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School District 51 budget ax to swing

Mesa County School District 51 has long ranked near the bottom in per pupil funding in Colorado, a victim of an allocation formula that gives more weight to districts with more or fewer students and also funnels more money to areas where teachers face a higher cost of living.

Due to the lower level of funding per pupil, the budget cuts affecting every school district in the state are particularly tough to swallow in Mesa County.

School District 51 revenue totalled $151.8 million for the 2009-10 school year, fell to $147.6 million for 2010-11 school year and likely will shrink to $138.4 million for the 2011-12 year. Consequently, the district could have to cut expenses by

$12.1 million for the upcoming school year. To make the picture even more grim, the revenue for next year includes expenditures for capital construction. The revenue stream for previous years didn’t include capital construction. By comparison, even the higher revenue stream of 2009-10 was $60 million below the national average for school districts.

“How can you expect a better than average educational system when you spend less than average?” asked Melissa Callahan deVita, executive director of support services for School District 51.

Some business people are sympathetic with the district’s plight as it seeks to improve results despite declining revenue.

“Are there a lot of problems with how we run the ‘public school’ system? Sure. But we’ve got to give them funds to do the job,” Doug May, president of May-Investments in Grand Junction, stated in an e-mail response to a Business Times request for input from local business people.

But other business people might ask why even an average expenditure is warranted, particularly at a time when public education is under scrutiny and per pupil spending at public schools is often higher than that of private schools.

Callahan deVita said she doesn’t approach school budgeting in the same way as a lifetime public sector accountant might approach the situation. She formerly worked as a private sector accountant, a partner in the respected firm of Pricewaterhouse Coopers. She also ran her own business.

Callahan deVita said she came into the school system expecting to see some waste. But she, and local business people who visit her office, discovered they can’t find the waste they expected to see in the budget. She said what some might view as waste can be expenditures that help produce a good school system for children and their families.

“Do we need to heat the buildings?” she asked. “Do we not review the teachers? … From a leader looking at my employee base, I want to retain and recruit the best people I can to teach my children.”

At this point, Callahan deVita said the district doesn’t have much choice as to where it cuts. “Eighty-five percent of our cost is employees and benefits,” she said. “We can have fewer people and we can pay the people we have less.”

Partly due to public pressure and partly due to the local district philosophy, cuts in the past two years have focused on administration and departments not directly involved in classroom instruction.“Last year, we did have less people at administrative levels,” she said. “We were spending 83 percent of our revenue on the classroom. Now it’s 87 percent. That tells you where the cuts have come from.”

But the cuts are about to hit the classroom in a significant way. Of the 80 employees expected to retire this summer, District 51 plans to replace 38 or fewer.

At the same time, the student population is declining, but not enough to reduce the number of classes. Student enrollment peaked at the equivalent of 20,513 full-time students (kindergarten students count as half students) in the 2009-10 year, and is projected to slip to 20,188 by the fall of this year.

In a nutshell, the budget will have declined 17.9 percent over a three-year period while student enrollment will have dropped 1.3 percent.

School District 51 Superintendent Steve Schultz has already proposed about $5 million in cuts, including staff reductions that affect teachers, counselors, psychologists and school resource officers. Plans include a reduction in utility expenses and an increase in athletic fees. A second round of about $7 million in cuts has yet to be released.

Callahan deVita said if the next round of cuts were made entirely outside of classroom services, the district would have to eliminate four areas: instructional support (including psychologists), central services, general administration and business services.

Drawing another comparison to the private sector, Callahan deVita said no large organization can operate without some administrative and business expenses. Such positions as school principals and accountants are necessary to function.

A few sources of funding are in flux as well, further complicating the process of figuring out what to cut where.

Amendment 23, a constitutional amendment approved by voters, requires state legislators to increase K-12 public school spending by inflation, as measured by the Consumer Price Index, plus 1 percent. However, that amendment is due to sunset next year, eliminating the yearly guaranteed increase.

