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Budgeting Challenges Facing the Morgan Board of Education

Article Date: 
27 July, 2012 (All day)

The following is a compilation of Campus Connections I submitted to The Morgan County News in late April and early May.  Slight changes have been made based on recent board actions and budget updates since that time.  It is rather lengthy, but I would encourage you to read it in its entirety.
Since 2008 our country, state, and county have been dealing with the longest recession in our history.  The longevity of the crisis has taken a toll on all of us.  Our schools are no exception.
In 2008 the district received $6,740,256 in combined revenue from the state and federal government for our K thru 12 program.  In 2009 we received $6, 971,874 from the same sources.  From 2010 to the present these funds have steadily declined.  In 2013 the projected revenues fell to $5,858,201 creating a deficit of -$1,113,673 when compared to 2009.
In 2008 the district had an enrollment in K-12 of 2,187 students and a teaching staff of 117.  In 2012 the district has an enrollment of 2,429 students and a teaching staff of 120.5.  We now have more students, a slightly greater staff, and significantly less funding.
The district has focused during this period of time on keeping class sizes manageable through various sources of stimulus money, saved funds, and capital transfers.  Most of these sources have now run their course and the reserves no longer exist.
There are two basic categories of funding in the district budget; the Capital Fund and the General Fund.  Capital Funds are earmarked for buildings, land, and upkeep.  General Funds are earmarked for salaries, benefits, supplies, textbooks, etc. Capital Funds are only generated from local property taxes while General Fund revenue is approximately 20 percent local property tax with the rest coming from state income tax.
In 2010 the state legislature gave districts the ability to transfer Capital Funds (buildings) to the General Fund (salaries and supplies).  The district has done so, with $375,000 being transferred from the Capital Fund to the General Fund in 2010 and 2011, and $667,000 in 2012.  The district has judiciously used these funds and presently has a fund balance of $300,000.  The board has authorized the release of $150,000 from this fund to help balance the 2012-13 General Fund proposed budget and has earmarked another $150,000 in anticipation of another challenging budget year in 2013-14.  The legislation allowing such transfers has now expired.
Many constituents have erroneously assumed that General Fund money has been supplementing Capital Fund money.  This is simply not the case.  Just the opposite has occurred; Capital money has been supplementing the General Fund.
In 2010 and 2011 the federal government awarded the district $882,525 in stimulus money.  These funds went directly to help cover decreased state funding to the General Fund and were expended in 2010, 2011, and 2012.
The State Office of Education and our local board have worked hard trying to walk a tight rope in hopes of the economy picking up and revenues from income tax increasing at sufficient levels to maintain the regular K-12 program.  As we are all well aware, the economy has not cooperated.  While the state legislature in the past session tried hard to increase funding to schools, they were unable to generate enough new income to counteract the damage of the past five years.
The Morgan Board of Education has enacted a series of budget cuts that protect the integrity of the classroom, limit the losses to personnel incomes, and protects the interest of local taxpayers, many of which are also suffering from the economic woes of the present.  We join a number of districts throughout the state facing similar financial challenges. 
In a series of sessions from April to the present, representatives from the administration, the Board, the teaching staff and support staff have worked together to determine ways to reduce costs and protect the integrity of the education experience for our students.  This has not been an easy assignment.  The following cuts and adjustments have taken place to this date:
Adjustments in administrative assignments saved the district $55,535.  For the past 15 years elementary teachers have been given 10 non-contract days for preparation.  For the 2012-13 school year four and a half days were cut saving the district $68,459.  For the 2013-14 school year the remainder of these days will be totally eliminated and elementary teachers will be given preparation time during the school day while the students receive instruction from super skills assistants in P.E., music/art, computer technology, etc.
• For several years, teachers were paid for six professional development/planning days prior to or during the school year.  The state withdrew these funds in 2010, but the district continued paying for two extra days the past three years.  These days can no longer be funded.  This has saved $68,238. 
• Administrators have had their contracts cut by two days saving the district $6,561. All support staff work days have been reduced by two days saving the district $19,303.  Post retirees that have come back into the system to work in our district will no longer receive a 401K benefit at a savings of $13,324.  Four custodians have also agreed to have their work year reduced by eight days at a savings of $6,222.  The board will also be taking a reduction in their compensation saving the district at least $2,400.
 
