The Wake school board is reforming its budget committee and taking a closer look at its budget after district officials informed them of potential shortfalls this school year.
The district is expecting to fall short by at least $2 million in operating expenses, and its child nutrition services department is expecting a $3 million shortfall. The total budget is about $2.2 billion, meaning the shortfall represents well less than 1% of the budget.
Other WRAL Top Stories
The district’s shortfall is driven by a few things: A $1.3 million expected increase in required payments to charter schools, a $658,000 in unexpected costs toward its criminal background check contract and a possible underbudgeting of utility costs.
The shortfall could total more than $4 million, without factoring in an expected $3 million shortfall in child nutrition services, which operates independently of the rest of the budget.
The financial headache is also complicated by unexpected enrollment growth and a lower employee vacancy rate.
“It looks like we have more students than anticipated, and that’s great news,” Board Member Lynn Edmonds said.
There’s good news within the challenges, Chief Business Officer David Neter told the school board.
It’s harder for the district to make up for the shortfall this time because it’s already depleted its reserves below 6% of operating costs — a threshold recommended by accountants — and because fewer cost savings are available in the budget this year, such as savings from vacant jobs that could be frozen. The district’s employee fill rate has been improving, from 91.6% a year ago to 93.2% this year. That’s another thing board members said they were excited about, in spite of the fiscal implications.
The school system’s enrollment has also grown higher than anticipated by either district or the state. That means the district and state budgets didn’t set aside enough for the eventual needs. The district is counting 161,115 students this year, up from 159,995 at the same time last year, Last year’s enrollment is what this year’s state funding is based on. Lawmakers approved funding for enrollment increases in House Bill 10 last month, but it’s unclear if more money will eventually be needed later this year.
The school system’s child nutrition services department will have a $3 million shortfall again that the department can’t use savings to cover this time, unlike in recent years. That’s because the department’s reserve is less than two months of operating costs, though it’s required by the state to have at least that amount in reserves.
The department operates like an independent restaurant and is funded by its revenues — from paying customers and federal and state reimbursements — and the occasional federal grant. The school board doesn’t fund the department, but it must make sure it can break even.
Operating costs have gotten more expensive for the department, with wage and supply cost increases that have outpaced the increase in school meal prices and federal reimbursement rates.
As the district plans for its shortfall and for the next year’s budget, Board Chairman Chris Heagarty said he plans to re-form the board’s budget committee to take a closer, more regular look at the budget.
The board will also discuss its budget at its annual board retreat Dec. 17 and Dec. 18.
Board Member Cheryl Caulfield said she wants to get more specific budget information from the district and noted that other school systems have been helped by doing performance audits. Those audits identified underused programs and made other findings that could be helpful in budget planning.
“We don’t have enough money to do what we need to do,” Caulfield said, adding that the board talks often about struggling to pay for their ideal education.
Heagarty noted the hundreds of pages provided in each budget but said there could be room to dive deeper into the structure of the school system itself and to better present financial details. He said the board’s retreat would tackle some of that, ahead of the budget committee starting.