HCS grapples with tight budget
Haywood County Board of Education approved the 2025-26 budget on March 10. File photo
Haywood County Schools Board of Education passed its budget for 2025-26, and despite multiple years of contraction and yet another budget focused on offsetting losses and minimizing expenses, the school system continues to outperform other districts across the state.
But this year, administration says, the budget is as tight as it can get.
“We are as lean and efficient as we can be,” said Haywood County Schools Superintendent Trevor Putnam. “I’m just not comfortable going below that, and so we must seek out additional funding.”
The primary focus points for Haywood County Schools’ 2025-26 budget are to recruit, retain and support employees, limit expansion items in the local current expense budget and adjust the budget as needed to account for loss of ESSER funding, declining enrollment and associated issues with the Canton mill closure.
Several factors are impacting the creation of the 2025-26 budget for Haywood County Schools, including the loss of ESSER III funding which provided an additional allocation of $15,692,592 to Haywood County Schools.
“These funds were expended over four years,” said Finance Officer Leanna Moody. “We got these funds in the 2021-22 fiscal year, and they ended in September of 2024. So, we had them for three months this [fiscal] year.”
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Salary-related expenses paid with ESSER funds for the current fiscal year totaled $878,278. Haywood County Schools did not pay for newly created positions using ESSER funds, but some were used for remediation tutoring and to help offset some expenses paid for by local funds.
“That is a huge impact affecting our budget this coming year,” Moody said.
What’s more, Haywood County Schools lost 117 students this year and that reduction will be reflected in the 2025-26 fiscal year state, federal and local funding allocations.
Additionally, after the mill closure in Canton in 2023, Putnam was able to secure a $3 million grant from the North Carolina Department of Public Safety. Those funds were used to offset some local expenses for utilities, to the tune of about $1 million during the current fiscal year.
“We will not have those next year, so that’s a huge hit to our budget for next year,” said Moody.
According to Moody, utility costs have increased approximately $450,000 over a two-year period.
There are six separate funds that make up the total budget — the local current expense, local restricted funds, capital outlay, child nutrition, state public schools and federal grants.
The local current expense budget provides for a broad spectrum of school system operating costs which include supplies, repairs, utilities and contracted services, as well as instructional support personnel.
Because the school system is creating its budget prior to the passage of the new state budget, the development of the local current expense budget depends on certain assumptions that administration expects to see in the state budget. Those include a 3% salary increase for non-certified personnel, a 5% salary increase for certified personnel, a 7.65% employer matching FICA (Federal Insurance Contributions Act), 24.75% employer matching retirement and $8,662 annual costs for employer-matched hospitalization.
“Obviously the general assembly has not concluded their session,” said Putnam. “We’ve seen them release [a budget] as late as October, November, so there has to be some budget assumptions, and we typically calculate just a little high, in anticipation for any decisions they may reach.”
Moody said that there may be changes ahead for the employer matching rates.
“The North Carolina State Health Plan has a $507 million deficit, and they are currently discussing the best way to move forward with that regarding premiums,” Moody said. “They’re also discussing implementing a salary-based premium for employees. So, the higher your salary, the more you’ll pay for health insurance. That is being discussed and that sounds like that will go into effect, but there is no information available about what our matching rates are going to be next year. So that could substantially change. All those are unknowns.”
The anticipated county per pupil appropriation rate is $2,591.43 for the 6,370 Haywood County School students, plus 686 charter school students. This is up $81.57 from the county per pupil allocation rate of $2,509.86 in the current year budget.
The loss of 117 students has significant impacts on next year’s budget.
“I want to bring this into perspective,” said Moody. “If our ADM had remained the same, and we hadn’t lost those 117 students, our county appropriation this coming fiscal year would have been $18,544,273. So just the loss of those students, that’s a net loss of $259,000 to the school system.”
“The current funding formula provides a 3.25% per pupil appropriation increase; but however, due to the loss of the students, the total percentage increase will only reflect about a 1.81% increase in overall funding,” Moody Continued.
The fiscal year 2025-26 anticipated county appropriation is $18,285,134. This amount is combined with $345,000 in fines and forfeitures, $24,000 in ABC revenues and a $719,483.75 fund balance allocation to make revenues equal expenditures, for a total $19,373,617.75 local current expense budget. This marks the second year in a row that the school system has had to allocate more than $700,000 from its fund balance to balance the budget.
