and Grants Administration,
at 305 995 -2532.
Sin
Rudolph F. Crew, Ed.D.
Superintendent of Schools
RFC /AMC:Ibd
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Attachments
cc: School Board Members
Superintendent's Cabinet
School Board Attorney
Dr. Magaly C. Abrahante
Ms. Iraida R. Mendez- Cartaya
Ms. Tabitha Fazzino
Miami -Dade County Legislative Delegation Members
Mr. Ronald L. Book
Mr. Alberto R. Cardenas
Mr. Thomas A. Cerra
Dr. Richard H. Hinds '
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