Without new revenue or cuts in expenditures, Pulaski County Special School District leaders are looking at drawing as much as $7.6 million from $17.2 million in district reserves to meet expenses in the coming 2018-19 school year.
The district's School Board received the financial report at a meeting Tuesday during which members approved the 2018-19 school year calendar.
School Board President Linda Remele of Sherwood said after the meeting that she anticipates that the board will make budget cuts later this spring -- possibly in staff positions and other school district operations -- to reduce the gap in projected revenue of $123 million and expenditures of $130.6 million.
"We're going to go for budget cuts," Remele said. "We've got to cut something. There's no way on God's green earth that this board is going for second-lien bonds. If I'm wrong on that, you can come tell me afterwards."
A yearly draw on cash reserves can put any Arkansas school district at risk of being classified by the state as a district in fiscal distress. The Pulaski County Special district in 2011 was so labeled for findings of financial mismanagement and overspending and was operated by the state for five years. The district emerged from state control and elected a school board in 2016.
Denise Palmer, the 12,000-student district's chief financial officer, told the board Tuesday that several factors are contributing to the budget gap and the potential for a dip into reserves that would leave the district with a contingency fund of about 7.4 percent of its expenditures.
Those include:
• The end after this year of special state desegregation aid to Pulaski County's four school districts, of which Pulaski County Special's share is about $15 million.
• An anticipated loss of local tax revenue of about $69,000 because of a decline in personal and utility property values within the district's boundaries.
• A $4.7 million increase in what is now the district's annual $10 million repayment of bond debt -- the result of recent bond issues for the Mills High, Robinson Middle and Sylvan Hills High construction projects. If the district should sell additional second-lien bonds, which don't require voter approval, the payment could be an additional $856,080.
• The anticipated purchase of five new buses at a cost of about $400,000.
• And a $1.2 million increase in payroll and benefits, including the annual step pay increases for an additional year of work experience.
Left out of the calculations Tuesday are any reductions in state Foundation Program Aid to the district as the result of declines in student numbers. That state aid is based on the average enrollment of a district over the first three quarters of the previous school year.
Enrollment projections are particularly difficult to make in the district because the board has only recently voted to allow students who reside in the Pulaski County Special district to attend schools outside the district or to allow students residing elsewhere to enroll in its schools. The school-choice program's sign-up period is this spring for the coming school year.
Palmer told the board that district staff members will present to the board in April some possible options for narrowing the budget gap. In an interview, Palmer said a school district has limited means to generate money: Increase enrollment, increase property values and/or raise property taxes.
In regard to the building projects, the board learned Tuesday that the new Mills High is about 70 percent completed and Robinson Middle is about 82 percent complete. Both are to open to students in August. The Sylvan Hills High expansion is about 5 percent of the way toward opening in 2019.
Also on Tuesday, the board approved the 2018-19 school year calendar that establishes Aug. 13 as the first day of school. The last day of school for students will be May 24, 2019, unless school closings during the year necessitate extending the year past the Memorial Day holiday, May 27.
Metro on 02/14/2018