The Douglas County School Board pored over the first draft of a proposed 2020-21 district budget on May 26 during a five-hour special board meeting where budgeting — with a focus on millions in suggested cuts — was the only topic of discussion.
District staffers are projecting a $30 million to $60 million budget deficit for district-run schools and programs spurred by the COVID-19 pandemic.
The draft budget is far from final but offered an early glimpse at what district finances might look like once whittled down in response to pandemic-related revenue losses.
“Although everything is being done not to impact our classrooms, the reality is that there will be an impact to classrooms,” Board President David Ray said. “The significant amounts that we are needing to reduce creates a ripple effect that just makes it inescapable for us to think we can do business like we did a few months ago.”
Directors asked staff to return with a new draft that lessened the impact of cuts on high-risk students, such as students learning English as a second language or children receiving free and reduced lunch. Directors also asked to place a greater share of the burden on departments.
Some directors felt the initial proposals focused too many cuts at the high school level.
The board expects another budget update on June 9 and will approve the district’s budget on June 23.
The wide range in the Douglas County School District’s deficit projection is a reflection of the many unknowns regarding school funding in Colorado, DCSD Budget Director Colleen Doan said.
The state’s Joint Budget Committee recommended slashing the equivalent of $577 million from K-12 school district funding in the upcoming year, Doan said, but how that will translate at the local level depends on what the state education department does with the school finance act.
In the 2018-19 school year, the school finance act provided for more than $7 billion in funding to Colorado school districts, according to the Colorado Department of Education.
State has choice of options
The state has several options for enacting the cuts, Doan said, such as repurposing local mill levies or increasing the budget stabilization factor to levels not seen since the Great Recession.
Public school districts in Colorado receive funding from numerous sources but mostly the Public School Finance Act, according to the Colorado Department of Education. The budget stabilization factor is a factor in the school finance formula created by Colorado’s Legislature folllowing the Great Recession, according to the Colorado School Finance Project.
The tool reduces funding for school districts proportionately and reduces state aid, balancing the state budget.
Doan presented three separate models of possible cuts to the district’s per-pupil revenue — 9%, 12% and 15% — and walked directors through a menu of 13 suggested areas they could choose to cut spending.
Doan said cutting per-pupil revenue does not impact the entire general fund, which comprises additional revenue sources. The general fund is roughly 77% per-pupil revenue this year.
“This isn’t a 9%, 12% and 15% cut to the entire budget,” Doan said.
Three-day furlough suggested
Staff’s first suggestion was an all-staff furlough of three days — which would save $6.1 million across all budget cut models.
The district could trim central and districtwide departments by reducing staff or cutting operational, non-salary budgets, she said. Aside from furloughs, this option proposed the largest cut, ranging from $4.9 milllion to $12.9 million in reductions, depending on the model.
Staff suggested reducing transportation funding for field trips and athletics, possibly requiring schools to charter those services on their own using fees or donations. That would reduce spending between $2.9 million and $4.7 million.
Doan said the district typically holds 1% of its general operating budget as a contingency, in accordance with board policy. Directors could choose to reduce that by a fifth to a quarter, she said.
Reducing overtime and additional pay is another option, either by prohibiting overtime alone or halting both overtime and additional pay, which Doan described as compensation for when employees go above and beyond duties. On the low end that could cut spending by $800,000 or on the high end, $3.7 million.
Some schools, although not all, have seen a reduction in enrollment but have not reduced staff accordingly, Doan said. Requiring them now to cut staffing to match lower enrollment could cut spending up to $2.9 million, according to the presentation.
The remainder of the 13 proposed cuts, such as eliminating mileage reimbursement or district-provided cell phones, would cut spending in the hundreds of thousands each.
Online petition aim at proposed cut
Staff’s suggestion to cut special program spending anywhere between $400,000 and $700,000, which includes International Baccalaureate programming, sparked ire with some community members. Kyle Lewis, a 2020 graduating senior from Douglas County High School, started a Change.org petition urging the district to preserve funding for IB programs. The petition garnered roughly 1,900 signatures as of noon on May 29.
Lewis is worried that cutting funding to the IB program “threatens the continued existence of the IB program in the district,” he wrote in the petition.
“Not only would this deprive future students of IB’s incredible opportunities, but it would end the program prematurely for the students already participating,” Lewis’ petition reads.
The district is also faced with $7.9 million in mandatory expense increases, Doan said, or costs it will face regardless of available revenues.
More than half, or $4.3 million, is a loss of projected neighborhood per-pupil count funding.
That means the pupil count for neighborhood schools is lower than the previous year and more funding is passing through the district to charter schools, as charters become a larger share of the district’s enrollment, she said.
Similarly, charter schools receive more of the district’s mill levy override dollars as they grow in enrollment. That will result in a $500,000 decrease to the district’s MLO share.
The district also expects a $1.5 million increase in special education school-based staffing and a $1.6 million increase to its employer-share of PERA rate costs.
Revenue ideas offered
To increase revenue, Doan presented suggestions ranging from increasing instructional fees, corporate sponsorships fees at athletic stadiums or facility rental fees. Increasing transportation fees, the daily fee for each ride, could raise the current cost of 50 cents to $1 or $1.50 a ride.
The school district does expect to receive federal relief dollars or already has from some programs, Doan said.
From the CARES Act, the Douglas County School District will receive $1.3 million that can only be used for COVID-19 response, and not to offset revenue shortfalls. The district has not received these funds yet.
DCSD has received $27 million from the Coronavirus Relief Fund, Doan said, but will not spend that money until guidelines for how it can be used are released.
The district also expects aid from the Governor’s Emergency Education Relief Fund, part of the CARES Act, but does not know how much.
Tracie Rainey, executive director of the Colorado School Finance Project, cautioned directors to budget conservatively this year and warned the worst impacts from COVID-19 may not come immediately.
“The out years when we had the Great Recession and the impact on K-12 came in years two and three,” Rainey said. “As anticipated by the governor’s office and by Legislative Council, they are anticipating the out years two and three to be harder than the current one.”
The budget will almost certainly need to be amended throughout the year, she said.
President Ray said the task is tall when schools were already underfunded before the pandemic.
“The reality is that even before this economic crisis, we live in a state where voters approve laws for a highly constricted government that is unable to effectively fund essential services and cannot save for a rainy day,” Ray said. “This has resulted in the Douglas County School District being underfunded by nearly $600 million in just the last few years.”
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