The Payson school board this week adopted an optimistic preliminary budget plan, with lots of problems in the fine print.
A flush of federal funding has provided something of a financial high in the face of big enrollment declines and worrisome state funding formulas.
Kind of like giving pain killers to a cancer patient.
Still, the board members made the best of an uncertain situation — with promised federal funding for the moment preventing the widespread cuts that enrollment declines and extra costs related to the pandemic might otherwise require.
The district has suffered a roughly 15% enrollment decline since the onset of the pandemic — roughly 300 students. The drop wiped away years of slow enrollment growth. In addition, about 15% of students have opted to remain full time in distance learning mode, which also costs the district funding.
The enrollment drop prompted the board to cut nine teaching positions. However, federal funds will provide at least temporary funding for six positions. The district may get millions in additional federal grants, which could restore the nine positions.
Currently, the district has about 119 teachers and an operating budget of about $18 million. The operating budget remains essentially unchanged, although the district will use federal grants to bolster the reserves against future cuts.
On the surface, the preliminary budget presented this week featured some big hits, including a nearly $900,000 decrease in budget capacity due to the enrollment decline. Losses include a $400,000 reduction in funding due to distance learning, a $540,000 cut to eliminate nine teaching positions, a $300,000 budget freeze and other cuts totaling some $2 million in a budget that this year totaled about $18 million. The new budget will come to $16 million in operating funds, but an extra $1.7 million in carry-forward money from the anticipated, but unspent federal grants related to the pandemic.
The district also this year got $250,000 in Forest Fees, money the federal government gives districts whose attendance area includes mostly federal land.
So despite the cuts, the budget includes a nearly 3% salary increase built into the salary schedule. Those salary increases amount to more than $300,000.
An additional installment of COVID relief in December promises to infuse millions more into the budget. In addition, the district could get millions more as part of the third major COVID relief measure the House passed and the Senate took up last week.
The federal money will mask the pain of the enrollment decline for at least another year.
The situation would have been even brighter if the state had followed through on an original promise to distribute all the education money it got from the CARES Act to school districts to fully offset enrollment declines. However, Arizona only partially covered the loss of 50,000 students statewide — including 300 in Payson.
The board will have additional budget hearings before June. By then, the state will have adopted its budget so the district will have a better idea as to what’s coming. Right now the picture’s not pretty, thanks to a minimal increase in state per student funding, a push for fresh income tax cuts, and a proposal to dramatically expand the voucher program to cover private school tuition. Gov. Doug Ducey has recommended against changes in state formulas to cushion the impact of enrollment declines.
Finance Director Kathie Manning detailed the changes in the preliminary budget, clarifying that many of the shifts remain contingent on actually receiving the promised federal funding.
So here’s a rundown on some changes facing the 2,000 students and nearly 300 teachers and staff on five campuses.
• Budget capacity will decline by $848,000: That’s based on the state’s per-student spending cap, with adjustments for the mix of students.
• The district will lose some $400,000 due to the lower rate the state pays for online classes versus in-person classes. That’s proved painful this year due to the weeks and months spent in enforced distance learning due to the pandemic.
• Payments into the state retirement system will increase only slightly — by roughly $20,000.
• The district’s health care premiums for employees won’t go up at all — a major bit of financial good news, considering the trends in recent years.
• The budget eliminated $49,000 worth of capital budget lines.
• Property and liability insurance will increase by about $23,000.
• The district will add two teachers at the cost of $120,000 at Payson Center for Success, a hybrid online high school program where enrollment has soared.
• The district will also spend $120,000 to add a bilingual teacher and a special education teacher, required by state formulas.
• The district will cut nine teacher salaries due to the enrollment decline, a savings of $540,000.
• The district will save about $100,000 by not replacing or shifting several part-time staff positions in health, transportation and classroom aides.
• The district will also save $44,000 on two extra temporary custodian positions. The district implemented enhanced cleaning methods during the pandemic, although later research showed the virus rarely, if ever, infects people from a contaminated surface.
On the other hand, the preliminary budget includes a much more cheerful list of potential increases made possible the December federal COVID stimulus package referred to as ESSER II. The money will probably show up in the next few months, with some used to cover expenses this year but most shifted forward into the upcoming budget year. So here’s the list of priorities for the $2 million the district has not yet received stemming from ESSER II:
• $250,000 to continue upgrading technology, with another $50,000 for software.
• $300,000 to cover transportation costs — which would likely include a new bus or two.
• $60,000 for an elementary school reading teacher, to help make up the big fall in test scores linked to the pandemic.
• $60,000 for a math intervention teacher at JRE.
• $950,000 to shift into other departments to cover COVID-related expenses.
• $300,000 for new science textbooks in grades K-12.
The district could get millions in additional help if the Senate approves the American Recovery Act. Manning estimated the so-called ESSER III could bring in between $2.6 million and $4.4 million for Payson. The board adopted the top priorities for that money should it arrive. However, Superintendent Linda Gibson said the board should consider putting most of the money in the contingency fund as a reserve against the big cuts likely to hit the district if enrollment doesn’t recover and the federal stimulus money dries up. The board-approved priority list for that money includes:
• Reinstate the nine teaching positions cut ($540,000).
• Add a social worker ($60,000).
• Get more science textbooks for K-5 ($139,000).
• Additional teacher pay ($17,000).
• Restore the added custodians ($44,000).
• Add a maintenance office tech ($52,000).