Each spring the budget process begins with the Board establishing broad parameters for budget development. (Adopted 2-11-2021) The Administration follows the Board’s parameters and reinforces these parameters during actual budget development. These guidelines have been observed and incorporated into the 2021-22 Budget.
State revenue as a percentage of total revenue appears to have peaked in 2018-19 (71.4%) and will now comprise 67.1% of the District’s operating revenue, a decrease of 3.5% over the prior fiscal year (70.6%). The State is now 4.3% below the recent historical peak in state funding as a percentage of total operating revenue.
The State legislature has continued to increase education funding pursuant to the McCleary decision, however a large portion of this “new” revenue comes in the form of salary and benefit allocations, making the funds less flexible than local levy dollars.
The legislature has provided significant structural changes to the education funding for 2019-20 and beyond, which included a decrease in local levy authority (capped at $2500 per student or $2.50/1000, whichever is less & adjusted by CPI annually). This drop in local levy funding is coupled with new restrictions on what and how local levy funds can be used to support and supplement basic education.
The District is very close to its statutory 2022 levy authority of $54,000,000. This was possible given the passage of HB 1476 which allowed the District to base its levy authority on 2019-20 enrollment or 2020-21, whichever is greater. The 2021-22 Budget has a 2022 calendar year levy of $2,663.39 per student.
Due to pandemic driven enrollment decline the District had to reduce programs significantly, with a mid-year reduction in force of classified staff and a larger reduction 1 in force of both certificated and classified staff that was authorized by the Board on April 14th, 2021. The program reduction action rationale summary is provided as follows:
Enrollment Decline and Effect on Reserves:
As noted above the District has and will likely continue to face student enrollment declines due to the COVID-19 pandemic. (An estimated 1,652 students over a two year period). A decline in enrollment directly effects revenue that is generated on a per student basis from local, state and federal funding formulas. Furthermore, the District’s tuition based programs such as Food Service, Before and After School Care (BASC) and facility rentals have also declined significantly and do not drive the historical program revenue needed to keep self-sufficient. The District’s financial decline has been rapid, with a total beginning fund balance of $42.3M for 2019-2020 and an estimated ending fund balance of $27M for the current fiscal year. $27M represents a total fund balance of 7.8% of expenditures. Prior year equity balances of $42.3M or 13.77% of actual expenditures. The decline of equity reserves from $42.3M to an estimated $27M is $15.3M or a 36% decrease in reserve balances.
Uncertainty from Legislature and Federal Stimulus (As of 4-14-2021):
The program reductions before the Board today, assumes no additional hold harmless funding from the State legislature (as only the Senate Budget thus far provides this funding) and ESSER funds totaling $6.4M or $331 per student. A portion of ESSER funds will be supplanted (in allowable activities) to assist with the huge budget shortfall facing the District. The District finds itself in an unfortunate revenue position as the State House and Senate have yet to reach political/budgetary agreement:
No surety on hold harmless due to Covid-19 enrollment decline for 2020-21 (Senate is proposing a $1500 student minimum when combined with ESSER funds, which would net the District $20 to $22M)
No sign that we will not have continued enrollment declines for 2021-22 (K registration is down again) No financial assurances/direction for transportation funding for 2021-22. (The District has missed 2 ridership counts and will likely have reduced Spring ridership, effecting next year’s transportation revenue significantly ($6 to $7M unless the legislature provides funding)
No concurrence as of yet from the House on HB 1476 (This bill has yet to become a law but could allow the District to collects its full levy authorization.
Increased expenditures, enrollment decline, opening of new buildings, and more:
Why is there a need for a program reduction this significant? Given increased expenditures and as noted earlier a huge loss in student enrollment, the District is facing a “perfect financial storm.” Overall, the District was authorized to make reductions of just under $22 million. Following the close of the legislative session and the confirmation of hold harmless funding for enrollment decline, transportation, ESSER (federal stimulus) and the passage of HB 1476 the District was able to restore $4.2 million in reductions in counseling and social/emotional supports.
In order to keep staff and community informed and seek input, we offer several communication avenues: the District creates a budget website with a timeline and ongoing updates; the School Board scheduled time at each business meeting for legislative and budget updates (podcasted for the public), administrators met with key groups such as the PTSA to provide updates; the District asked for comments and suggestions via a budget e-mail account, and the District shared information via district bulletins and staff e-mail messages.