Notes provided by: Jan Stetson

School committee budget sub-committee meeting
October 9 2003

Present:

Suzanne Owayda, Paul Schlichtman, Jeffrey Thielman, Susan Sheffler, Joani LaMachia, Martin Thrope, Joanne Gurry, Dick Fanning, Jan Stetson

Presentation by EdNets President Richard Trembowicz:

[ed. Documents provided by Mr. Trembowicz:

• Security Policy Summary (Word document)
• Privacy Policy Summary (Word document)
• Fundraising Analysis Notes (Word document)
• Fundraising Analysis (Excel spreadsheet)
• Presentation to School Committee (PowerPoint presentation)]

Main points:

EdNets is a startup. Provides following benefits to participating school districts:

Professionally designed website templates for schools, combined with secure hosting for the sites. Enable schools and school districts to use web technology effectively. Enables schools to put sensitive information such as grades and student IEPs on the web because of effective security.

Provides fundraising revenue to school district via rebate program and website promotional revenue. That is, rebates on purchases from participating retailers and ad revenue from ads on websites. Lots of build in mechanisms to keep advertising content from view by students younger than 16.

Business model is basically to deliver a geographically localized, high income population to local and other interested retailers. By definition, people involved with a local school website live around there, so local merchants have an incentive to sponsor.

Response and questions:

Paul Schlichtman
Q. Made some comments regarding Arlington demographics pointing to two high-speed internet providers in town and high level of internet involvement/usage, ending up saying essentially, “You are in the right town.” Asked about sensitive information like student grades, student IEPs—where does that information physically resice?
A. We act as a mirror site from Arlington schools server via VPN from a school server. The town/school department makes the decision whether to include that information on the site. If the schools put it up as part of the site, the EdNets system draws on it. Pointed again to “banking-level security” for data. Anything the school system does on its own “You won’t have our level of security.” And the town can opt out of any sensitive information we don’t want included.

Susan Sheffler
Q. She was looking at a handout of some projected numbers. She commented that the numbers for level of citizen involvement looked “very aggressive”. How did he propose to realize those numbers [ed. I don’t have the actual numbers to hand at the moment.]
A. We expect to rely on PTO members place direct 1:1 calls to 15 families a year. There is a tool that creates a call list from the parent database [ed. I’m not entirely clear on this.] then the PTO places calls to tell people how to register. People in this community will get a call to bring people into the program.

Susan Sheffler
Q. Commented that you will need that 1:1 contact.
A. You’ll be using our tools to manage and generate response.

Susan Sheffler
Q. How do you make money?
A. From the rebate program—they get 25 percent of rebate. 80 20 fundraising spoit paid on websites from sponsors.
Ad revenue, sponsorship additional things like consumer companies consumer surveys they donate for surveys done (ick)

Martin Thrope
Q. With due respect, the security tools sound great, the revenue sounds great, these are interesting concepts—however, you’re a startup. What happens if you flop after we have become dependent on your success? [We are relying on the revenue stream from this plan, and they fold and that revenue goes away.] How do we find out about you and your potential viability? We’re in bed with you, will we have a problem.
A. Promised extensive documentation of their credentials and business plan and so forth.

Martin Thrope
Q. Is technology viable? Are you viable?
A. This is not new technology.

Martin Thrope
Q. The implementation has to be viable.
A. You’re likely to see potential investor at a meeting like this. If you’re making money, we’re making money. Least of your concerns is that you’re making money and we flop.
[ed. This may be a little disingenuous. Their program might be a success in Arlington, b/c this is such a tech-savvy town, and generate revenue for us, but not do so in enough places overall to keep EdNets afloat.]

Jeffrey Thielman
Q. Tell us about yourselves.
A [ed. Bios of the management team are on the EdNets website.]

Jeffrey Thielman
Q. How long have you been around?
A. Sales started last February. Two districts have signed on, Swampscott and Melrose. Others are in earlier stages of consideration, Georgetown, North Reading, Ipswitch, Burlington.

Jeffrey Thielman
Q. Are there others doing what you propose? Who is your competition?
A. No, nobody really. Companies trying to provide web services to schools have flopped b/c schools have no money. Companies providing fundraising for schools have done better. This concept provides both. Most competitors are in higher education space, because there’s no money in K-12. We’re targeting suburbs with high per capita income and high computer use. We’re not going to start with the City of Boston.

Jeffrey Thielman
Q. How much venture capital?
A. A half million, then another million and a half, then six and quarter. [ed. I don’t recall the time frame for these amounts.] We will give references. Innovation entails risk, our job is to help you understand the risk and manage it.

Discussion of fees:

Paul Schlichtman opened by asking who’d seen the Nightline segment. Said he’s disturbed to his community the poster child for bad school financing. Makes him angry. Arlington is not a poster child for deterioration of other municiapal services. That’s going to resonate. We need to make that point.

Some possibilities suggested regarding fees included:
-Charging a fee for all non-mandated programs
-Charging fees for only some programs
-Charging fees to a level where all non-mandated programs are fully funded by fees, which raises issues of fairness and inclusion. Local independent sports clubs etc. don’t have mandate/responsibility to include all Arlington kids.
-Eliminating some programs rather than charge fees for them

Paul Schlichtman suggested, go in the exact opposite direction and eliminate fees for athletics, and make athletic programs dependant on an athletics override.

It was mentioned that school sports are “a good deal” for parents, e.g. many pay for hockey up to 9th grade when school programs kick in.

Agreed that Jeff Thielman and Susan Sheffler will work together to draft a fee proposal starting after the Wednesday October 10 FinCom meeting, which will provide some needed numbers. Also need to get hard numbers as to how much programs actually cost.

Goal to get proposal ready and call public meeting by end of October to early Nov ember.

2004 budget:

Paul Schlichtman asked Dick Fanning for general remarks. Fanning said, looking at 5.5 million shortfall. Susan Sheffler [looking at something that said] in 3 years the schools may be back to last year level. That’s unacceptable.

Jeffrey Thielman said Joani is working on a q&a workshop on closing a school through the outreach committee.

Jeff commented that work on fees and restructuring O’Neill delegated to this committee. Paul to contact Mr Tosti re a discussion of O’Neill. Martin Thrope commented that priorities now may not be the same as they were when O’Neill was developed.

Discussion of budgeting process. Martin Thrope arguing there is another way to increase funding: stop doing something here so you can do something else there. As valid as thrashing it out of the parents. Go through the entire budget and have the administration justify each item. He’s suggesting an item by item review. Who chooses to keep a secretary in the superintendents office rather than crossing guard. Is that the choice we want to make? If you don’t look at the whole picture, you can’t make these choices intelligently.

Response from Paul Schlichtman and others that such a review might not be effective use of time, energy, resources.

Response from Jeff Thielman that it’s the responsible thing for the committee to do. When can we go through budget in detail with a fine tooth comb? A good board needs to do that.

Discussion by Dick Fanning about 0 based budgeting, which Marty Thrope suggested was the same as what he was suggesting, just starting from 0 rather than present, existing budget.

Discussion of need to involve newly-hired CFO in the budget process, seek his expertise re: approach, suggest he explore comparisons with other communities.

Committee had requested current budget status, what was available was a summary booklet from June. Joanne Gurrey commented on the difficulty of providing accurate, up-to-date numbers given numerous changes late in the game, and lack of staffing to do the work.

Conclusion that next meeting needs to involve new CFO for discussion of budget.

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SPOT is an organization of concerned parents and community members who are interested in full, equitable and sound financing of our public education.
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