About 50% of local funds are allocated to instructional services. This year that amount is $9,883,350.81, up from $9.5 million in the current fiscal year. Moody says the increase is mainly due to salary and benefits.
Another 41% of local funds are spent to support activities that provide system-wide support for school programs such as maintenance, central office, operational support and liability insurance.
“This year’s budget is a flat budget; we’re not trying to increase anything,” said Moody.
About 9% of local funds go directly from Haywood County Schools to charter schools. That amount is increasing from $1,680,000 in the current fiscal year to $1,720,000 in the 2025-26 fiscal year.
According to the HCS administration, of the 117 students HCS lost over the last year, only 17 were lost to the brick-and-mortar charter school Shining Rock Classical Academy. The other 100 are assumed to have been lost to a mix of displacement, as well as virtual charter schools.
“Could be the impact of the flood, could be the result of the mill closure, but only 17 are [to Shining Rock],” said Putnam. “And a lot of times, we get those students back. Gone for now and back tomorrow. But far bigger than that I think are other factors, like I said the mill closure, the flood, and these virtual charters are rampant. I mean rampant. A new one pops up it seems like about every two months.”
Associate Superintendent Jill Barker said that many of the students who are attending virtual charter schools in Haywood County have never been enrolled in the Haywood County School system.
“But if they live in our county and they enroll in a virtual charter, then we have to pay for that,” said Barker.
For each student within a local school’s administrative unit who attends a charter school, North Carolina law requires the public school system to pay the charter school the amount equal to the school system’s per pupil local current expense fund appropriation for the fiscal year.
This is required even if the school is not located within the county, or if the student is attending a virtual charter school.
According to Barker, in addition to paying out for students attending Shining Rock, HCS is paying virtual charter schools in Raleigh and the eastern part of the state. Putnam estimated that roughly 20 of those students living in Haywood County and attending virtual charter schools had never been enrolled in Haywood County Schools in the first place.
Of the 686 charter school students in Haywood County, an estimated 38 attend a virtual charter school.
Moody explained that because charter school student numbers are determined during the first two months of each school year, even if students return to Haywood County Public Schools at some point during the school year, Haywood County Schools has to continue forwarding that student’s per pupil allocation to the charter school for the rest of the year.
“So, if they come in mid-year and the numbers fluctuate, which they often do, we don’t receive funding for those,” said Moody.
Chairman Chuck Francis said, “we need to fix that.”
“I think that it’s only fair that if that kid moves back to us or comes from them to us, then it penalizes us for the rest of the year, I don’t agree with that,” Francis said.
Other board members agreed.
“The money should follow the student,” Board Member Marla Morris said.
The anticipated local restricted funds are just over $3,000,000.
“Local restricted funds are not permitted for use in the current expense budget,” said Putnam. “This number varies based upon grant receipts. These funds are reserved for use and set forth by grant or policy guidelines.”
Capital outlay budget funds cover maintenance repair and renovation projects, equipment needs and capital safety support efforts throughout the school system. The requested capital outlay budget is $1.25 million.
This money will be used to replace the roof of the Bethel Middle School cafeteria for $150,000, replace an HVAC system at Clyde Elementary for $100,000, replace the roof of the K-1 building at North Canton for $60,000, upgrade the fire alarm system at Pisgah High School for $160,000, finish paving the parking lot at Tuscola High School for $300,000, install new controls for the HVAC units at Waynesville Middle School for $55,000 and paving at Waynesville Middle for $75,000.
Additionally, the system-wide student device replacement schedule for Chromebook will cost an estimated $350,000.
State public school funding provides for everything from repairs to contracted services, to instructional and support personnel. The state public school fund is the largest funding source for the school system and is based on the ADM of 6,370 students.
“We have no preliminary planning budget data from the state,” said Putnam.
So, the school system creates its budget using the current year allocation for state public school funds, which is $53,341,808.
Federal grant funds are restricted for use in federally regulated areas, including Title I, Title II and Title IV. The current year allocation of federal grant funds is $4,590,102.
Board members said that there has been a “lot of buzz” around the federal funds right now and asked Putnam whether he had heard anything regarding those funds.
“I’ve been asked that question,” said Putnam. “If you work in education long enough, you’re kind of immune or numb to that. We are used to a $15 pay rate minimum with no additional funding; we’re used to state money pullbacks, we will deal with that when or if we see it. It’s sad, but true, if you work in public education, you’re used to being shorted on money.”
