Slow enrollment growth, depletion of reserves to constrain future Lawrence school district budgets
photo by: Nick Krug
This spring, the Lawrence school board had the rare task of deciding how to spend more than $4.8 million in new money coming the district’s way for the next school year.
That was not a task the school board has had in recent years when there was little or no bump in state funding, nor are any school boards in the immediate future likely to have near that much new money to allocate toward district needs. With the 2018-2019 new money, the board hired three new elementary school guidance counselors, three new special education instructors and two behavioral health interventionists. The board is scheduled to consider approval of the budget on Monday.
The new money that board members allocated for the coming year was from a boost in state aid that resulted from the new K-12 school funding formula that the Kansas Legislature approved this spring. The bill adds $522 million in new K-12 funding over the next five years. It was the first significant increase in state aid for education since the recession.
Information that Kathy Johnson, the district’s financial director, shared with the school board last month indicated the district’s big windfall from the new formula was the $4.8 million for 2018-2019. The district would see about $2 million a year in new money the remaining four years of the formula’s funding increases, she said.
The Kansas Supreme Court ordered lawmakers to add more money for those four years, but neither Johnson nor Lawrence school board member Shannon Kimball thinks legislative action will greatly enhance the amount of money the district gets annually from 2019-2020 through 2022-2023.
The Kansas Department of Education has suggested the Legislature add $90 million annually in funding each of the remaining four years to meet the court mandate, Kimball said.
“I don’t know how much of that the Lawrence district would get,” she said. “It won’t be a huge pot of money. It won’t be like what we saw this year.”
Johnson notes the court didn’t find anything amiss with the new formula’s per-pupil funding structure. With that, the district will have a number of budgeting challenges in the coming years.
• Lack of enrollment growth. Johnson said the way for a district to haul in significant amounts of new money in a state formula based on per-pupil state aid is to add lots of new students. The Lawrence district is projected to continue to grow slowly during the next five years.
• The end of new facilities weighting. After the 2018-2019 school year, the state will phase out the practice of providing added funding for students attending newly built classrooms just as the district is adding classrooms to Lawrence and Free State high schools through the $87 million bond referendum approved in 2017. Johnson said new facilities weighting allowed the district to boost its enrollment number for per-pupil state aid purposes by 63.5 students for 2018-2019.
• The end of deficit spending. In a move the state encouraged, the district has spent down the $6.47 million it had in reserves in 2014 when the state froze funding to districts in 2015. Johnson told the board in July there was currently $2.4 million in reserves, but the district will spend $1.4 million of that in the coming year.
Over the long term, the most significant of the factors for the district is the lack of the kind of enrollment growth that will provide a big boost in state revenue, Johnson said. A report the district and its consulting firm RSP Associates released last spring projects a modest 0.7 percent enrollment increase through 2021-2022.
Johnson said the district actually saw a slight enrollment decline in 2017-2018. Last year, the district had a full-time equivalency enrollment of 10,657 students, compared to 10,704.8 the year before. The state allowed the district to use its higher September 2016 enrollment for 2018-2019 budget purposes, Johnson said.
The enrollment numbers on Sept. 20 of this year will determine per-pupil state aid in the 2019-2020 budget. Johnson said the early estimate is that enrollment will increase by 85 to 90 students, but that is an educated guess. The modest growth number will be further reduced by the loss of the 63.5 students that drop off with the end of new facilities weighting, she said.
The end of deficit spending
The school board agreed in the 2018-2019 budget to augment state funding by spending $1.4 million from the district’s remaining $2.4 million of reserves. Johnson said that deficit spending option will not be available to supplement the state aid the district receives for 2019-2020. In fact, the board may want to put some of the new money it does get into reserves, Johnson said.
“If the board wants to build reserves back up, it will at some point have to do that,” Johnson said.
The district is not limiting its financial focus to just revenues, but will also look at how it can make the dollars it does get go further by becoming more efficient, Johnson said. That is an area Superintendent Anthony Lewis will emphasize during an update of the district’s strategic plan, which is planned for the coming year, she said.
Lewis said he hoped to hear ideas on that topic during his scheduled listening tour. The first of the six dates on that tour will be from 5 p.m. to 6:30 p.m. Sept. 20 at West Middle School.
“I am interested in feedback from the community as to how it thinks the district should prioritize spending our limited financial resources,” he said. “If efficiencies are found, it benefits us all.”