PJ Caposey: School Funding, Rural Education, ESSER Funding, Superintendent Shortage

Hayley Spira-Bauer: Welcome back, everybody to the Learning Can't Wait podcast. We have a fan favorite, not just a hostess favorite, but a fan favorite. Back with us today, we have PJ Caposey, the superintendent of Oregon CUSD 220 and Meridian CUSD 223 in Illinois. You heard me right? Two districts. Welcome back PJ.

PJ Caposey: Good to be here. Thanks for having me.

Hayley Spira-Bauer: PJ, are you sleeping these days?

PJ Caposey: Well, when the head hits the pillow, I am sleeping very, very well.

Hayley Spira-Bauer: I bet. I bet. Do you wear one of those Oura rings that tells you about your sleep every day or do you not need it anymore?

PJ Caposey: Well, no, I used to wear, what was the watch one? It was the strap that was real popular four years ago during Covid, but then I started obsessing over it and it actually became quite unhealthy for me. So no, I do not.

Hayley Spira-Bauer: Okay. Probably for the best,

PJ Caposey: Probably

Hayley Spira-Bauer: For the best.

PJ Caposey: Well,

Hayley Spira-Bauer: Given that you are a busy person and you have a lot going on between your two districts that you are currently leading, I thought it would be good to just jump right in. Does that sound good to you?

PJ Caposey: Amazing.

Hayley Spira-Bauer: Alright, so PJ, you've already answered all my questions in your first appearance on the podcast with some really great fellow guests. So I'm going to dive right into the topic at hand. Your episode is part of our funding miniseries. It's going to go live very shortly for a reason. We are in 2025 amidst a very uncertain federal fiscal environment that is trickling down to our states and local levels and vendors, school leaders, nonprofits. They all are up in arms about what's coming down the pipeline. So I want you just to describe from your vantage point over in Illinois how you would describe the current K-12 funding landscape.

PJ Caposey: Well, the same way that people describe the housing bubble that was about to implode in the early aughts, we're in a really bad shape in Illinois and I don't feel like enough people are talking about it. Actually, I've been writing an article on it but haven't quite got it to publish at this point, but we're in a bad spot.

Hayley Spira-Bauer: Tell me why you specifically name Illinois being in a particularly bad spot, because I think this is both a federal and a local conversation. So what factors are making it particularly challenging for Illinois?

PJ Caposey: So Illinois is among, if not the most property tax dependent state on school funding. And so what we've had over the last five to seven years is almost unprecedented growth in property tax. The term that we use is EAV, which is equalized assessed valuation. For those that don't live in superintendent business manager world, that is what we look. So EAV has had this unprecedented rise. The issue is that with that, so two have every expense. So in my district currently we've had about a 32% EAV rise over five years, which is crazy to think about that we're getting a third more money from our primary revenue source. But teachers salaries have gone up 36%. In the same time support staff has gone up 42% and insurance has gone up 30. So actually we're in a worse position despite the best financial conditions we have ever had in the state of Illinois. ([03:19](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2FMHi4iX7jfrlH6469iGIQBfIVScLcgprXScxfIqFaOT-HSVnoe7QFWFCZp82ex0IIfiFPak8GbnV8I1VdrbKVSswlQ0U%3FloadFrom%3DDocumentDeeplink%26ts%3D199.78)): Now, districts that are less dependent on residential property are a little bit safer and this because commercial property tends to not be as volatile, but in districts that are small or small town or rural, we're in a really, really dangerous position because on top of that, you throw on the fact that we have a teacher shortage in Illinois, particularly again in small town rural areas. So what do we do to combat the teacher shortage? Well, we pay our existing teachers better to try to get to retain them, and then we throw all these incentives at all of it costs, all of it costs. And so we're spending more and more and more, and the increase that we're seeing in EAV is just not sustainable. And so we are in a really precarious position, I think four to eight years out. It's not tomorrow, but around the corner, it's a pretty dangerous spot.

Hayley Spira-Bauer: How are you preparing for that?

