The eyes and ears of most of the leaders in primary and secondary education across Kentucky were focused on Gov. Matt Bevin’s address to the legislature Tuesday night.
And most liked what they heard since the new governor proposed increased spending for K-12 education, largely to address issues created by growing school enrollment. But his plan’s main focus was on ways to begin “shoring up” the state’s retirement funds for employees and teachers and that will have significant future budget consequences for the county school system.
While the governor was presenting his budget plan at the state capitol, the Harlan County Board of Education was holding a special meeting at their central office to make up for one postponed by last week’s bad weather.
Part of what the local board discussed was a draft plan for next year’s budget as presented by Jody Gilliam, the district’s finance director.
Once again board members face projected reductions in revenue due to the ongoing loss of enrollment from the outmigration of population as the coal industry here is being inexorably squeezed to death by poor market conditions, greatly increased regulation and growing production costs.
As bad as that expectation is, the board must also face the prospect of increased staff costs even if they add no one and give no raises. While the governor proposed no new money for teacher raises over the next two years, the costs associated with shoring up the state’s retirement systems will force the local school system to come up with more money to pay into those funds.
Because census projections show that Harlan County is likely to have 30 fewer students next year, the county schools must plan for a loss of nearly $120,000 in attendance funding, along with another $20,000 loss in extra funding that goes with that for the percentage of those students who would be considered “at-risk” (based on income) or requiring special education services.
The basic state formula for school funding, referred to as “SEEK,” is also expected to have a shortfall in Harlan County for the current year of over $76,000, Gilliam noted. That will be taken from the district’s contingency fund, which schools are required to maintain for each budget, so that’s less money they can carry over into the new year as an emergency surplus.
As far as higher expenses go, the district must increase the percentage of salary it contributes to classified employee retirement which they estimate will cost an additional $85,000.
Second, because of a change in the law, beginning in January 2017 schools will be required to pay matching Social Security and Medicare taxes for employees, both of which had been previously exempt for schools. It is estimated this will amount to a little over $66,000 more for the half-year (Jan. to June). A full year’s estimated expense of nearly $133,000 will have to be included in planning for the following 2017-18 school year.
Also, the district is nearing the end of its grant that pays half the salary expense for most of the school counselors. Including fringe costs, the addition of all the salary expenses for the current number of counselors will require an additional $229,000, Gilliam reported.
School leadership remains hopeful additional grant funding can be secured to maintain these services without requiring the money to come from the district’s general fund.
“But we can’t apply for a renewal of the counselor grant until the current one expires,” said Superintendent Mike Howard. “We’ll just have to wait on that.”
The school system is also going to have to begin paying its phone bills. Up until now, schools had not been billed for phone service.
Gilliam said the phone companies have agreed to upgrade the technology to maintain the quality of service, but going forward the district will be billed for regular phone service, beginning next year at a 50% rate. That will cost approximately $70,000, but the percentage will increase as the school years pass, he added.
Barring additional surprises, the total cost to the district for all the added expenses and lost revenue is expected to be more than $663,000, Gilliam reported.
The school board will have between now and the end of the current school year to decide how to address these issues. No decisions will be made until the current legislative session concludes and the Department of Education provides its estimate of what the SEEK formula’s funding will be for everyone.
“In the meantime, we’ll manage with what we have,” Howard said.