Teacher supply budgets have been reduced by 5 percent, saving $9,700.  The state legislature actually reduced funds for the Optional All-day Kindergarten by -$17,500 to the district.  At the same time our enrollment for kindergarten has grown for the 2012-13 year.  By eliminating the full-day kindergarten and increasing the number of regular kindergarten classes by 1/2 teacher, we actually reduced kindergarten class sizes and saved $24,800.  Kindergarten students with specific needs who would have qualified for the extended day program will receive additional assistance as needed.
• Travel costs have continued to increase, especially in terms of fuel purchases.  In 2008 the state awarded the district $524,892 to the transportation fund.  We estimated only receiving $507,115 in 2013 - again, more students and more miles, but less funding.  High school students who participate in extra-curricular activities including athletics and school-sponsored clubs will be charged a $25 travel fee for each sport they participate in and once a year for club membership.  This will generate approximately $15,000 to help cover fuel and driver costs.  All field trips will have to be covered by the sponsoring school and their fund-raising activities.  In the past, the district has only charged the schools for mileage for these outings.  This will save the district approximately $8,000.  
• Changes in employment including retirements, resignations, reductions in force, and reassignments will save the district $73,711.
• The individual school community councils have also stepped in and have agreed to employ Land Trust funds to cover costs in their individual schools that meet the criteria for their school improvement plans.  To date this totals $84,125. These funds are generated from state mineral leases and other similar contracts between the state and private enterprise.  
Cuts and adjustments for the 2012-13 school year total $445,678 as of this writing.  From 2009 to the present the board has reduced expenditures in the General Fund by $1,085,289.
These cuts and adjustments do come at a cost to the educational system.  Our student population continues to grow and we desperately need sufficient funding to meet the needs of all students, programs and staff.
The board has balanced the 2012-13 proposed budget.   The projected General Fund Budget Revenues total $13,350,000.  Projected General Fund Expenditures total $13,350,000.  Unfortunately, this budget does not include contingency funds for unexpected emergencies and expenditures.
In forecasting the 2013-14 district budget the board anticipates another year of cuts.  They may very well be forced to implement drastic reduction-in-force actions in order to balance the budget.  The district is already running as lean as possible and further reductions will increase class sizes in virtually every school.  Without the necessary teachers and support staff, our children’s classroom experiences will suffer.
What can be done to curtail the downward spiral and begin to lift the district back to the pre-2008 era of funding?  A lot depends on the United States’ economic recovery progress, Utah’s economic trends, and Morgan County’s population and business growth.
Locally, existing homes and the construction of new homes do not, at the present time, generate enough revenues to support student growth.  Over the past 20 years the county has become a bedroom community to the Wasatch Front. People live in Morgan, but work and do most of their shopping elsewhere.  Districts that have been able to weather the economic storm have a healthy mix of homes and businesses.  Morgan needs more local businesses and compatible industry.  Morgan needs to also support the businesses already established in the area.
This past legislative session over 120 bills were introduced related to education.  Some legislators are eager to micro-manage public education and earmark funds for their particular interest, but seem reluctant to fund schools at acceptable levels.  When the dust settled in the 2012 session and all of the verbal rhetoric was ended, Morgan School District only received a net increase in state revenues for the General Fund of $33,500!  That was not enough to cover ongoing costs, let alone meet the needs of increases in fuel, utilities, retirement, etc.
The federal government must get spending under control.  All governments within the State of Utah must balance their budgets; the federal government should at least attempt to reduce expenditures to match revenues.  Public schools do rely on assistance from the federal government and this is not likely to change, but much of the crisis we are experiencing in this state and county is a result of decisions made at the national level.
Finally and reluctantly, the district has to take into serious consideration other taxable avenues to generate revenue.  Morgan is only one of a handful of districts that does not have a voted leeway.  This leeway can generate additional revenues for the General Fund.  Districts around us have this leeway and are using it judiciously as need requires.
Just like the nation, many local residents are struggling to make ends meet and yet some are doing quite well financially.  Many parents are willing to pay for more of their child’s education, but what about senior citizens who are on fixed incomes?
Whatever happens, the next year or two will be difficult ones for the district.  We can keep our fingers crossed that the economy rebounds, but at the present time it seems that any recovery will be slow and painful.  The upcoming national elections will have a major influence on the way the ship sails.  State and local elections could also have an impact.
The Morgan Board of Education will conduct a Truth in Taxation Hearing and a Budget Hearing as part of their regular board meeting on Aug. 14.  At that time the board will review historical budget information from 2008 to the present.  They will discuss the possibility of making further cuts to the system as well as taking a vote on whether or not a tax increase is justified or necessary for 2013.  They will also consider the possibility of taking to the public the option of a voted leeway.
Contrary to rumor, the board is not considering cutting or eliminating programs in the arts, trades, or extra-curricular areas at this time.  Other ideas may be generated as a result of the interaction in the meeting.
The work session will begin at 4 p.m. in the district board room, followed at 6:00 P.M. by the regular board meeting.  The Truth in Taxation and Budget Hearings are scheduled for 7:30 p.m.  The public is invited and encouraged to attend. Depending on the number of attendees at the meeting, it may be moved to a larger venue at Morgan High School.
The Morgan Board of Education is determined to work through this difficult time in a reasonable and responsible manner.  They appreciate the input of staff members and the public as they move forward with the decision making process.