Battle Ground Public Schools’ budget for the upcoming school year will increase by more than $11 million as the district prepares for a potential “fiscal cliff” in subsequent years.
During its Aug. 22 meeting, the BGPS Board of Directors voted unanimously to approve the $214.4 million operating budget for the 2022-2023 school year. The budget draws on reserve fund balances by about $13.1 million, though what remains is still above school board policies on what the district needs to maintain.
The budget is based on an 8% decrease in district enrollment from what it was before the COVID-19 pandemic, BGPS Chief Financial Officer Michelle Scott told the board at the meeting. She said the state’s drop during that time was 3.4%.
District Superintendent Denny Waters said BGPS has enrollment loss that’s equivalent to Vancouver Public Schools and the Evergreen School District. Waters noted the state average accounts for districts like Ridgefield which are experiencing “astronomical” growth.
State revenue is driven by enrollment and makes up three-quarters of the district’s revenue, Scott said. The district’s local levy, which was approved by voters last November, makes up about 13.7% of revenue.
General revenues for the 2022-2023 budget increased by about $8.3 million or 4.6%, due to a state inflationary increase, Scott said. The district’s local levy remained largely flat.
Total revenue for 2022-2023 was about $201.7 million, up about $4.6 million from last year. Though an increase, the district will have about $5.7 million less from federal special purpose funding which includes Elementary and Secondary School Emergency Relief (ESSER) funds.
For expenses, teaching activities made up about 56% of the spending. That included classroom teachers and aides, classroom supplies and extracurriculars. Other expenses included support services ranging from school libraries, security, transportation and maintenance, as well as administration both at the building and districtwide levels.
About three-quarters of expenses are salaries and benefits. Scott said included contracted services would lead that total closer to 85%.
District expenses increase by about $11.6 million compared to the past school year, and includes roughly $5.7 million of ESSER funds. Those expenses cover nurses, counselors, psychologists, security and learning recovery efforts
For this year, the budget features seven more certificated staff including counselors, a psychologist, a curriculum adoption coordinator and a director of instructional leadership. It also includes around 50 more classified staff including security, paraeducators, a custodial lead and communications support.
The roughly $13.1 million difference in revenue and expense will reduce the district’s fund balance from $43 million to $29.9 million. Scott said much of the draw on the fund balance was from enrollment stabilization funds the district received the previous school year.
Outside of the operating budget, the district also has $24 million budgeted expenses from its capital projects fund. Scott said that money will fund the relocation of CAM Academy as the district places modular buildings at the district’s Lewisville campus. Those funds will also be used for a modular building at Yacolt Primary School.
Scott also provided an overview of a four-year forecast for district finances. In that forecast, she spoke of a “perfect storm” beginning in the 2023-2024 school year. The factors at play for the potential “fiscal cliff” included expiring ESSER funds, the ending of enrollment stabilization money, inflation, labor scarcity, the potential for an economic slowdown and current world conflicts.
“This is not just unique to Battle Ground Public Schools,” Scott said.
The potential for a fiscal cliff is being looked at by districts locally and nationwide.
She said the district will look at the potential impacts over the course of the next year.
Waters said the per-student model of funding from the state had a large impact on the district’s financial planning. Cuts were easier to make on classroom teachers because there was a direct correlation, but for positions covering schools more broadly like counselors, nurses and custodians, that model is a complication, he said.
“You still have to find ways to pay for those people because you still need them, and so the overall impact with enrollment is considerable for us,” Waters said.
On the sizable fund balance the district has, Waters said it is a necessity to maintain given uncertainty over its other funding resources. When planning the 2021-2022 budget, the district initially budgeted for no levy which saw even more significant draws on its balance.
“We were worried about not passing a levy, so we tightened our belts,” Waters said.
Even with more than $13 million used, the district’s balance is still well above the roughly $12.9 million that board policy dictates the district must maintain.
“I think, personally, $40 million is too much money to have in a surplus, so I’m happy that we’re spending it,” Waters said.
In full recognition of the potential fiscal cliff, Waters said the district will see how this year’s budget plays out and will “adapt accordingly.” He noted BGPS received more than $30 million in ESSER funds and enrollment stabilization money over the course of the past few years which will go away soon.
“I think the easiest way to avoid the fiscal cliff is enrollment gain,” Waters said. “If we could gain the enrollment that we lost, those 800 to 1,000 students, we would be fine going into the following year.”
