Financial future of Moffat County School District uncertain
District might ask community for funding
January 26, 2015
Craig — Moffat County School District is facing a sixth year of possible major budget cuts, but this time there's nothing left to cut outside the classroom.
With a projected deficit of $750,000 to $850,000 for the 2015-16 school year and no certainty about how much state funding will be provided to the district until at least April, the Moffat County Board of Education and administrators are trying to get the jump on understanding their options.
"It kind of falls back on the old adage, 'Plan for the worst and hope for the best,' and there's a whole host of ways to present that," said school board member and recently minted Moffat County Sheriff KC Hume.
In this case, planning for the worst could include everything from asking Moffat County voters to pass a mill levy override in November to dipping into reserves to cutting staff and elective programs throughout the district for the 2015-16 school year.
Tasked with the challenge of solving the budget deficit and creating a sustainable three- to five-year fiscal plan for the district, the Moffat County Board of Education is seeking to educate Moffat County residents about their choices.
"Hopefully we can engage with the public and have that deep and meaningful conversation about what's important to us," Hume said. "What's important to Moffat County? What do we want to look like as a school district? What level of education do we want to provide?"
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A special school board meeting has been set for 7 p.m. Feb. 12 at the MCSD administration building to present the budget situation to the public.
"To establish the future of our district regarding the budget, we will be entertaining public comment that evening," board President J.B. Chapman said. "We want to hear from staff, we want to hear from taxpayers, we want to hear from everybody. Finalized decisions will not be made, we will just be having discussion."
A perfect storm
At the base of MCSD's financial woes is a complex and unpredictable state funding process for public education in Colorado.
The amount of money a school district receives from the state each year is determined largely by three things — the School Finance Act, Amendment 23, and the so-called "negative factor" — which define formulas and parameters for calculating a district's funding per student.
"The SFA outlines a formula that evaluates various factors… including how many at-risk students a district serves, the cost of living in the community, and the size of the district. MCSD receives less funding than other districts in our area largely because of these three considerations," according to the 2014-15 Guide to Understanding Your School District Budget from MCSD's Finance Department, available on the MCSD website.
The intention behind Amendment 23 was to bring public education funding back to 1989 levels when adjusted for inflation, according to a handout created by the Colorado Association of School Boards.
However, the Colorado Legislature altered its interpretation of the amendment in 2009 in response to the economic downturn, creating the negative factor, which cuts funding to school districts throughout the state.
MCSD's per pupil funding for the 2014-15 school year is $6,667. Without the negative factor, state funding would have been $7,462 per pupil, adding up to more than $2.1 million that the district did not receive.
Comparatively, the statewide average per pupil amount is $7,636 for the 2014-15 school year, according to the MCSD budget guide. Nearby Hayden School District receives $9,117 per pupil, while Steamboat Springs receives $7,018 and Meeker receives $7,301.
The district's per pupil funding for the 2015-16 school year could see an increase to $7,115, thanks to a budget request from Gov. John Hickenlooper that would boost public education funding for the coming year.
The governor's budget request would decrease the negative factor amount deducted from MCSD's funding, equating to a $762,186 bonus for the next school year. That amount would make up a significant portion of the district's projected deficit for the coming year, though it would not offer any solution for future deficits.
The trick, however, is that the governor's budget request has to pass through the Legislature, and won't be finalized as part of the state budget for several months. It's anybody's guess whether the requested increase for kindergarten through 12th-grade education will be granted.
"I think that is the hardest part of our budget is that 70 percent of our budget is tied to that per pupil funding," said MCSD Finance Director Tinneal Gerber, "and we don't know until April (what that funding will be.) We have to turn around and finalize our budget by June."
Compounding the state funding debacle is the fact that MCSD is shrinking by an average of 50 students per year, according to Gerber, primarily due to families moving out of Moffat County.
Data from the U.S. Census Bureau via Yampa Valley Data Partners reveals that Moffat County's population did in fact shrink by nearly 1,000 people from 2010 to 2013.
Since the school district is funded based on pupil count, this equates to less state funding despite the fact that the district's overhead costs remain essentially the same.
Add to that increasing costs in staff benefits, utilities and contributions to the Public Employees Retirement Association, and the financial picture becomes even more bleak.
"I describe this as the perfect storm," Hume said. "Student enrollment continues to go down, and (we have) a public education funding system in the state of Colorado that's as screwed up as ever — you never know year to year what's going to come down. Plus the infrastructure continues to degrade because we haven't been able to maintain it."
Gerber estimates that the district has about $9 million worth of capital improvements needed for school infrastructure, not including costs to update the school's aged bus fleet.
Furthermore, Gerber projects that budget cuts required for the 2016-17 school year — if both state funding and current trends within the district continue — will be another $1.4 million.
"Every time we go into this budget, we're looking at $1 million to $1.4 million in cuts. Even as things come in — new revenue — that still doesn't answer where we're going as a district, how we're going to fund new curriculum," Gerber said. "We are at the point that we've nickel and dimed every program, every department."
For the school district to properly fund future curriculum and technology improvements, Gerber estimates that an additional $2.3 million in funds would be required.
"In the end, this is really the deal — the community of Craig has to decide what they want to do with their public education system," MCSD Superintendent Brent Curtice said. "I believe that we are one of the most important economic drivers, because if your schools aren't functioning well, people don't come here."
The school board is considering a wide array of solutions to the possible deficit, including dipping into reserves or giving voters the option to approve a mill levy override increase of $1.9 million in addition to the nearly $2.2 million approved by voters in 1997.
"(We need) a better understanding of the needs and desires of our community and their tolerance level, whether it be spending reserves, whether it be a mill levy override, whether it be a bond, or any of those funding resources that significantly impact all of us that live here, all of us that pay taxes," Hume said.
Without additional revenue sources, the school district is likely to be facing tough choices in the coming years — from staff cuts to a four-day school week — even as soon as the next school year.