The Federal Sequester & More Bad News on Funding

Post date: Mar 8, 2013 2:35:28 AM

March 7, 2013by Granger Meador, BEA Chief Negotiator

Teachers have been asking what the local impact may be from the much-publicized federal budget cuts, commonly known as the sequester, which took effect on March 1. The news is bad, of course, but even worse news comes from a property tax change approved by state voters in November and further reductions we have suffered this school year in state aid.

Federal Sequester Will Cost BPSD Almost $150,000 in 2013-2014

The federal sequester took effect March 1, including a 5% cut in federal funding to public schools. Statewide a loss of $52 million is expected and local cuts for the 2013-2014 school year are projected to be $148,287.

Federal funds include Title I funding for teachers and supplies for several of our sites serving disadvantaged students, IDEA funding to compensate part of the cost for Special Education, Title II training and adult education funding, Title VII Indian Education funding, Reach Coach funding, Carl Perkins Vocational/Applied Technology Education funding, and more.

Sequester Will Require General Fund Carry More Special Education Costs

The district's General Fund is separate from its federal funding. While some local programs will simply be scaled back, the loss of funding will negatively impact our General Fund in some areas. The most significant is the expected loss of over $56,000 in IDEA funding for Special Education, which is mostly used for staffing. Since the loss of funding is not accompanied by a change in state staffing requirements for Special Education, the district will be forced to divert more of its General Fund to paying for Special Education teachers and aides.

Less Money For Professional Development

The loss of over $11,000 in Title IIA funding for training will reduce professional development opportunities for district staff and could also require diverting more of the General Fund to provide sufficient training for various ongoing district initiatives.

Hopefully No Title I Staff Cuts

One brighter spot amidst the gloom is that Trudy Green, the district's Director of Federal Programs, plans to prioritize staff funding in the Title I programs to hopefully avoid any reductions in teachers paid for via Title I. However, this does mean that the non-personnel items funded through Title I will be reduced almost $54,000.

State Question 766 May Cost the District Over $630,000 in 2013-2014

Of even greater fiscal significance is State Question 766, which passed last November. It exempted all intangible personal property from state property taxes, to the great benefit to major corporations such as AT&T and to the detriment of public schools and ALL taxpayers. All taxpayers lose because the question diverted some of the cost of bond issues onto the rest of the property tax rolls, which will raise the sinking fund millages for everyone.

Separate from sinking fund millages for bond issues, public school districts also receive major operational funding from property taxes (also known as ad valorem taxes). Exempting intangible personal property from taxation is expected to reduce such state ad valorem taxes by almost $73 million. Bartlesville is estimated to lose over $630,000 in annual operational funding from this loss in property taxes.

Unfortunately, the governor's proposed budget not only failed to make up this loss to schools but also failed to fund mandated health insurance premiums for school employees and to fund recent school reforms. Local State Senator John Ford and other legislative leaders have called for additional funding to cover those expenses, but their proposals do not begin to cover the property tax losses from State Question 766.

Statewide Common Education Funding Is Down 20% Over the Past Five Years; BPSD State Aid Is Down $880,000 This Year

State funding for our public schools declined sharply in recent years even as total enrollment rose. This double whammy has led to drastic reductions in state aid to our district.

Our state aid for the current school year has declined $879,609. Part of this is harmless since it reflects an increase in local property taxes. Local property taxes will be up $349,113, reducing state aid accordingly. This is how state aid is meant to work, helping equalize funding across districts.

But that still leaves a net $530,496 loss in state aid. Part of that loss is due to a loss of about 58 students in average daily membership, but it also reflects how overall state formula funding was flat for Fiscal Year 2013 even as statewide school enrollment grew by over 7,000 students.

Building The Budget

All of these funding losses create additional pressure on our budget as we look toward the 2013-2014 school year. This year I am again serving as the only classroom teacher on the 12-member District Budget Committee. We are of course including these losses in our calculations as we begin building a budget recommendation for the Board of Education. We won't know where we will land overall until the end of May when state funding for common education is finalized. The local school board will adopt a budget in early June.

Unfortunately all of this bad news makes it all the more difficult to make improvements in teacher salaries or class loads. Our district's priority on keeping class sizes low in the early grades is a key part of our academic success. But it also means that we have far less money to spend on salaries. Consequently our teachers, particularly teachers with more than 25 years of experience, are paid lower than the peer average even though we outperform ALL of them academically.

Click the graph below to enlarge it.

Fund Balance Is Still Healthy

We need to end on a happier note, and that is that the district's fund balance is still near its historic high despite the cuts in state aid. So there is room to absorb some losses if the school board opts to do so. We should end the school year with over $5,500,000 in the fund balance. While one must be prudent about trying to fund ongoing expenses through the fund balance, it should give the school board some level of comfort with absorbing some of the funding cuts without matching cuts in personnel and other costs.