COVID-19 Impacts on our School Budget as of June 9th
During our budget meeting on Monday, June 1st, we talked about the budget shortfall for the next school year. This topic was also discussed by the city council on Thursday, June 4th. The notes I’ll share below represent a bit of a hybrid of those meetings and my own analysis of where we are.
How big is the budget cut?
I have found it difficult to understand the clear answer to this question, but here’s what I think I’m hearing. The city will be using a considerable chunk of our rainy day fund (free cash) to offset revenue losses next year. In doing so, we will be level FUNDING the budget. This is not the same as level SERVICE. This means we have the same amount of money that we had in the 2019/2020 school year. It does not mean we can afford to do the same amount of things or that we can employ the same amount of people. Each year, we are contractually obligated to certain increases, both with our 11 unions, and with other vendors, like our bus company for example. So what is the ‘cut’ then. Our appropriation from the city from 2019/2020, and under the current guidance is $61,250,000. So the cut is relative to our contractual increase and any lost revenue within our schools. Here’s what I believe the math says about the cut we are facing.
Contractual Obligations: $2,500,000
Lost revenue: $1,000,000
Total ‘Cut’ $3,500,000
Let that sink in just a minute before we proceed.
How will we cut that much from the budget?
I. Don’t. Know. The administration shared this slide deck with us to represent potential cuts that we could make, outside of staffing. See it here. It cuts everything from supply budgets to planned textbook replacements, to online subscriptions. It does also address savings when we replace a planned retirement position with new staff which is generally paid less due to lack of tenure and normally planned changes in the costs of our out of district tuition for vocational education and special education. This helps us identify $733,143 in cuts. To be clear these are not good cuts. But they may well represent the least bad choice we have. So this brings us to still needing a cut of $2,800,000. Where to now?
The presentation lays out 2 items relative to staffing. First, 0% Cost of Living Adjustments (COLAs) for all union employees. To save this $1,300,000, we will have to ask our 11 unions to forgo a raise next year. We are contractually obligated to these raises so this will have to be negotiated. The presentation also represents some savings for a retirement incentive. This would save money if people who weren’t planning to retire decided to do so. Both of these things together are estimated at $1,600,000. So that leaves $1,200,000 to be cut. It’s also the end of the presentation.
Truly, I don’t know where the additional cuts will come from. But there is no way this can happen without impact to the 4200 kids who rely on our city to provide them an education. It’s just not possible.
Will there be a stimulus or some way to save the budget?
Hard to say. There are bills sitting in Congress at a national level. As I understand it the Massachusetts delegation understands the need but without willingness from both sides of the aisle, it seems unlikely to be a national priority. The state could also provide stimulus, but the ability to help is limited to the state’s rainy day fund and likely would need that federal stimulus to make an impact. There is some talk that requirements on how money from the CARES Act is used for eligible expenses may be loosened to allow cities and towns to replace the revenue with it, but I don’t know how real this possibility is. What I did hear clearly at the City Council meeting was that the city administration would plan to use any unexpected stimulus to replace our rainy day fund. The fund will need to be replenished for sure, but this does mean that we WON’T use any CARES Act money to offset these huge cuts. And this breaks my heart. There are bills moving through the statehouse to allow cities to borrow to cover deficits. But I have not heard anything that makes me think our city administration would consider such debt. I’ll clearly say that we should be pursuing this option in my opinion. If we can borrow money to fix sidewalks as Medford did last month, borrowing to head off this kind of catastrophic budget cut seems like a no brainer to me. The School Committee has no authority on this matter. We can only officially work on making the least bad cuts at this point. But as a resident, we can and should expect our city leaders to be turning over every rock to get us out of this.
How will we ‘get back to normal’ after this budget?
Great question. I’ll say that I believe the cuts we make this year will be defining for years to come. Budgets don’t historically rebound from this kind of thing in a short time period. So we may be faced with a slow climb back to covering that $3,500,000 cut. As we do that though, I want us all to remember, that we were underfunded BEFORE this cut.
It is clear that we are not positioned financially for new things. But the fact is that many items on this list are things that our students need. We currently live without them, but that doesn’t mean they are not needed. The list as I’ve captured it stands at $7.715 million. There are some costs that might represent one-time costs but very few. There are also costs that truly are ‘nice to have’ wishes. I share this list with you, not so that you will identify which item here or there we may not need, but rather so you can see what I am considering when I say that we are underfunded. The list is available here.
But What about CARES Act Funding?
School Specific Funding
Medford’s schools received $668,052through the Elementary and Secondary Schools Emergency Relief funds as part of the CARES Act. Medford is required to provide $30,372.73 to St. Joseph’s School, $37,039.92 to St. Raphael’s school. This leaves a balance of $600,639.35.
In addition to school-specific funding, the City of Medford received $5,093,008 to address COVID-19 related expenses. This money can be used in a variety of ways INCLUDING for education-related expenses due to COVID-19. The program has clear rules for spending that are as follows:
“Necessary expenditures incurred due to the public health emergency with respect to...COVID-19”
Funds may not be used to substitute for lost revenue
Not budgeted as of March 27, 2020 when the CARES act was enacted
May not supplant state or municipal spending
Incurred on or after March 1, 2020, up to December 30, 2020
The city is able to spend any amount of its $5M on school-related expenses. Both pools of CARES Act funding may be used on education-related expenses that meet the above-listed criteria. On Thursday night at the City Council meeting, it appeared that we haven’t really spent much of this city allocation at all. The Finance Director repeatedly said we don’t have an expense problem but rather a revenue problem. And this money can’t fix our revenue problem. This raises the question for me about the school-related expenses we are incurring and will incur due to the pandemic - from masks for students to cleaning supplies and remote learning tools and training. We will be meeting about this at 5:30 pm on Wednesday, June 10th. At that time I hope that we will receive a better accounting of the funds available to the schools so that we may determine how to spend this money to face our realities next year.
Your call to action: Pay attention to the budget discussions as it unfolds in the month of June. There are deep cuts being discussed that will be detrimental to our schools. Please reach out if you'd like to meet (email@example.com). Please also share this blog with friends and neighbors who want to be informed about our schools. Subscribing to the newsletter will ensure you receive these updates as I post them.
Jenny Graham is a member of the Medford School Committee. This blog represents her thoughts on issues of interest and does not reflect any official position of the City of Medford or the Medford School Committee. Meeting minutes, which are the public record of all meetings can be found here. Full recordings of meetings of the School Committee can be found here.