Despite a budget stalemate at the state Legislature, two of Gilbert’s school districts are pushing ahead with their spending plans for the fiscal year that begins July 1.
Gilbert Public Schools is looking at a proposed $280-million spending plan while Higley Unified School District is considering a $117-million budget.
For GPS, the larger of the two districts, the Fiscal Year 2023 budget is 4.4% higher, or $11.8 million more, than the current budget.
“We are proposing a budget that hasn’t been really been approved by the Legislature,” said Bonnie Betz, assistant superintendent of Business Services at the June 7 Governing Board work study. “We are obligated though to adopt a budget by July 15. We expect the governor’s budget to be the most conservative that we would see for Fiscal Year ’23.”
The district’s proposed budget assumes the governor’s budget will be adopted and assumes a student loss of 400. The board is expected to adopt the preliminary budget June 21.
Betz said nondiscretionary spending increased for the district by a total of $3.42 million in the proposed budget.
The increases include $2 million more for special education, $1 million for general inflationary costs for supplies, fuel and utilities, $300,000 for medical insurance premiums and $120,000 for other insurance premiums.
“These are things that we are obligated to adopt or to spend or increase,” Betz said. “We have limited control over any of these items.”
She pointed out that this was the first time to include nondiscretionary inflation increases in the district’s budget. The district saw an inflationary increase of over 8% in the current school year.
“Because of that inflationary increase we felt it was important to send more money out to our schools for their discretionary budgets because they are going to see increase in costs,” Betz said.
Out of the $1 million in inflationary increases, each elementary campus would get $5 more for $65 per student; junior highs would receive $5 more for $70 per student while high schools would see $8 more to $85 per student, according to Betz.
The district also is seeing a $15.6 million increase in discretionary spending for next fiscal year.
About $4.5 million would go for instructional and behavioral coaches and full-time hires for the new acceleration campus at $3 million; $250,000 for starting salaries for positions such as speech-language pathologists and nurses; $500,000 for hourly increases and $800,000 for expanding pay for performance for professional staff.
Another $11 million in proposed discretionary spending would fund the ongoing 3% pay hike for teachers, administrators and hourly employees and for sick-leave buyback.
Betz said the district would see $2.6 million in savings in the new fiscal year, which includes $1.5 million if there is a reduction of 20 full-time employees due to an anticipated enrollment loss of 400 students.
And using the available $5.8 million of the $29.9 million left at the remaining of the current budget year, that leaves the district with a $10.9 million deficit, Betz said.
She said strategies such as using monies from the budget balance carry-forward and shifting maintenance-and-operations expenses to other accounts would cover $10 million of the shortfall, leaving $900,000, which would be covered by drawing down the fund balance.
“Is it possible as we spend through the year and we are careful in our spending we could realize the $900,000 at the end of the year?” board member Jill Humpherys asked. “Say we allocated X amount of dollars for something and then that money came in less. We would have a little bit of savings over the balance of the entire year. We could possibly come up with that $900,000.”
Betz said that was correct and reminded the board that the loss of 400 students was an assumption. School districts receive funding from the state based on prior year student headcount.
“If we lose only 200, we already won,” Betz said. “There are still many things moving with possibilities in the future.”
She added that the student count for the current school year was being recalculated with the final tally available July 15.
Board member Bill Parker questioned how the reduction in teachers would be determined if there was a loss of 400 students.
Betz assured him there would be no layoffs of any personnel.
“We have ongoing, regular attrition that easily accounts for that 20 FTEs,” she said.
Finance Director Jackie Mattinen said the estimated average teacher salary in the new fiscal year would be $63,799 compared with the average pay of $57,228 in the prior fiscal year.
Betz added that the pay increase added to the $57,228 does not take into account teachers who have left the district.
“We’ve already had attrition of our highest-paid teachers that would have our average salary go up, not down,” she said. “So we would present another estimate to you probably at the adopted budget but also expect that in our revision that’s in December or January that is when the average salary will be computed more accurately to reflect the population of teachers in Gilbert Public Schools next year.”
And, the district’s unrestricted capital budget capacity is proposed to increase by 3.9% to $44.2 million, Mattinen said.
Some of the $24.16 million in proposed capital spending include $1.97 million for teaching and learning, which includes the gifted-curriculum adoption; $4.4 million for technology such as laptop refresh; $5.5 million for schools and $420,000 for athletics.
Betz said $8.98 million of that amount is being held as contingency, which is meant to be spent but there’s no request or knowledge of what the needs are out there at this time. An additional $20 million is being held in reserves, she said.
Mattinen highlighted some of the capital spending in the 2022 fiscal year, which included $4.4 million for district-wide technology and operations, $3.2 million for a new curriculum, $1.5 million for school furniture and equipment, $1.3 million for library furniture, $977,524 for vehicles and $532,593 for athletic equipment and uniforms.
Betz concluded the presentation, noting that there were lots of risks and opportunities in the budget, least in fact that the Legislature hasn’t approved a state budget yet.
HUSD CFO Tyler Moore said staff used a lot of assumptions in crafting the proposed $117-million budget because they don’t know what the state budget will look like. Adoption of the budget, which is $10.2 million higher than the current revised budget, is scheduled for June 22. The preliminary proposal would see an estimated budget carry forward of $22 million or 19.5 percent of the total budget.
“We have to submit this regardless of what’s happening at the state level,” Board President Amy Kaylor said at the June 8 meeting. “So, I can understand this flux and being on the conservative side not knowing what they’re going to do. Frustrating but nonetheless it is what it is.”
Moore noted that the district will have an opportunity in December to revise its budget if needed.
“We are very conservative in our budget numbers,” he said. And this year we did not have to revise down. We could have revised up but we chose not to.”
He said some of the highlights of the proposed budget include no anticipated additional federal pandemic-relief money, a transfer of $4.4 million from the maintenance and operation fund to capital to pay the two middle-school leases and an estimated budget savings of over $500,000 by moving the district’s medical insurance to a self-insured plan, where the district will be responsible for the claims. Currently the district gives 21% of its budget to United Health Care, according to Moore.
The budget also proposes to transfer an additional $3.6 million from the M&O fund to the unallocated capital contingency should the $95-million bond fail in November, according to Moore.
“We may need capital at a moment’s notice,” he said. “Rather than bringing a revised budget we will have that budget contingency available and will be able to make sort of capital purchases at a moment’s notice.”
He added that the budget would be revised if the bond passes, putting the $3.6 million back in its original account.
He said that although there are bills addressing the Aggregate Expenditure Limit, as it stands now, school districts in the state will again face potential cuts in the new fiscal year because the state Legislature in March approved lifting the cap but just for Fiscal Year 2022.
“We are planning on holding a large contingency for this just in case those bills do not go through,” Moore said. We will be prepared.”
Moore said the increase to the proposed budget can be attributed to a number of factors, including keeping the ADM or student enrollment flat and a projected 2%, inflation, which is the minimal the state has to fund the district.
Moore also said that due to the population increase in the state, there are bills being proposed to increase funding for K-12 anywhere between $400 million to $600 million. The district budget took a conservative approach at the potential increase in funding and he didn’t expect to have to revise the budget down but rather up, he said.
“Across the board good news for Higley in what we can do for the future,” Moore said. “I feel very confident we can make a lot of our initiatives funded and it’s nice to see this state start to invest some budget into K-12 in addition to their regular obligated statutory inflation percentage. So that is encouraging news.”
Also in the proposed budget the average teacher salary is $65,717, up from $62,173 from Fiscal Year 2022.