Haywood Schools prepare for the worst as it awaits funding word from state
Haywood County Schools will cut its budget by $900,000 next year, plus tap its cash reserves to the tune of $1.5 million to soften the blow of what would otherwise be even larger cuts.
“This is a draft. We may have to go back and cut more,” Haywood Superintendent Anne Garrett said, when presenting a summary of the school system budget to county commissioners last month.
Haywood County Schools has a total budget of $64 million. Funding comes mostly from the state and county, both of which base the schools’ appropriation on its student body.
Haywood Schools had 170 fewer students last year than the year before, which in turn led to less state and county funding. That’s been the main driver behind the budget cuts, which are projected to include:
• Eight fewer teachers. Fewer students reduced the need for as many teachers.
• Seven floating teachers assistants. Every Kindergarten and first-grade classroom will still have its own dedicated teacher assistant, but a “floating” assistant funded at each elementary will have to be cut.
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• Three school secretary positions.
• $40,000 in classroom supplies and materials.
Despite 170 fewer students in a year’s time, that isn’t the whole reason for budget cuts. State education funding per student — regardless of the actual number of students — has declined.
“We are spending $500 per student less than we were in 2008,” said Matt Ellinwood, education policy analyst with the N.C. Justice Center nonprofit.
It’s unclear what state funding will be for the coming school year. For the first time, the Department of Public Instruction won’t even wager a guess to help schools
“They just don’t know what is going to happen,” Haywood School Finance Director Angie Gardener said. “Things are up in the air so they aren’t providing those planning numbers.”
With the Department of Public Instruction unwilling or unable to issue budget projections, school systems have been on their own to postulate what might be coming down the pike.
“All this could happen, none of it could happen, or more of it could happen,” Gardener said, pointing to the list of projected budget cuts. “Right now, we are having to make assumptions.”
The $900,000 in projected cuts come despite a 2 percent budget increase in county funding. Haywood County commissioners agreed to up county funding of public schools by about $290,000.
However, it is quickly sucked up by the ever-climbing cost of doing business, namely obligatory human resource costs for teachers and staff covered by county dollars in lieu of state dollars.
The state doesn’t provide enough money to adequately staff the schools. So the county ponies up big bucks — about $16 million each year — to round out school employees. It comes up to around 55 teachers and 110 support staff, including school secretaries, janitors, maintenance workers, IT crews and cops in schools.
The 2 percent bump from the county to the school barely covers the higher health insurance, higher retirement plan costs and salary raises according to a school system presentation to county commissioners. The state lawmakers have bandied about various pay raise proposals for teachers, and whatever they arrive at the school system would have to do provide the same for the 55 teachers who are paid with local county dollars in lieu of state dollars.
There’s another wild card in play: how many students a new charter school projected to open this fall will siphon away from the public schools. The school system loses at least $7,000 in state and county funding for each student that leaves the public school system to go to the charter school.
Some of the increase from the county won’t stay with the school system, but will instead be passed along to the charter school.
Cushioning the blow
The school system has tapped its reserves routinely for three years now to prop up its budget.
It’s routinely been cutting as well. But the cuts have been lessened thanks to the reserves.
Schools everywhere were dealing with state budget cuts, but not all had a safety net to the extent Haywood has.
But it wasn’t dumb luck. School leaders intentionally squirreled away the reserves with an eye toward leaner times. In particular, the school system had socked away some of its federal stimulus money that was given out during the early years of the recession.
“When we had the federal prop up or bailout or whatever you want to call it, we very wisely set some aside to increase our fund balance,” explained Assistant Superintendent Bill Nolte.
Bailout money rolled in over a three-year period. The idea was to give schools a federal bailout to save teaching jobs, in light of the cash-strapped states everywhere cutting education budgets.
Haywood Schools indeed put some toward saving jobs that would otherwise be lost due to state budget cuts, Nolte said.
“But we also worked very hard to have some fund balance to help us when the funding cliff occurred,” Nolte said.
Hedging against the so-called funding cliff — when the federal bailout money quit rolling in — has indeed saved the school system, as it’s dipped in to that pool consistently for three years now.
But the school system can’t rely on the reserves forever. The well has nearly been drained.
There was $5 million in reserves at the end of the 2012-2013 school year. There’s now $3.4 million. By the end of the coming school year, reserves will be down to only $1.9 million.
That’s when the time of reckoning will finally be here. While the reserves won’t be completely gone yet, the school system needs a threshold of at least $1.5 million to buffer against the ebb and flow of cash coming in and cash going out. Appropriations from the state and county don’t perfectly align with when payroll is due or other expenses must be paid.
There’s a chance the school system may not draw from reserves as much as it has planned to. In that case, the time of reckoning could be another couple of years, instead of only a year away, but it’s eventually coming, Nolte said.
