District's Assessed Valuation Per Student
By now, many of you have previewed or at least heard about, a budget presentation given to the Board on Nov. 17 (available via the District Web site). It’s not good news. We have a large deficit ($29.2 million) to balance before July 1, 2010. In a nutshell, here are the issues. In one day when the District split (from June 30, 2009, to July 1, 2009), we went from $2, 818 per student received from local property taxes, to $1,824. To make up this deficit for this school year, the Board of Education eliminated $9 million in jobs, raised $4 million through property taxes, and used money ($20 million) out of its general fund reserve (rainy day fund).
The challenge for next year (2010-11) is to cut $20 million in ongoing expenses. Some think we are replenishing the $20 million in our rainy day fund. Not true. We used the one-time $20 million to cover ongoing expenses. We also need to anticipate additional revenue shortfalls that may come from the State Legislature. The $20 million deficit for next year climbs to $29.2 million when you add in $6 million (best-case scenario) in anticipated revenue shortfalls from the State, new operation costs to open Herriman High, and anticipated increases in health insurance.
The Nov. 17 presentation outlined $42.7 million in possible revenue sources to balance the deficit. Some possibilities are much better than others. For the next several months, the Board of Education will be reviewing the possibilities, watching the State budget, and making decisions about how to meet next year’s deficit. This is a process. I’ll say it again, this is a process. Decisions won’t be made overnight. It will take much consideration, searching, and discomfort to identify workable, long-term solutions. We will continue to look for ways to reduce costs in areas that can assist the general fund. Please follow the process and stay informed about considerations of the Board. It’s a daunting task that will require everyone’s help.
It’s very nice to be back and into a new school year. The summer has been filled with many activities and charged with lots of excitement, emotion, and many difficult decisions. You, our employees, make all the difference in the world and repeatedly demonstrate why people love to live and educate their children in Jordan School District!
One of the most frequent questions I am asked is, “What about education funding for next year?”
Everything I receive from the Legislature indicates there will need to be additional funding reductions next year. The most frequent amount used to describe the size of next year’s deficit is $700 million. We are being encouraged as a District to maintain reserve accounts wherever possible and prepare for possibly several years of reduced State revenues. I also urge caution when listening to news reports that say the recession has “bottomed out.” Economic indicators viewed in isolation can be misleading as to the overall state of the economy.
As a District, we need to anticipate various financial circumstances that could present themselves. We cannot completely rule out mid-year reductions in funding if second and third quarter revenues are down from projections. However, we are encouraged at the State’s projected revenues during this period of time which would be sufficient for this year’s expenses. We will be working on options and strategies in the event the State were to reduce the value of the WPU mid-year, or cut additional categorical funding to our District this year and next.
The District financial condition is stretched to its limit. Our financial needs are in excess of $30 million for this school year. Through property tax increases, use of fund balances, reductions in staff, and other budgetary action, we will neutralize this deficit for this year, but still need to be very proactive in anticipation of another year of state funding cuts.
Everyone is focused on the economy. As the economy goes, so goes much of the funding for education. There are lots of places to watch. Some watch the stock market. Others watch federal economic recovery appropriations. Still others watch unemployment figures. I spoke this past week with colleagues in California, Nevada, and Arizona about their state budgets and the impact of education. Oddly and thankfully, I came away with a definite awareness that “things could be worse – much worse.” In the midst of our own financial deficits, comparisons of financial woes don’t really make anyone feel better.
Right now, I am staying very focused on our State Legislature and Governor Huntsman. So many things are in a state of flux right now that it’s nearly impossible to know exactly how this and next year’s budgets will be adjusted.
The State has some financial flexibility with funds appropriated to build roads, bonding options, distribution of surplus funds (rainy-day funds – - – hello, it’s raining), anticipated federal economic stimulus funds, and unallocated one-time funds from this year. Everyone seems to have a different way of putting this all together in order to point us in a clear financial direction.
As a District, we are being very fiscally conservative right now, even a little stingy. We are aware of general adjustments that could be made, but haven’t become specific at this point. Whatever resources we have, we want to be sure they are used in the most productive manner. I, with you, would really like to know what we need to do financially this year and begin to prepare for next year, but we don’t have much to go on. So we watch, wait, and evaluate our response to possible outcomes. For now, waiting for more information and details is an O.K. place to be.
By the way – no news yet on the Arbitration Panel decisions regarding assets or a ruling from the 10th Circuit Court of Appeals in Denver on the Herriman City appeal.
Let’s talk about some rumors- five of them – economic ones – the ones that might affect our District. I didn’t make these up. I’ve been asked about them. There are many more that I am asked about every day.
Rumor #1: The budget will be cut by 30 percent next year.
What I know: I’ve never heard that budget cuts could reach 30 percent next year. I do know that local school districts were held harmless during the last special session of the Legislature. Public education as a whole starts out next year in a deficit position of $74 million. Governor Huntsman has proposed using the state’s $100 million “rainy-day fund” to fill this deficit. That would get us by one more year.
Rumor #2: The District split is expensive. The sinking economy will stop the division from happening.
What I know: A slowed economy will not stop the District split. Either court or legislative action would be required to stop, or postpone, the District split. Herriman City’s lawsuit is awaiting review by the 10th Circuit Court of Appeals in Denver. The Legislature will convene in late January.
Rumor #3: The Governor will call a special session of the Legislature to stop the District division.
What I know: Governor Huntsman has considered convening a special session on this issue in the past. It remains an option, but I’ve not heard any recent talk to convene before the next regular session of the Legislature in January.
Rumor #4: All District personnel and services will need to be relocated before next July.
What I know: The issues surrounding sharing programs and services between the two districts are currently in discussion, but haven’t been resolved. When this is finalized, we will know what personnel, if any, may need to relocate. We should know very soon.
Rumor #5: We will no longer be able to hire computer lab teachers due to budget cuts.
What I know: I don’t know what the budget for next year will be.
The economy has everyone concerned. Just when we thought federal legislation might turn the tide, we continue to see the ups and downs of Wall Street. The economy across the nation is in decline. It’s slowed in our state. I’ve not spoken with any educator in states across this country, east to west, that isn’t talking about declining revenues. Some are panicked as revenue shortfalls number in the billions of dollars, others are being cautious and hope that revenues and future budgets remain flat at best.
These conditions can breed rumors, usually unfounded. I’m asked a lot of questions about what will happen in Utah, given the national and local economy. My answer: “I don’t know, but as soon as I do, I’ll let you know.” A good approach for me in tough times in education is to stick with what I know. Don’t speculate. Be cautious. Stay informed. Say nothing rather something that could be misinterpreted. Watch the indicators that will ultimately influence the final outcome of the issue. That doesn’t mean I’m not thinking. I’m a compulsive thinker – that’s different from a worrier. My most positive course of action is to contemplate scenarios, lots of them. If I do enough of that, when the facts begin to solidify, chances are I will have at least contemplated the issue and some possible next steps. That allows me to focus immediately on solutions and strategies and not be idled by swirling around in what is happening. Next blog, I’ll talk about some rumors. I’ll tell you what I know and what I don’t know.