PJ Caposey: So it's interesting. So collaboratively, I guess, so what I'm challenging my board to do is we have to have a strategy. So the good news is that both of my districts, we've worked really hard to be fiscally responsible and we've got a lot of money in the bank. And so the term that I use in my board often is a runway. So we've got this long runway and I've got probably 10, 11, 12 years left in my career in Illinois before I go do the retirement double dip thing that people do. I could maybe even run out those years. So it's not a tomorrow issue, but it's definitely a strategy issue. And so for me, I'm trying to walk my board through, there's really two ways that solve this. One is we do less for kids, we reduce programming and we reduce staff or we increase taxes. ([05:12](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2FBQmRHUsuUAb_VHj5OkbHO5taYbEGTivbqmxZk6t62fOvKUEcFVfpbaOEsOk1R10y6AlOXLdPtGDRDkSGE9mqwlODZPk%3FloadFrom%3DDocumentDeeplink%26ts%3D312.82)): Those are really our two sustainable ways out of the problem that's emerging. And nobody likes either one of those two options. So a lot of times it becomes, alright, punt one more year deficit, spend one more year and we'll see if something changes with the state or a new influx of money like ESSER or whatever comes through and we can offset expenses. But we're in a pretty dangerous spot I think in Illinois and small rural, and again, we're not going to feel it for a few years, but it's just things are escalating at a rate that are not sustainable. And even with that escalation aren't attracting new teachers. So even that solution isn't really solving the problem.

[05:00] **Hayley Spira-Bauer:** A lot of what you named here is specifically local to Illinois and to your own districts. How are you thinking about the federal policy changes and what would you advocate for to help stabilize funding for public schools?

PJ Caposey: So when I think of the federal side, I'm curious more than anything else, right? Because we haven't really heard specifics on anything. So there is a world in which nothing really changes except how the money flows through. And then there's a world where it could be catastrophic for many districts. Now my districts are under 5% federally dependent, and so again, we could survive, right? We'd be all right.

Hayley Spira-Bauer: I think that's such an important point. Can I just pause you for one sec, PJ, because I had Rita Fernan, Vito on from Penn, GSC, she's a funder, whatever. She does all this work around financing and she specifically called it out. I don't think everybody realizes that most schools are not extremely dependent on federal funds for their regular operations. They have a percentage of their budget which amounts to millions in many cases depending on the size of the district, and yet it's fractional, it's small fractional amount. So I just want to pause for a second and call that out because I do think there's maybe some confusion around that it does impact other aspects of school operations, but I think it's an important note

PJ Caposey: A hundred percent. But the thing that I always add as a caveat to that is it's usually our most traditionally underserved kids that are most impacted by federal dollars. And so not serving those kids isn't really a choice. So if the federal dollars go away, then it's just going to be supplanted by the local dollars, which means that there's going to be a shortfall somewhere else. I am curious just simply from the standpoint of I have some colleagues that just don't care yet. I have some colleagues that are in a full panic about it. And so I am just very curious if all Title and IDEA money just starts to flow through health and human services, then for the most part we're pretty substantially the same now even if everything just flows through in terms of Title and IDEA money, there's still a lot of competitive grants that the Department of Ed is housed for years that have allowed for innovation, that have allowed for creativity, that have allowed for additional services and programming. And there's no mention as to what that might look like. So there's probably going to be loss in this no matter how it happens. I just don't know. I'm curious as to what the plan is. I am pretty plugged in. I haven't seen a plan. So if I haven't seen it, I assume most people haven't. I'm sure there is one. I'm not saying there isn't. It's just not out there in really any circle that I'm aware of at this point.

Hayley Spira-Bauer: Yeah, it's not publicly available information. So you need two things there that I think are really important, which my next question was going to be about equity and how we serve all learners particularly are most vulnerable with all of these changes. So you called out that yes, it's only 5% of our budget and that 5% typically impacts our most vulnerable populations, our students with disabilities, our multilingual learners. How do you as a school leader protect those students? What you said, is it as simple as what you said that you turned to the local funding to make up for that you apply for grants? Is there more to it?

