COVID-19 Impacts on our School Budget
You’ve likely been reading a lot about what COVID-19 means for our economy. I know that I have. I am very concerned about the impact this will have on our school budget and I wanted to create a place to keep a comprehensive list of the conversations and decisions related to budget impacts.
We held a special School Committee meeting on April 27, 2020. The City’s auditors presented an update on the potential impacts of COVID-19 on our budget. I believe all of our city councilors were also in attendance for this hot-off-the-presses information. Our schools are funded 80% by local receipts and 20% by state aid.
In terms of city revenues, the auditor is projecting the following:
According to the Governor’s proposed budget, Medford is scheduled to get $26.6 million in state aid. $12.2 million of that amount is designated for schools. His projection assumes a 20% DECREASE in state aid which translates to a $5 million loss.
Building permit revenue in Medford is usually forecasted at $4 million annually. Right now permits are being issued on an emergency basis only. The auditor is working with the building department to confirm anticipated activity and revenue, but his analysis assumes a $2 million decrease.
Excise taxes will be down 10% as new car sales have seen a sharp decline.
Hotels and meals taxes will be down approximately 25% for the year due to a closure from March to May (one fiscal quarter). This means a $1 million decrease.
Other revenues are projected to be down $0.8 million.
In total, he’s projecting an $8.2 million decrease in revenue.
He’s also projecting an increase in fixed expenses to cover pension, debt service, and healthcare costs. Fixed expenses will increase by $3 million. Our deficit through this loss of revenue and increase of fixed costs are approximately $11 million according to his analysis.
How do we move forward?
The auditor went on to say that there are a lot of unknowns. We do not know if the federal government will provide bailouts to cities and towns. He indicated that there is little appetite for that in Washington, which is a real travesty. He also indicated that the state appears reluctant to dip into its rainy day fund. Boy, if ever there were a rainy day, I feel like this is it. I’ll be honest. I do not understand the point of a rainy day fund if it’s not for situations like this. He said on the city side, we will know a lot more in early June when we are able to firm up impacts to building permit revenue and at that point we will know whether property tax delinquencies go up in a significant way. He recommended that we wait, if we can, to finalize any budget. He said that some cities and towns are planning for a level-funded budget (meaning no increase at all), while others are planning to start the year using a “1/12,” or monthly, budget. When this happens there is no increase at all, but we approve the budget one month at a time. I think this approach can be effective when you have reason to believe that things will change rapidly through the year and you want to take slow pragmatic steps.
Can we take on debt?
The answer is, of course, complicated. Per the auditor, Medford currently has $38 million in debt, and our debt ceiling is $500 million. This means that we have ‘room’ to take on debt. There are of course rules to taking on debt. Generally, debt is used for things like new schools and buildings and other capital expenses. Years ago a bond purchased an influx of technology for our schools, as well as new school buildings. The city is just about done paying for our ‘new’ schools (elementary and middle schools). The auditor said that in order for us to take on debt to offset the revenue losses he’s predicting, there would need to be legislation filed to be able to do so, because this debt would not be for capital purposes.
What does this mean for our schools?
I am very concerned about our school budget in light of all of this. More than anything, the budget allows us to serve students, teachers, administrators, and the community in the ways they need to be served. We will see more needs before we see fewer. Our students are in the middle of a traumatic event in their education. Many of our students will not have received the support they needed to thrive in this remote learning environment. This is not anybody’s fault really. Our entire educational system was built to thrive in a school building, with warm connections and caring teachers available to give a hug to our littles having a bad day and a high five to our high school students who nailed a test. Our system is simply not built for this. It is increasingly obvious that September will not bring back a ‘normal’ school year. Rather, the next academic year will be at least as challenging as this one. To meet these challenges we will need new and different tools in ways we haven’t needed them before. Our goals for professional development must shift, our need for 1 to 1 Chromebooks is no longer a wish but a need, and all of this costs money. I am, as most leaders in our district and across the nation are, losing sleep about this each and every day. Nobody takes these responsibilities lightly.
School Committee Decisions as of 5/15/2020
We are, and will continue to be faced with a number of decisions around our budget. Making them is incredibly difficult for many reasons. First, there is not a clear target. It is ever moving and seems to never be getting less cloudy. We await decisions from the city about how they will navigate the city forward and what impact that will have on how we make budget decisions. This is incredibly difficult, and they appear to be working as fast as they can with little to no information.
Our district operates a number of programs that are required by law to be self-sustaining, meaning we should be collecting revenue to support the expenses and this happens outside of the general budget or our city’s allocation to schools. As soon as the school closure began, we halted tuition payments for things like before and after school and preschool. We also stopped collecting revenue for canceled building rentals, use of our pool and rink, and obviously, there is no school lunch being provided so there is no lunch money coming in. Because of these issues, we have made a number of decisions about this current academic year. We have furloughed a number of groups of employees.
Our furlough terms ensure that those with health benefits through the city can maintain them through the end of the 2019/2020 school year, and that wherever possible the furlough is short enough to not impact retirement plans. These workers are able to file for unemployment including Pandemic Unemployment Assistance (PUA). Pandemic Unemployment Assistance (PUA) provides unemployment benefits to individuals who are unable to work because of a COVID-19-related reason but are not eligible for regular or extended unemployment benefits. All accepted applications will initially receive the minimum weekly benefit amount, plus an additional $600 Federal Pandemic Unemployment Compensation (FPUC) weekly benefit. The Department of Unemployment Assistance determines eligibility for both programs based on a number of factors. In some cases, our staff will make MORE than their normal wage due to the PUA. The impacted groups include:
Kitchen and food service cafeteria workers for 4 weeks from their scheduled last day of the school year.
Before and after school staff effective 5/4/20
Lifeguards, rink workers and field attendants effective 5/4/20.
The School Committee has established the following communication that has been delivered to our impacted employees.
“In these very uncertain times, we as the School Committee take our role very seriously. We as a district value the service you provide to our staff and students. You have our commitment that we will continue to advocate for clear and direct communication to you about your employment through the end of this school year, through the summer, and as we prepare for the start of the next school year. There may be changes ahead, and we will be clear about how they impact you and engage you as proactively as possible.
We know that the public has entrusted us to steer our schools to improved outcomes. Right now, that means that we are faced with difficult decisions regarding our school district’s financial obligations. It is our job to make sound short-range decisions to ultimately make our long-range outlook as good as it can be. We will be faced with many more decisions about the future of our schools if our city’s funding is not supplemented beyond what we know about today. We as a district value the service you provide. You have our commitment that we will weigh and consider the value you and your co-workers bring to our staff and students, and that we will do that for all our employees who may be impacted by our uncertain future.”
In addition to the above groups, we unanimously passed a motion to clarify the standing of our Kids Corner preschool teachers. An excerpt from the motion I offered in conjunction with Paul Ruseau and Mea Mustone is below:
“We make a motion to reconsider our decision to furlough the Kids Corner teachers effective 5/4/2020. We will continue to pay the Kids Corner staff through the end of the 2019/2020 school year. It is our opinion that their role is similar to others currently employed by Medford Public Schools within the MEEP program, and at this time we need not allow the nature of our funding mechanisms for these two programs supersede the employees’ role and value. We remain deeply concerned about the viability of this and other programs managed by tuition-based revolving accounts in light of the COVID-19 pandemic.”
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