Wake County Schools is facing a projected $3 million budget shortfall that will likely lead to budget cuts this school year. The school district鈥檚 finance staff gave a to the school board Tuesday night describing the rising costs that are driving the district over budget.
Chief Business Officer David Neter began by reminding board members that when district officials began crafting the budget for this school year, they presented the board with a list of that, if they occurred, would put pressure on the planned budget.
鈥淢ost of the items on that list have now come to fruition,鈥� Neter said.
North Carolina public school districts are required by state law to maintain a balanced budget, so a shortfall would require the district to find other budget cuts, Neter warned. The district鈥檚 finance team plans to make recommendations at a later board meeting to address the shortfall.
鈥淲e've got an over $2 billion budget, but that budget is all invested and invested in important things. So our recommendations will have impact, but we'll do everything we can to mitigate that impact against our core business,鈥� Neter said.
What鈥檚 causing the shortfall?聽
Since the fall 2018, Wake County Schools raised starting pay for school nutrition workers from $11.58 per hour to $17.75 per hour in an effort to retain staff. That escalated labor costs for Wake County school nutrition workers by 53%. Food costs also rose by 40% in this period.
Meanwhile, revenue for school meals has not kept up with those costs. The district raised the price of school meals for students who pay full price by 25% and federal reimbursement rates for students who qualify for free or reduced price lunch rose 30%. During the pandemic, schools nationwide received federal reimbursements to provide free meals for every student, and that has since ended.
The district is now on a trend to spend down its reserve balance for school meals. Neter said the program needs to keep a fund balance to cover two months of operating expenses or face other penalties. Maintaining that fund balance will mean a loss of $3 million of expected revenue in the district鈥檚 budget plan for this year.
Another factor: a change in how the state funds traditional public schools is affecting districts like Wake County where enrollment is growing. Starting this school year, the state is funding public school districts based on their prior year鈥檚 enrollment, instead of their projected enrollment. At Wake County Schools, enrollment rose this year, and the district is waiting on additional funds that were allocated in a recently passed state law to fund that growth. Finance officials don鈥檛 yet know how much funding the district will receive from this.
Board member Sam Hershey said he has requested information about how much this change in the funding model is affecting the overall budget.
鈥淲e would not have a shortfall in all likelihood, in any area, if it was funded by (actual) enrollment,鈥� Hershey said.
Here鈥檚 a breakdown of other rising costs
School utilities: The cost of heating and cooling and other utilities have been $2.5 million over budget this school year.
Charter schools: Funding for charter schools in Wake County funnels through Wake County Schools鈥� budget. This line item is $1.3 million over budget this year due to growing charter school enrollment.
Background checks: The district performs background checks for school volunteers and prospective employees. Due to increased hiring to fill vacant positions, the district is $658,000 over budget for background checks.
Vacancy rates: School districts save money when positions are vacant. Wake County Schools鈥� vacancy rate has dropped from 8.4% to 6.8%.
鈥淚t sounds like some of these higher expenses that we do have are things like inflationary costs, cost of meals, costs of paying fair wages, etc., but some of these things are actually indicators of good news,鈥� said board chair Chris Heagarty. 鈥淚f we've been able to fill vacancies, well, we have to pay the people filling those vacancies.鈥�
The school board plans to establish a budget committee to work on identifying potential budget cuts.