PJ Caposey: Sure. There will eventually be more to it if it becomes kind of a crisis situation. But for the most part, no, we will just figure it out for those kids, not necessarily first, but also pretty much first, and then you build around it. So it's the same way if anyone's ever worked in a junior high high school, when you build a master schedule, you build around your most, your populations that are special first, when that might be, whether it's your advanced and gifted kids or your special needs kids or your multi-language kids, you build around that and do everything else. The budget's not really any different with that. It's not like all of a sudden we're going to be like, oh yeah, we're just not going to do FAPE. No, the kid is still going to get access to what the public education they need, but that might mean now we're going from 21 in kinder to 24 because now we have to pull a teacher from here to there to make it work. ([10:14](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2F2K4RlCLnLFoMUhFLBq8_Cx_AXZVLzPaHsQX1nqGQYo7e2PD2daDxoSDFB7s0qQr_0yOoCnHVo-AaXaeE408Eth88PpM%3FloadFrom%3DDocumentDeeplink%26ts%3D614.61)): So that's what people I think miss in translation is that we can cover these gaps. It just means less direct service to the collective whole. So anytime that we're doing any type of reduction in expenditure, that means it's just going to be less services. Now, in some cases in particular, even with some ESSER money, we added some services that didn't show any ROI. So not every service that you don't offer anymore is catastrophic, but it is by definition less services. And so that's something that I think the public at large and particular teachers, I don't think we do a very good job as superintendents helping teachers understand this scope at all. And my perspective on that comes from I teach grad school, and so I teach finance to lots of really well-intentioned teachers who want to become administrators, and there is no base level of knowledge. And so it is literally 101 stuff to get 'em started so that we can get into more complex stuff so that I can teach the class. And so the overall education on this is so slight right now.

[10:00] **Hayley Spira-Bauer:** That's why we're doing this miniseries because I do think there's so much ambiguity that everyone's kind of talking in circles, and if I've taken anything out of the conversations that I've been having for the miniseries, it's that we have to just be slow and methodical and think about the future, not just this moment because the impact, like you said is coming. You mentioned briefly that in talking to your colleagues, some folks are not concerned about it right now. Is that the largest general sentiment? What are you picking from your peers in Illinois and around the country as you talked to 'em about their approaches upcoming?

PJ Caposey: I would say that there's somewhere between anxiety and excitement. There's some people that really think that the Department of Ed maybe doesn't serve this huge purpose, and it's going to be more local control in the truest sense that this happens. So there's excitement, there's anxiety, there's some people that the job's hard and other stuff's happening. And so it's like when it's important, I'll know. And until then, I'm just going to keep trying to improve reading scores, which I'm not faulting somebody for doing that, but it's, people have different levels of intriguing concern on this because quite frankly, I mean, I know, again, we know a lot of people, nobody really has any influence over this. So it's the old Covey circle of influence thing. We're not really in the circle of influence on this decision, so might as well just chill out until it comes out and then we'll figure out what's going on after that.

Hayley Spira-Bauer: Do either of your districts pursue revenue generating opportunities such as facility rentals or partnerships with local businesses to source for alternative funding models? I've been hearing a little bit about that recently as well.

PJ Caposey: Yeah, I mean, we take advantage of any revenue generation that we can. I mean, we even own farmland and lease it right? Mean. So we take advantage of any revenue generating opportunity we can. It just all becomes in total, in a good year, you maybe get, you pay for two teachers, so it's not changing the trajectory of your district, but you are stop gapping, right? So right now in Oregon, we're shopping banks because our scoreboard broke and I need someone to pay for a scoreboard. And so part of that, instead of wanting to pay for the scoreboard, I'm trying to see which bank, if we take our business there, will buy us new scoreboard. So we're always looking for different ways to offset expenditures, but none of them, there's a district I read about, and I'm not sure where it was at, but went way down the road back in the day of mining their own Bitcoin, that would've been a self-sustaining prophecy that would've worked out good. Most of the revenue generating things that districts do aren't mining Bitcoin. So we're basically, again, trying to find a teacher or two salary if we get it right.

Hayley Spira-Bauer: Oh my gosh, I just quickly Googled that. One of the things that I just found when I Googled it as you're speaking was about the town doing it illegally in the state and the space under this is probably not what you're talking about, but in the space under a school in Massachusetts, that's probably not what you're talking about, but that also is fascinating. PJ, I'm talking to you and we're going so rapid fire through these questions that the listeners are getting a real education here from you. And I'm going to change course again to something you mentioned three questions ago, which is that you talked a little bit about ESSER funds and them drying up and not everything showed ROI. So I'm curious about what data you are paying attention to from that dried up ESSER funds and what really lasted that you tried out during the pandemic that really made an impact on the community that you serve?

