Despite a projected $9.4 million decline in revenue for the coming fiscal year, Kyrene School District’s top financial officer said the district will cut spending without major layoffs or cuts in services to students.
Kyrene Chief Financial Officer Chris Hermann laid out the district’s plan for bridging the funding gap during last week’s board meeting.
The decline is largely driven by a projected enrollment loss of 1,210 students that is expected to cost Kyrene more than $6 million in state reimbursement.
“Because the district was faced with a $9.4 million decreased revenue situation from ongoing sources for next year, it was essential for us to make some sizable reductions in expenditures in next year’s budget in order to right-size our district spending against these lower future revenue levels,” he said.
“Otherwise achieving a balanced budget for next year, or even in future years, would have been almost impossible to do.”
He also explained the goal is “to look at ways to reduce expenditures across the district, so that the maximum amount of resources would continue to be allocated to the classroom and also to ensure that no one particular group or area would be disproportionately overburdened with any of these expenditure reductions.”
District office spending is poised to take the biggest spending cut with $2.2 million. The largest portion of that cut involves $850,000 in employee costs achieved largely by not filling the equivalent of 19 positions.
Another $435,000 will be achieved by reducing the number of third-party contractors that provide services to disabled students, Hermann said, noting such services would be provided by district personnel.
“It’s important to mention that we are not lowering the bar or eliminating services provided at the district officer,” he said, “but rather we are looking to find more effective ways to perform those same activities.”
Hermann said that while the district’s “structural budget deficit” in the 2021-22 fiscal year “means there is no funding to sustain a permanent salary increase for employees,” Kyrene may use of some of its third round of federal pandemic relief money to provide one-time bonuses.
He added that the Legislature may also provide unexpected additional funding that could be used for those bonuses.
He also said the district is being forced to provide additional funding for special education services “because there is no certainty that this funding will ultimately be aided in the state’s final budget.”
The budget process in the Legislature is stalled over a few Republicans’ opposition to the creation of a flat income tax that would cut more than $1.5 billion in state spending – much of it cutting into cities’ share of state revenue often used to fund public safety operations.
Kyrene’s size and overall household income levels also have impacted the amount of pandemic relief it is getting, particularly under the third round of Elementary & Secondary School Emergency Relief Fund (ESSER) moneys funded by the American Rescue Plan.
The district is getting $9.5 million in that third round of funding – far less than even some smaller districts are receiving because Kyrene has a higher per capita household income, which factors into the funding equation.
To address some of the ESSER III funding disparities among districts, Hermann said, the state has approved an additional subsidy of $570 per pupil.
But he added “there are still some wide ranges and disparities in the ESSER III per-pupil amounts across the state” because a significant part of that funding is based on the number of poverty-level households in districts.
“It was nice to see that the state recognized some of these issues and used a portion of their discretionary ESSER funding in order to address this disparity and help raise the funding floor for districts like Kyrene,” Hermann said.
Neverthless, board President Kevin Walsh noted that Kyrene is at the very bottom of pandemic relief funding among all 207 public school districts in Arizona.
“It’s the floor,” Walsh told Hermann. “We are at the bare minimum floor. This is such a difficult decision for you because you see other districts in the state who have a lot more funds from us or than we do.”
The budget will now be the subject of a public hearing at the June 22 board meeting and another hearing will be held July 13 prior to the board’s approval of a spending plan. ′