“The bottom line is our revenue does not match our expenditures,” Putnam said later in the budget work session. “If you look at inflation in general it’s about 7% ... Yet not only are we not seeing an increase because of the loss of students, we’re seeing a negative residual. So, we’ve got to remedy that.”
The overall increase in the budget from local funding is estimated at 1.8%.
“If you look at an inflation rate of seven or eight percent, 1.8% [increase] is not going to cut it,” said Chuck Francis. “Because we still got the same number of lights to turn on, the same heat, and you know you say, ‘well, you can cut your teachers,’ but if it was all out of one classroom, that’s easy. We’re also mandated by how many teachers we get allocated for by enrollment, and mandated how many can be in a classroom, so you’ve got a double-edged sword. It’s not fair; we’re not playing with a good hand, in my opinion.”
Barker explained that while class sizes are mandated in grades K-3, there is no class size limit for grades 4-12.
“We started out at 26 kids, and we keep moving that number up. Our classrooms are getting really big and that’s because there’s no maximum, you can have 40 kids in a classroom. The reality is, they don’t fund that like they do in K-3,” said Barker. “What’s happening is because of this loss, we’re just getting huge classrooms.”
Francis said it might be time to start a conversation with the county about restructuring the funding formula, as well as certain costs to the school system.
“It’s great to have a funding formula but if the funding formula’s not working …,” said Francis. “I think we might need to be arguing about the electric bill. If there’s that much of an increase, and we didn’t get that much of an increase in our funding formula, then it’s not a realistic number to me.”
And while the school system has spent the last several budget cycles figuring out how to cut costs, administration say those opportunities may be at an end.
“I think we demonstrated a willingness to cut and trim where we could; we showed that two years ago,” said Putnam. “I’m no longer in that place. We are as lean and as efficient as we can be.”
Over the last few budget cycles, HCS has eliminated a high school director out of central office, it has eliminated half of what it normally contributes to lead teachers and reduced the number of teaching assistants.
“I can assure you, we are as lean as we need to be,” said Putnam. “I’m just not comfortable going below that and so we must seek out additional funding.”
Despite the measures impacting the HCS budget, performance has continued to increase. Testing data released in 2024 showed HCS ranked sixth in the state out of 115 school districts. That is up from its seventh place ranking the year before and 10th place just a few years prior.
“We have seen a rise in our scores during this; we’re looked at very differently now,” said Barker. “There’s a ranking that they give high schools when kids are applying to college.”
According to Barker two HCS students have already received Goodnight Scholarships at NC State this year, two more are still finalists and two other students are finalists for the Morehead Scholarship at UNC Chapel Hill.
“That used to never happen here,” said Barker. “We had six kids go to Governor’s School last year. Just the amount of success that our kids are having because of these academic programs, our partnerships with the community college, all those things.”
“A top tier school system should get paid top tier,” said Francis. “Time to renegotiate.”
The child nutrition program operates independently of the school system and its revenues include cash from meals and supplemental items sold, United States Department of Agriculture (USDA) cash reimbursements and USDA donated commodities.
“Our budget for the 25-26 school year shows an increase of 1%,” said School Nutrition Director Allison Francis.
The budget for the coming year is $5,558,306, and with revenues at $5,395,800, the child nutrition department will allocate $162,506 from its fund balance in order to meet expenses.
Labor and benefits make up 55% of the school nutrition budget, food and supplies make up 40% and overhead costs are 5%.
The USDA commodity rate that the nutrition department receives is $0.45 per lunch based on the previous school year’s lunch claims. Those funds are used to purchase commodity foods and farm-to-school produce.
The nutrition department gets reimbursed $2.84 for free breakfasts and $0.39 for paid breakfasts, as well as $4.54 for free lunches and $0.53 for paid lunches.
“87% of the meals that we claim are at the free rate and the other 13% are at the paid rate, based on our CEP [Community Eligibility Provision] standings for the school year, and we’ll get to reassess that percentage April 1 when I pull that data for next year,” said Francis.
The main increases in expenses are based on the increase in benefits and labor including the 3% increase for non-certified staff, as well as increases in insurance and retirement.
The proposed 2025-26 fiscal year budget for Haywood County Schools was approved unanimously during the March 10 meeting.
