Superintendent’s Corner

Budget, planning season in full swing



The budget and planning season is here. In thinking about how to best craft this message, a childhood memory came to mind. One of my favorite family times was attending the Ringling Brothers and Barnum Bailey Circus, the high wire act was always suspenseful. They seemed to figure out how to navigate while maintaining balance, carrying poles, and pacing slowly along the high wire high above everyone. Sometimes there were obstacles added that caused greater apprehension. I think about the planning and likely teamwork that made this feat successful and possible. Our budget challenges going forward seem to be just like this image in that we prepare the budget taking into account varying impacts and put our collective best plan forward. As we focus our attention on continuing to build the best education possible for our students, I will provide you with updates on our school budget process that can be accessed on our district webpage. For the 2018-19 school year we will need reduce expenses by just over $1 million. We are seeking input from staff and community. Three “big” challenges for our district are enrollment, increase in PERS rates, and increase in the needs of our students.

Enrollment

We look back and try to project forward where we will be with enrollment. We look at birth rates, enrollment reports, and community changes. We know if all the students born in our community attended school here, we would see a different picture. In conversations with local realtors we know that new home sales are coming from folks who are retired. The current cost of housing and low supply of affordable rentals in our community create a challenge for families to find housing. We do continue to monitor new construction. Enrollment for our district K-12 students (not including our two charter schools), in 2016-2017 we declined 96 students, and in 2017-18 we declined 101 students. Previous to these two years, we had one year of gaining 17 students (2014-15), and two years (2013-14 & 2015-16) of losing 10-11 students. Our current enrollment not counting charter schools is 2,794.

Public Employees Retirement System (PERS)

As we plan what is happening with PERS is important. Here’s a brief explanation of the situation. PERS has a pool of money used to pay retiree benefits to PERS members. This money comes from primarily two sources; payments into PERS from employees and investment earnings (they take the money they collect and invest it). Investment earnings fluctuate but the average earning form 1970 – 2016 was about 10%. The PERS pool of money would not be enough to pay all retirements should every PERS eligible employee retire tomorrow. The gap between the money on hand and the money needed to pay all eligible retirees is called the unfunded actuarial liability (UAL). PERS has a budget panic when the UAL goes above 30%. All PERS calculations are based in part on a best guess of earnings in the future. PERS is lowering that best guess on earnings from 7.5% to 7.2%, which equates to $530 million statewide. Since the best guess number is going down, the money PERS collects from employers has to go up to get at or above the panic point. For all school districts this means a 6% increase beginning July 1, 2019, with the size of our current payroll this increase is approximately $943,000 per year.

Special Education Costs

Meeting the needs of our students comes with significant cost to our General Fund. An example of the stretch that happens with our budget is through “high cost.” In 2015-16 we had 60 students that cost the district $2.6 million to educate; while the reimbursement request to the state was over $900,000 we received $576,000. For 2016-17 we had 70 students that cost $2.9 million to educate. Our request this year for reimbursement is $853,000, we are estimating receiving half. This process runs a year behind. High cost students are those who exceed $30,000 to educate. The state has a pool of funds we can request money from to help cover these costs. This is one example of what makes budget planning challenging. The difference between what we are paid per student and potentially reimbursed by the state still leaves $1.5 million unfunded that comes from our General Fund.

Gathering Feedback

The challenge for us is to continue to move forward keeping programs in-tact. In fact, we need to grow programming. This is a very challenging time and at the same time we have an excellent team, supportive community, and collaborative culture that will figure out together how to navigate the future. Please let me know your thoughts, ideas, and questions.

Michelle Johnstone

Dallas Superintendent



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