Scottsdale Unified School District has its expenditure budget for the 2020-21 school year but the effects of the COVID-19 pandemic may cast a shadow on budget plans for years to come.
The Governing Board unanimously approved its about $372.7 million expenditure budget, which includes $174.1 million in maintenance and operations spending, at its June 23 meeting.
As part of an ongoing trend, district leaders are anticipating a drop in average daily membership (ADM) of about 275 students, with a contingency for 50 more. Acting Chief Finance Officer Shannon Crosier, who was director of finance at the time of the presentation, said the district has budgeted for that potential loss.
Furthermore, the district has the ability to cover another 200 in ADM loss because of the CARES Act. The ADM is tied to how much money the district receives from the state, multiplying the ADM by the base level per student. For the current fiscal year, the base level is $4,359.55 per student, a $157.25 increase from the previous year.
Then-interim CFO Jeff Gadd said the impact of COVID-19 is hard to pin down but the plan to account for a potential 525 loss in ADM is the district’s best guess at this point. He said if the pandemic drives a larger ADM loss, SUSD leaders would need to review the budget at that time.
Mr. Gadd said while he hopes the drop won’t exceed the plans, it is unpredictable on how parents may react in the coming months. One concern he has is he’s noticed an increased activity from charter schools.
“I saw a letter from BASIS that basically said ‘whatever you want, we’ll take care of,’” Mr. Gadd said. “I mean, they’re aggressive with knowing that, that marketing piece is optimal for them to make some headway with their overall enrollment.”
Mr. Gadd also pointed to the potential impacts the pandemic could have on the 2021-22 budget if this year’s attendance drops significantly. In that fiscal year, the district would have to figure out a 200 ADM drop without the CARES grant since it is a one-time offer at this point.
“I think it’s going to become the real issue because you’re not going to have state support and if that enrollment declines is much greater than we thought it would be, it’s got the potential of carrying another enrollment decline into 2021-22, a new enrollment decline that will make life even harder,” he said.
“I realize none of that is really optimistic. ... The whole budget discussion is dependent on pretty much the ADM count and what the state budget shortfall is as to whether they make some changes at the support level. The likelihood is they might not increase the base support level at all. That would mean you would get no inflation and if you have to absorb a fairly sizable ADM loss, then those two would work together in creating some budget challenges.”
Along with these concerns, Mr. Gadd said students who are online rather than in person get 95% of the base level per student, which works out to about $200 less per student. He said a change to get full ADM funding for online students requires legislation from the state.
Then Superintendent Dr. John Kriekard said the district is part of a lobbying group pushing for that legislature. He said he’s heard from this group there is some rumblings on the issue at the Arizona capitol.
As for potential ADM drops, Dr. Kriekard said he was optimistic the district wouldn’t see as heavy of drops as Mr. Gadd predicts. Dr. Kriekard pointed to the district’s recent enrollment coming in ahead of what was originally estimated as a potential harbinger.
“Our marketing had been outstanding in getting our name out there, the way our principals are taking care of kids and I think the way we were working very hard on academic rigor that people are coming here because they get a better education,” he said.
“That won’t change and I’m very optimistic that when school opens, people will be looking to Scottsdale to see what a wonderful job we did with this situation.”
The district’s M&O budget limit is about an $8.5 million increase from the previous year. Ms. Crosier said that increase is because the district won’t transfer $2.7 million to its capital budget like it did last year. She also said the district will get about a $4 million increase for the increase in base amount per student.
She also pointed to the voter-approved override from the 2019 election and carry forward as rounding out the increase.
The majority of the M&O budget is planned to cover instructional costs (roughly $95.1 million). The district will also put about $18.1 million into student support and about $7.2 million into instruction support.
As a result of the budget, Ms. Crosier said district staff will see a 5% salary increase. She said the district can also hire 10 social workers or guidance counselors. She also reported district employees won’t see a drop in their benefits.
SUSD also claimed in a press release district taxpayers can expect to see their combined primary and secondary tax rate decrease by about 3%.
As for the capital budget, the district plans to use about $10.9 million (43%) on technology with about $7.8 million (31%) going toward furniture and equipment. The capital budget is used for the district’s long-term planning.
Governing Board Vice President Patty Beckman expressed concern over what potential costs might be for technology since students and teachers used more of it during the COVID-19 shutdowns. Mr. Gadd said he wasn’t too worried about those costs because there is more flexibility with the capital budget.
“Where the issue is going to come, I think, is going to be affording programs, affording staff, pupil-teacher ratios, all those things that drive the M&O budget,” he said. “That’s the one that’s more critical in terms of whether we can deal with any large increases or not.”