Kyrene Chief Financial Officer Chris Hermann

Kyrene Chief Financial Officer Chris Hermann broke down the district’s cost in this new fiscal year of coping with the COVID-19 pandemic.

COVID-19 is costing the Tempe Union and Kyrene school districts millions of dollars.

Tempe Union is spending $2 million in the 2020-21 school year on laptops for all incoming freshmen – an expense that will become an annual expenditure.

Kyrene Chief Financial Officer Chris Hermann told his governing board last week that the district will be spending $2.7 million in the fiscal year that began today, July 1, on expenses directly related to the pandemic.

And if all of Kyrene’s 13,000 students returned to classrooms next month – something district officials do not expect – the cost of achieving true social distancing among students in the classroom and on school buses would run into tens of millions of dollars more.

As districts across the state try to prepare for a new school year in the shadow of surging coronavirus cases, the new 2020-21 budgets that governing boards are adopting this month are starting to reflect a hard reality: COVID-19 has driven up the cost of keeping staff and students safe and continuing children’s education.

For the new fiscal year, however, both Tempe Union and Kyrene have balanced budgets that won’t increase taxes.

But the pandemic’s ultimate cost to all school districts likely will take months, possibly several years, to fully tabulate because sales tax revenue nose-dived during business closures and the impact of soaring unemployment on income tax revenue won’t be known for at least a year. 

Schools get millions from the state as their share of sales tax revenue and income tax revenue helps pay other state expenses – including the cost of public education.

Gov. Doug Ducey indirectly acknowledged the pandemic’s initial financial impact on Arizona schools in a series of executive orders last week.

Ducey is taking $200 million from the Coronavirus Aid, Relief and Economic Security Act to protect schools against budget shortfalls due to anticipated declining enrollment, in essence guaranteeing that schools will have at least 98 percent of the state aid they were getting this past school year.

That is crucial as state aid is based on the number of students in attendance. A survey last month by the political consulting firm of HighGround found 20 percent of adults with children in school said they would not send them back next year given fears of COVID-19.

And if 20 percent of a district’s students choose not to start when the doors open, that would normally translate to a 20 percent drop in aid – a costly bite on budgets with basic aid at $5,500 per student.

The plan also contemplate that schools will be providing more instruction online than in traditional years. Part of that $200 million is earmarked for remote learning.

But the state will provide funding for students who are not sitting in a classroom all day, five days a week.

Chuck Essigs, lobbyist for the Arizona Association of School Business Officials, said this is particularly crucial for districts that plan more flexible schedules to reduce the number of students in a classroom at any one time.

Kyrene Superintendent Dr. Jan Vesely said Ducey’s executive order will “provide budget predictability to school districts and charter schools” and addresses questions of funding for schools with or without approved online instruction.

However, it remains unclear if the state reimbursement rate for pupils taking online classes will be equal to the rate schools get for in-classroom students. Asked about that Monday, Ducey only said, “We want to fully fund our schools.” 

Vesely said she is expecting various state agencies over the next few weeks will clarify the operational details of Ducey’s order “as there are still a few issues that remain a bit unclear.”

“It’s important to understand the majority of this financial relief would not necessarily be additional money for Kyrene, but rather is intended to minimize the loss of funding from enrollment declines or from lower funding due to providing online instruction,” Vesely said.

“For instance, if the district experiences an enrollment decline over 2 percent, there would still be a negative impact to the FY21 budget of approximately $1.5 million due to lower enrollment funding.  However, any enrollment declines in excess of 2 percent would not further negatively impact the FY21 budget.  While we hoped that the governor’s executive order would hold districts harmless for any enrollment declines – likely due to COVID-19 – the order does protect Kyrene for any enrollment losses beyond 2 percent.”

In order to be eligible, schools actually must be open to all students five days a week. The impact of that order on Tempe Union is unclear, since the district is not starting the new school year with a five-day in-class option. Tempe Union is offering parents only two options: five days of online learning or four days with one day in class.

Ducey’s order means that if a parent has nowhere else to send a child, the school must agree to take him or her every day – not just the days the student otherwise would attend – even if it means that child remains in the library.

“This plan provides schools with the flexibility to ensure Arizona students continue to receive a quality education, whether through distance learning or in the classroom,’’ the governor said in a prepared statement. He said it “provides parents with options that work best for their families.’’

Chris Kotterman, lobbyist for the Arizona School Boards Association, said that guaranteed funding and flexibility is crucial for schools. The only question, he said, is whether there’s really enough money in the plan.

“I hope that that $200 million holds up,’’ he said.

