Orange County Schools
Superintendent's Message
Patrick Rhodes
Superintendent
patrick.rhodes@orange.k12.nc.us
2012-2013 Budget
April, 2012
State and federal budget cuts continue to play a major role as declines in state and federal appropriations continue to squeeze school system operations. For Orange County Schools, this will be the fourth year in a row we have been subjected to massive state budget cuts. This year’s reversion (funding we are required to return to the state) is an all-time high of $2.5 million. Since2008, Orange County Schools has been forced to send a total of $7.4 million back to Raleigh. Sadly, these cuts represent a statewide cut of $417 per student and North Carolina now ranks 48th in the nationin per-pupil funding. Federal appropriations to the district will also drop $1.66 million, as the EducationJobs funding ends and our Foreign Language Assistance grant funding has been eliminated. As a result of these cuts, the total projected funding shortfall for 2012-13 is over $4.4 million.
To avoid negatively affecting direct classroom services, the system has cut 16 district-level positions, not filled vacant teacher assistant positions, and cut expenditures in multiple areas. Since 2008, we have cut 36 employees from our workforce while increasing our enrollment by 350 students. Furthermore, state funding cuts have not allowed us to fill 49 other school-level positions. Next year, according to state projections, we expect to serve an additional 148 students. We have made all the cuts we can make.
Contrary to state and federal appropriation pullbacks, the Board of County Commissioners has continued to provide stable operational funding support to the schools and has funded growth due to enrollment. Out of 115 North Carolina school systems, Orange County Schools ranks 107th in federal funding, 79th in state funding, and 4th in local funding.
Over the past three budget cycles, the school system has not requested an increase in localper-pupil funding. We have absorbed state budget cuts by reducing staff levels and cutting district-levelprogram budgets.
Looking ahead to the 2012-2013 budget year, these declines in revenue are accompanied by higher costs due to state-mandated increases to health insurance premiums and retirement contributions. The increased costs and state-mandated increases are listed below:
Local Cost Increases (due to state mandates)
| Employee Retirement Contributions (from 13.12% to 14.31%) | $ 170,000 |
| Health Insurance Cost Increases (up $261.00 per employee) | 55,000 |
| Utility Rate Increase (approved by State Utilities Commission) | 55,000 |
| Subtotal – Mandated Increases | $280,000 |
Federal Funding Cuts
As noted earlier, two essential federal appropriations to the district are being cut to zero. Funding for Education Jobs and the Foreign Language Assistance Program were specifically focused on providing school-level instructional staff by paying for 38 teachers and 1 teacher assistant. This loss of $1,658,358 must be replaced if we are to continue providing these important classroom services.
| Federal Education Jobs Appropriation Loss | $1,406,850 |
| Foreign Language Assistance Program (Federal Cut) | 251,508 |
| Subtotal – Federal Funding Cuts | $1,658,358 |
State Funding Situation
As a result of legislative funding cuts, North Carolina public school systems were forced to employ 11,833 fewer staff statewide. Orange County Schools has made major cuts to personnel. Since 2008, fifteen positions have been cut from the Central Office, and we have decreased the number of teacher assistants from 151 to123. For the current year, specific statefunding cuts impacting Orange County Schools include instructional supplies, school technology, instructional support, assistant principals and central office administration and are in addition to the $2.1 million discretionary cut we were required to make.
State Discretionary Cuts
The largest cut to state funding, known as the discretionary reversion, requires school districts to send funds back to the state after they have been appropriated. Since 2008 Orange County Schools has sent back $7.4 million. For the 2012-2013 budget year, Orange County Schools will be required to send back, or revert, $2,500,524. This is an increase of $394,077 over last year’s total. For the currentyear, our system met these reversions by sending back funding for positions (21 teachers, 24 teacher assistants, and 4 support positions). These 49 positions were not filled while enrollment increased by 126 students. Taken all together, the projected funding shortfall for 2012-13 will be $ 4,438,882.
| Local Cost Increases | $ 280,000 |
| Federal Cuts – New | 1,658,358 |
| State funding reversion | 2,500,524 |
| Total Projected Funding Shortfall | $ 4,438,882 |
Meeting the decline in revenue without negatively affecting the classroom is critically important. Our Board and staff members have worked hard to identify savings to reduce costs and to protect the classroom unit. We cannot make further cuts without affecting classroom services.
Recommendations
For the 2012-2013 budget year, I am recommending that the Board (1) request an increase in the per-pupil appropriation provided by the County, (2) apply state payroll flexibility savings and (3) appropriate from fund balance. Since 2008, the School Board has focused on cost cutting and has not requested an increase in the per-pupil appropriation.
In order to prevent cuts that will directly affect students, I am recommending that the Board of Education request additional funding from the Board of County Commissioners. The requestedincrease will be essential in order to maintain existing programs. It will be used to prevent further teacher layoffs, prevent excessive class size increases, and keep our elementary and middle school foreign language programs intact. I am recommending that the Board of Education request a $220 increase in the per-pupil appropriation. This would generate an additional $2,307,184 and maintain funding for 38 teacher positions which include elementary and middle school foreign language instructors. This level of funding is necessary in order to counteract the negative effects of state and federal budget cuts to our schools.
I am also recommending that the Board of Education appropriate payroll savings generated from a comprehensive analysis of our state and federal position allotments. Complicated State Board of Education financial flexibility guidelines allow school systems to shift categories of funding in order to optimize resources which have been appropriated. By applying this flexibility, Orange County Schools has identified $700,000 for the current year and the same amount can be applied for next year. Should the Board approve using these savings, $1.4 million in additional revenues will be applied to next year’s budget.
The Board of Education has been proactive inpreparing for this sharp decline in state and federal revenues and has taken steps to increase reserve funding. Over the past four years, the school system has focused on cost cutting and efficiency using available resources. A wide range of strategies have been implemented, including reductions in force, applying payroll flexibility, not filling position vacancies, employing contracted services, and trimming departmental budgets. I am recommending that the Board appropriate $1,431,698 of its fund balance reserves to offset state and federal cuts. It is important to note that the remaining fund balance must be kept intact in order to offset projected capital funding reductions and/or further state and federal cuts.
The proposed revenue plan is outlined below:Revenues and savings
| Increase in per pupil appropriation of $220 | $ 2,307,184 |
| Funding Flexibility Savings | 700,000 |
| Fund Balance Appropriation | 1,431,698 |
| Total funds applied to the budget | $ 4,438,882 |
The recommended requested local appropriation from the Board of County Commissioners is $25,376,758. This amount is based on the following: 7,639 students (based on county projection) multiplied by $3,322 per pupil. This represents a $2,307,184 increase over the 2011-2012 appropriation.
Over the past four years, the school system’s budget planning has focused on reducing costs and protecting vital classroom expenditures.If approved, this proposed revenue plan will prevent teacher job loss, maintain class sizes, and limit the cumulativedamaging effects of huge state budget cuts. This revenue plan will also provide continued financial support for the world language program and allow for the continuation of other key academic college and career readiness initiatives including strengthening science and mathematics instruction, maintaining our strong literacy initiative, providing access to advanced technology and rigorous coursework, and narrowing achievement gaps.
The students of Orange County Schools have exhibited significant academic gains and measures of progress which include higher graduation rates, narrowing of achievement gaps, lower dropout rates, and SAT/ACT scores above the national and state average. In spite of the challenges of declining revenues, we will maintain a clear focus on the most important thing: the success and achievement of our students. The students, the classroom, and excellent teaching remain the top priorities in our district.