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New Hanover County school board still hashing out budget, TA pay increase uncertain

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Chief Financial Officer Ashley Sutton presented to the board the status of the budget on June 7, 2022.

At Tuesday's New Hanover County Board of Education meeting, members struggled with the budget for the upcoming fiscal year. The district's financial officer said she doesn't support the current plan — and it's unclear whether classified staff will receive a salary increase.

On May 6, the school board voted 4 to 2 to send the county commissioners a request for a $17/hour minimum wage with a 1% step increase — that is, an increase to the pay rate based on years of experience. The increase covered all classified staff, including teaching assistants, and would require around $12 million in annual additional county funding. Board Chair Stephanie Kraybill and member Nelson Beaulieu dissented to this request — member Stefanie Adams was not present for the vote.

But on June 6, county commissioners passed their budget, without providing this funding, so now it’s up to the district to figure out what to do next.

Essentially, the county passed an allocation of $3,434 per student. According to the district, the county projected 24,532 NHCS students for the next school year — which is 337 students less than what the district projected. This means the school district is losing $1,157,258 in funding based on this student enrollment number. (The county is also requiring the school district to be responsible for landscaping contract services, worth $385,000.)

But the county is appropriating funding for an expansion of pre-K classrooms, an addition worth $1,555,726. They also added $268,852 to the district’s budget for charter school payments.

Superintendent Dr. Charles Foust started the budget discussion by stating after the county budget outcome, the district is at a deficit of $17 million if it were to proceed with the classified pay increase without the support of the commissioners. Foust noted that, coming just one day after the commissioner's decision, the district's latest budget was a work in progress and that deficit did not include federal funds, which could be used to help bridge the gap — although not indefinitely.

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Dr. Foust said NHCS would operate at a 'deficit' of $17 million if the pay increase passes.

Prior to this budget discussion, Chief Financial Officer Ashley Sutton had been presenting the budget, which included the classified staff increase, over a span of three years. But moving forward, she said she can only project for the next school year because the commissioners said they cannot promise any funding beyond one fiscal year.

How will NHCS support a possible classified staff pay increase?

The district's original three-year plan to raise classified staff pay only has enough funding to guarantee the first year.

Without county funding for the classified pay increase, Sutton said, they would have to tap a pot of federal money, the Elementary and Secondary Emergency Relief Fund (ESSER), totaling $6,375,284 million each year. The district is also proposing to use $597,235 of the district’s fund balance to pay bonuses for classified staff who do not receive the first year of pay increase.

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CFO Ashley Sutton said if the pay increase passes the district will pull all the funding from ESSER.

If approved by the school board, in the first fiscal year — the 2022-2023 school year — this $6.3 million in ESSER funding would only be used for raises for classified staff in certain categories, including custodians, office support, and teachers' assistants.

Those in other categories, including classified staff like managers and those who work in skilled trades, would receive a $1,000 bonus in the first year but wouldn’t receive the pay increase until the 2023-2024 school year. And those in a final category, including technicians, wouldn't receive a bonus this year, and wouldn't see the pay increase until the 2024-2025 school year.

Again, that plan is financially hypothetical after the first year — it doesn't account for sustaining raises.

For example, there's funding for raises to certain staff in year one, but no money to sustain those raises through years two and three — let alone beyond that. The same goes for raises in year two; there's no money to extend them into year three. And because the ESSER funding will expire, there's no long-term plan to make the raises sustainable.

So, the district would need a considerable injection of funding in the second year, more in the third year, and then a continuing source going forward. And that could come from cutting positions.

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NHCS classified grades -- and the proposed allocation of funds.

Sutton said she and Foust have gone through the budget to find savings for the classified pay increase but to no avail.

“We have not as a staff been able to find funding, recurring funding that would not cause significant changes to school wraparound services. And so I just felt like that it's important that I say, I'm not recommending this budget," she said.

Sustainability of the increase?

In order for the increase to be feasible, Foust said they would have to cut about 330 district positions by 2024; some of those are currently vacant, but some are the positions of current employees.

“We either have to have positions or [an] increase but you can't have 'and,'" Foust told the board.

During the meeting, members Beaulieu and Adams signaled their support for the district’s conclusion that it’s not possible to raise classified staff salaries for the next school year.

“ESSER is non-sustaining funds, so when it’s gone in 2024, it’s gone. And we will have to figure out a way to replace it or potentially lose the raise or cut positions,” said Adams.

“I would not vote for this budget, because there’s no guarantee the funds for the pay raises would return,” said Beaulieu.

Member Hugh McManus asked the question of Sutton, “We would not have to cut any positions if we don’t give a raise?”

Foust responded, “That’s accurate we would go back to normal.”

Sutton also mentioned during this exchange with McManus that she had to also budget $3,324,432 for a mandatory state salary and benefits increase — which the district plans to pull from ESSER as well.

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CFO Sutton shows the mandatory state increase the district has to offer.

Other options to provide for the pay increase?

Member Pete Wildeboer suggested in order to pay for some of the classified staff increase if there was the potential to delay Foust’s plan for the district to go One-to-One, where each student will have an electronic device, a cost of $56,012,538.67 over a span of five years.

The district has completed Year One of the plan, which spent around $8.9 million for the 2021-2022 school year for the district’s high schools. According to Foust, he’s already ordered the devices in the plan for Year Two (2022-2023) for the remaining high schools and Williston Middle, worth $11,846,175 from ESSER funding.

In Year Three, the plan allocates $13.2 million for the rest of the district’s middle schools. Year Four will be for grades 3-5, worth $14.2 million, and the final year, Year Five will be for grades K-2, worth $7.7 million.

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One-to-one plan layout over a five-year span.

Member Judy Justice asked about the use of the district’s discretionary funds, but both Sutton and Foust said that all the district’s money is budgeted within its programs.

“We don’t have petty cash,” said Sutton. The only disclaimer with unbudgeted funds, according to Sutton, is when the district receives federal funds that have to wait for a particular use for the following school year.

McManus questioned why the district spends, for example, $83,115.53 per student at J.C. Roe Center or $56,332.80 at Lake Forest Academy when Masonboro Elementary receives only $11,001.34 per student. He asked district staff if these costs could be lowered somehow.

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CFO Sutton presented what it costs per student in each of the district's schools.
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Foust said it’s “more expensive to run these schools because of wrap-around services.”

Justice responded that these large per-pupil spending figures for J.C. Roe and Lake Forest include additional services for high-needs students in these schools, like the hiring of additional counselors and social workers.

What’s next?

The board is slated to have another budget work session on June 21 to figure out whether to pass the pay increase — which according to the district is unsustainable — or cut positions over the next two school years.

In the meantime, the board has approved the use of an interim budget if the issue can’t be resolved by the state-mandated deadline of July 1.