Without significant budget changes, Helena Public Schools is expected to be in the red sometime between 2022 and 2024.
The school district hired an outside contractor to evaluate its fiscal stability over the next five years. Now, Superintendent Tyler Ream is meeting with teachers and staff to discuss how to address a potential shortfall before it's too late.
"The point is to not get to 2022 and then be surprised," Ream said.
The three main issues identified in the five-year outlook include high staff pay, some over-funded programs and the loss of 400 or more students to the East Helena high school district.
This didn't come as a surprise to school district officials, and school board chair Sarah Sullivan said the issue has been a long time coming. She said the problem is happening all across the United States and is largely due to expectations for public education being greater than the funding provided.
"What we are dealing with now is an issue created by previous superintendents and school boards," Sullivan said. "We have to look at everything."
She noted that when interviewing candidates for superintendent last year, many were easily able to identify the issue when looking at the district's financials. According to Ream, staff salaries alone account for 90 to 95% of the school district budget.
"We are all trained to know that the sweet spot on salary is between 85% and 90%," Ream said, adding that "95% means something is getting squeezed."
After advancing every school district employee's salary five years on the pay scale, Ream said, it became obvious that the high pay will not be sustainable. This includes all school district staff, not just teachers.
Officials say a percentage of the budget currently allocated to salaries will need to be redirected to operations. Many of the operations costs were assessed based on standard inflation rates, but much of this is unpredictable. Officials hope to add 11% to the operations budget, which would account for a 7% deficit and in increase of 4%, although not all of this will necessarily come from the salary budget.
Helena officials are planning to lose approximately 100 students per year to the new East Helena High School, beginning with the 2020-21 school year and continuing through 2024-25. This year and for the next three school years, the East Helena school district is paying a tuition fee to the Helena district for the high school students still attending school there. However, the tuition amount will decrease every year as the next grade level is added to the East Helena district.
"It doesn't hit us hard the first year," Ream said. "But we start to feel it during the second year."
An exit of approximately 400 students means a significant chunk of Average Number Belonging funding leaving the district. ANB is funding received from the Office of Public Instruction on a per-student basis. According to the district's business manager, Janelle Mickelson, it's a complicated decremented formula that decreases with every student.
The base cost for a high school student in 2020 is $7,201. This is given to the district by OPI for the first student. That amount then goes down continually until the district reaches 800 students, when the district receives a flat $6,736.50 per student. With approximately 2,900 high school students in the district, many fall into the after-800 students range. Additionally, the district receives $15,632 for every 80 students over 800.
This can make it difficult to determine just how much funding will be lost due to the exit of students to East Helena, especially since an exact number is unknown. If each student who exits the district is counted as an "after-800" student, then the district's funding will decrease by approximately $689,282 per 100 students.
However, elementary student enrollment is growing somewhere between 1% and 2% each year. The district receives $5,624 for the first elementary student, down to $5,373.20 per student after 1,000. Ream said he expects elementary enrollment to continue growing.
Although he declined to elaborate on the issue, Ream also said he guarantees "we have some program costs that are too high."
Because the school district has not yet identified any solutions to the budget issue, they have not confirmed details about potential cuts.
"We are not identifying solutions at the moment," Sullivan said. "Teachers and staff will certainly have some different ideas we want to consider."
However, the district's plan does account for up to 16 position cuts in the high school district over the next five years. Ream said the actual number will be based on how many students exit the district. The intent is to allow this to happen via attrition, leaving open positions unfilled. Ream did said that there are no layoffs happening at the schools.
Other potential plans include consolidation of duties among lesser used positions. An example would be a high-level language teacher going back and forth between Capital High School and Helena High School if they didn't have a high number of students per class. Additionally, Sullivan said there could be some collapsing of classes that have low numbers.
The 2020-21 budget has to be approved by August, according to Sullivan. However, she said it would be preferable to have the budget done earlier. Until then, Ream and board members are meeting with all of the district's staff to gather ideas on how they can reduce costs.
Ream said the five-year outlook is pretty flexible on how the district can go about reducing costs. This is why officials want to consider everything the teachers and staff can offer as potential solutions. Moving forward, he wants to reassess and update this plan every two years to keep on top of many of the unpredictable variables.
This story has been edited to correct the number of high school students in Helena.