[15:00] **PJ Caposey:** So in the two districts, they took dramatically different approaches with the ESSER, which is kind of interesting because kind of living a case study, two case studies and size of one. So not necessarily that you can draw massive conclusions, but in the district in Oregon where I'm sitting right now, they essentially banked every ESSER dollar they could use. They essentially used it, the money that came in, they paid existing things off and did whatever, which to go back to what I talked about before has given us the runway. So now if things get bad, the four or five years that got bought was essentially bought with ESSER back in the day, and that was before I got here. So that's like thank you to my predecessor for giving me, and he did that intentionally. That was a thoughtful move on. His part is he knew he was entering retirement. ([16:00](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2FmfxtVB9SPhVWaEfBjxlRTB8ORZRgedSxaQ1qloYN8jpR09O0to0etn9DWdrZfydzwsKHBLOfnLSyVe8rNMaaQ1_Vk6g%3FloadFrom%3DDocumentDeeplink%26ts%3D960.47)): He wanted to leave it better than he found it. So shout out to Mahoney in Meridian. We attacked things. We went after things that we didn't know. I mean, the thing that probably has had the greatest ROI is that we added, and this is something that I even wrote articles saying, this is probably not the best use of because of adding personnel, because then at some point you have to cut personnel. But the actual human counselors we added had the most profound impact on what we do. It decreased our referrals and increased our retention. So everything has gone better with the actual human support. And then we also added some automated SEL supports that worked quite well as well. In terms of everything else that we added or supplemented, there were some that had ROI and there were some that had limited ROI. But one of the things that we do in our district intentionally is when we purchase something, we say, this is how we're going to measure effectiveness of it, as opposed to just being like, yeah, we're just going to add stuff and maybe it'll work. ([17:01](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2Fp7mnu3tRKR3WQMVfYp_XrO3Zw2lXQfpIhWl-AghbVzDPYFxjXAoEEf0IYJNSfD3GoIlufnE0CDF4UcvhL7BAxcojp4w%3FloadFrom%3DDocumentDeeplink%26ts%3D1021.61)): Let's find out. Right? No other business works that way. So in schools, we often forgive ourselves the responsibility of measuring return on investment. Now, when you have 37 levers you pulled at once, it is really hard to tease out what that looks like. But there are ways, and not everything is student achievement, right? Some cases it was just use. So one of the outage industries that boomed and then collectively failed with ESSER money was 24/7 online tutoring. Now, I mean, some are still successful, but I'm saying overall there's this huge spike and then fall for us, that wasn't about test scores for us, that was just usage. And what I actually said with ROI is we will know at the end of this contract if we are to extinguish the contract and people revolt, it worked. And if we are going to extinguish the contract and nobody cares, it didn't work. That's the ROI measurement we're using. So I am not talking sophisticated data schema at that point, but we talked about it upfront. That's what we knew we were going to measure based on.

Hayley Spira-Bauer: It's funny you say that, and I think that's so important. I was talking about this exact topic on a podcast the other day that I was a guest on. If you are purchasing products and your vendor is not saying to you what outcomes are you expecting, you should probably walk the other way. So cool to hear the other side of the coin because that is absolutely aligned with how I think we all should be approaching the work that we do. I just want to pause for a moment on the important point you made about purchasing, investing in school counselors to support the mental health needs of your students. I mean, our students are more depressed than anxious than ever, more suicidality than ever before. This has repercussions not just on how they perform in school, but also in their longitudinal success. Very cool that that's where you spent your money over at Meridian. Also very cool how Oregon spent its money, and one may have more financial implications, immediately obvious, but the other one has probably really long lasting effects on children's lives. So I respect both decisions deeply.

PJ Caposey: It was an interesting time. It was an interesting time. I have one other thing that I want to bring up in terms of that I think is getting lost a little bit in all this financial stuff.

Hayley Spira-Bauer: Please.

PJ Caposey: I think superintendents are about to make an absolute boatload of money.Not that we don't already make decent money, but superintendent shortage is dramatically under-reported on right now.

Hayley Spira-Bauer: Yeah,

PJ Caposey: I just did some consulting for a county that had three open superintendency and had one applicant for all three.

Hayley Spira-Bauer: Wow.