In reality, lawmakers started working the system to eliminate those guaranteed increases nearly two years ago. The state legislature raised its contribution to public education under Amendment 23, but then subtracted more than the increase in a creative accounting move, Callahan deVita said.

District 51 has received federal stimulus funding through the American Recovery and Reinvestment Act over the last two years. But those funds will likely disappear in 2012.

Finally, legislation endorsed by then-Colorado Gov. Bill Ritter in 2008 has backfired. The Legislature voted to freeze the public school mill levy used to calculate local property taxes across the state. In Mesa County, average home prices had risen more than 50 percent in the previous eight years. Consequently, many people in the Grand Valley protested the mill levy freeze amounted to a tax increase without voter approval. Since 2008, though, home values have fallen dramatically. Because the Legislature forbade itself from raising the mill levy to compensate for declines in value, the school district portion of property tax bills (about half of a property owner’s yearly tax bill) will be lower in 2012 than it was in 2010.

Across the state, the local districts’ share of per pupil funding was $2.07 billion in 2009-2010. It will be an estimated $1.88 billion in 2011-2012. State funding is also declining, from $3.52 billion to $3.23 billion over the same period. And yet, total public school funding continues to rise each year, hitting an estimated $5.95 billion for 2011-2012. So who’s making up the difference? Simple — the local districts pay the other $836 million, projected for 2011-12, by cutting expenses. The cutting began at local districts in the 2009-10 year, with local reductions reaching $130 million. That grew to $365 million in reduced spending in 2010-11. The federal stimulus funds helped, totaling $63 million for the school year that ends this month. Local districts are not counting on the stimulus funds for the upcoming year.

The adjustments have resulted in a decrease in local funding per student. In the 2009-10 year, per pupil revenue in District 51 topped out at $6,713. In 2011-12, it’s projected at $6,002.

While ranking near the bottom in per pupil funding, District 51 stands at 95 percent of the state average per pupil, Callahan deVita said.

A business person might ask why the district should bemoan its fate when many private sector companies also collect less revenue and try to do more with fewer employees. Employees face increased workloads as well as the prospects of small raises, wage freezes or even pay cuts.

This is where education is a different animal, Callahan deVita said. When a business faces declining revenue, it can work more hours, sell more products or even create new products. As the local economy bounces back, private businesses sometimes realize significant increases in revenue and profits in the course of one or two years. School district employees can usually count on raises each year, but the increases are often small. And when there’s a big uptick in the local economy, the raises don’t usually rise at the same rate as in private business, she said.

And in a private business, a drop in revenue usually corresponds with a decrease in customers the business serves, said Jeff Kirtland, public information officer for School District 51. In the school district’s case, the revenue decline isn’t associated with a similarly proportional decline in the number of students the district is required to serve, he added.

Callahan deVita said the district also is hamstrung by government regulations, such as the requirement the district retain its current $14 million expenditure for special education. “We do not have the flexibility to reduce funding anyplace,” she said, adding that private business people are often free to reduce spending wherever they see fit.

But there’s some flexibility in seeking new funding sources. The district is already meeting with community leaders to establish a nonprofit District 51 foundation. Callahan deVita said. And the district plans to pursue more grant dollars.

In late April, the Colorado House passed a measure that restored about $90 million of the $250 million cut from schools in the original version of the act. The Legislature was still deliberating school funding as of press time.

For now, though, the $12.1 million in local cuts represent real dollars and real people, from teachers to students to business people in the local workforce.

 

 

About
Mike Moran has worked as a news and sports reporter, and news manager for the past 30 years, in markets that include Rochester, New York; Colorado Springs; Panama City, Florida and Monroe, Louisiana. He also teaches Speechmaking at Mesa State College and assists his wife, Toni Heiden, in managing her real estate company in downtown Grand Junction. Mike is active in Kiwanis Club of Grand Junction, the Mesa State MBA Alumni Committee, Habitat for Humanity, the United Way and the Botanical Gardens of Western Colorado.
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Posted by on May 4 2011. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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