On top of that $200 million, the plan allocates another $69 million that Ducey received from the CARES program. The largest share of that, $40 million, is earmarked for bridging the “digital divide.’’

The report says that the closure of schools earlier this year brought into focus the fact that many students lack access to the internet at home.

What’s not in there, however, is any cash to purchase computers or high-speed modems for individual students. Aides to the governor said schools may have access to other funds, including $27 million that state schools chief Kathy Hoffman has in discretionary dollars.

Though Tempe Union’s laptop purchase is part of a “one on one initiative” to ensure that all students will have laptops, Superintendent Dr. Kevin Mendivil referred to the emergency campus closure brought on by the onset of the pandemic in mid-March to explain the urgency of the program.

“We still have a great need and just as we experienced through this COVID-19 closure recently, we were in an opportunity, fortunately,” to loan about 2,400 devices to students who had none so they could participate in online classes, Mendivil said.

But even if and when the pandemic ceases, that initiative will continue, Mendivil said, as a recurring annual cost. Under the program, incoming Tempe Union students would have that laptop all four years, then have an opportunity to buy it when they graduate.

The laptops will be purchased from the district’s capital budget – which got a $23 million boost in 2017 when the district sold a 63-acre plot of land in Ahwatukee to a Blandford Homes subsidiary that is building the gated Palma Brisa community.

Technology also accounts for all but $600,000 of Kyrene’s $2.7 million in coronavirus-related spending in the new budget, Hermann told the Governing Board last week.

He said $1.9 million will be spent on technology and another $200,000 on distance-learning support while the remainder will be used to buy cleaning and disinfecting supplies as well as personal protective equipment.

Kyrene is reprioritizing bond and capital override funds to cover those costs so that it has a balanced budget. Additionally, Hermann said, the district has achieved a $1 million surplus that can be used for any unanticipated COVID-19 costs or other unforeseen expenses.

But Hermann also offered a sobering look at what it would cost if every student came back to the classroom and the district wanted to ensure social distancing among pupils.

“Often questions arise about lowering the class sizes and reducing the ridership on buses. These activities come with both significant financial and organizational challenges,” Hermann told the board. “For instance, if only one student sat in a seat on a bus, Kyrene would need to hire approximately 60 additional bus drivers and purchase 41 additional bunch of buses. And the cost for these activities would be significant at a total of $7.7 million.”

That would double the district’s current number of drivers.

Of course, bus drivers are hard to find even without social distancing, he noted, so Kyrene likely would have to pay even more than it does now as it competes with other districts for drivers. 

Ducey’s plan does not address an expected increase in transportation costs.

Essigs said that schools won’t be able to fill buses with students, as had been done before, and yet still maintain the required social distancing. That, he said, will result in more trips, meaning more gasoline and, eventually, more wear-and-tear on buses.

When it comes to social distancing in classrooms, Kyrene’s costs would be astronomical, Hermann said: To reduce class size to only 15 students per room, Kyrene would have to hire about 420 teachers at an annual cost of $30 million in salary and benefits.

This is one of the reasons that Kyrene developed hybrid and all-online learning models, figuring many parents will opt to keep their children home, at least for the early part of the school year in the hopes that the pandemic will get under control.

Ducey’s plan also sets aside $20 million to help kids catch up on what many of them missed after in-person instruction disappeared in March.

Since Ducey’s announcement was only made a week ago, it’s unclear if Kyrene or Tempe Union will seek one of those one-time grants – which the state will award on the basis of a variety of factors. 

The governor also is putting $6 million into the Arizona Teachers Academy he got lawmakers to create several years ago to convince more college students to go into the classroom by paying for their college tuition.

What makes that necessary is that the COVID-19 outbreak has only exacerbated the number of older teachers leaving the profession, exacerbating what the governor’s office is calling the “Gray Wave’’ or “Silver Tsunami.’’ Those additional dollars, on top of $15 million already in the state budget, would provide enough to pay the tuition of another approximately 1,200 college students.

Aides to Ducey said that schools have direct access to other dollars, including funds from the Federal Emergency Management Agency, that could be directed to cover some of those costs.

Overall, Essigs said, he sees the plan as a positive development, stating, ““At least it’s better than what it was before.’’

Ducey also is making available $1 million for “school innovation microgrants’’ for innovative programs and $500,000 for the Teach for America program to provide tutoring to children defined as the most in need.

He also exempted school districts from having to go out and solicit bids for cleaning supplies and any other personal protective equipment needed. 

Howard Fischer of Capital Media Services contributed to this report.

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