PJ Caposey: Just did some work for another district who historically is a very high performing district, both academically and athletically, which you can say what you want to about it, but an athletically high performing district matters. And they had three applicants in the district. I'm leaving Meridian. They interviewed six candidates of the six five already have superintendencies. So there's a supply and demand issue happening with superintendency. And when this bubble bursts and you have to lay off your friends and make tough decisions, even less people are going to want the job. So I think it's going to be this really interesting thing because when we said that there's not this education, part of it is mistrust, and what is going to, my projection is what's going to happen is soup salaries are going to escalate quickly while we're also reducing staff and people aren't going to be able to wrap their brains around it. ([20:48](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2FQGof3GdwYE2-OJJSU9SzlEC6ZDpKu_gEGE_AJbbbao6i6DwTFW0vDBrfat4qzbXYipNtoBDsoe3kD8OP4KFmZ02qhpU%3FloadFrom%3DDocumentDeeplink%26ts%3D1248.46)): And that is going to be the nature of the marketplace. And I just don't see a scenario where that doesn't happen based on supply and demand. So it's really an interesting time, and I don't think we're having enough conversations around what that actually looks like and how it manifests. Because if the economy goes down at all, one of the things that I tease my suburban friends about all the time is in there. Nobody cares about what they make because they're not a 1% earner. Now, I have buddies that are making that are 45 miles away without necessarily great resumes making double my salary and nobody cares. But people really care about mine because a 1% earner in my town, what does that look like when we have 30 kids in a classroom and my salary keeps going up? How is that? How is society going to grapple with that? And I really think that that is, we're on the precipice of that and no one's having that conversation.

[20:00] **Hayley Spira-Bauer:** That is a good question and a really good call out PJ that I haven't heard yet in this dialogue. I'm grateful for it. I'm curious, how do you think this plays out? So the salaries increase while we're having to maybe increase class sizes and cut extracurriculars and all these other components, what happens next?

PJ Caposey: It depends on, so this goes back to federal politics. If it becomes much more of a voucher system, then it becomes a competitive marketplace. And then those that are bringing in kids to their district monies, following kids, there's all kinds of different ways that it can play. And there's a million dominoes. So I'm not exactly sure how it goes, but I do think what is going to continue to happen is, so for me, I've had the opportunity to go to lot statistics throughout the country. I've chosen to be where I've raised my kids, and I've chosen that because this is where I want to be. It may become so uncomfortable to be there that what will happen is the halves will continue to get richer, which means high quality soups will go to the suburban areas where nobody cares about what the salary is making and the EAV is stable, or the property values are stable because they're commercial. And then all of your small rural, I think could be in real, real trouble. And again, there's organizations like National Rural Education Association, but I think rural small town education in the next decade, particularly in property tax dependent states, it is going to be rough.

Hayley Spira-Bauer: So PJ, I have my final question for you here. What is the biggest misconception about school funding, given that you say we need more education, the biggest misconception about funding that you wish more people understood?

PJ Caposey: I think it shifts from district to district. Well, lemme just start. I'll start at the very simple. This is what I literally am teaching on tonight for my grad school class is thatwe can't do more without more taxes.And I know that sounds dramatically oversimplified, but schools run, lemme change that. Public schools run on tax, and whether that's tax that comes to the state and flows back down or that's local property tax. So we can't say we need to do more without somehow having more, which means more tax, which is, I know a dramatic oversimplification, but people don't get it right. So people are literally running for school board all over the place on more programs, less taxes. ([24:39](https://www.google.com/url?sa=E&q=https%3A%2F%2Fwww.rev.com%2Ftranscript-editor%2Fshared%2Ffi5PrnamRdJ6cSRbvFoMKCGCAHTAW3l5xutTkq-2m1R9iKKZOEUKagAUbv2w2049cc-rsfXHcz0Oh5xpJJ0PgxAiFsU%3FloadFrom%3DDocumentDeeplink%26ts%3D1479.65)): We are one of the few industries that our level of success does not influence our level of revenue. Now, if you are in a voucher state or a state where the money follows the kid, then sure, maybe it does. But in Illinois, I'll say for this, quite literally, the worse you perform, the more money you get because then additional money flows to you to provide support. And so I'll look at a district similar size, similar demographics, we're performing here, they're performing there, they get more money, and now it makes sense why the money flows there. But that just is what it is. So people, I think there's a mess of misconception as to you perform while you get more money. Nope. The only way that you get more money is to increase taxes.The bottom line is the bottom line is the bottom line.And if we start there, then I think we can have an educated conversation about what services we want to provide to kids.

[25:00] **Hayley Spira-Bauer:** PJ Caposey, as always, this has been an enlightening conversation and you kept up with my New York rapid style pace. Thank you so much for coming back to the Learning Can't Wait podcast and sharing your thoughts, your ideas, your predictions about the recurring funding environment for schools.

PJ Caposey: I wish it was a little bit more upbeat and positive.

Hayley Spira-Bauer: Listen, sometimes the reality isn't pretty and you have to be really wide-eyed about it, which is why we're having this conversation.

PJ Caposey: Thanks for having it, and thanks for leading it and starting the conversation.

Hayley Spira-Bauer: Yeah, of course. Thanks everybody for tuning in today. I.