At Wednesday’s New Hanover County Board of Education budget work session, Chief Financial Officer Ashley Sutton discussed further details about the district’s proposed budget. Last year’s budget totaled $390 million, but that included a significant amount of Elementary and Secondary School Emergency Relief (ESSER) funding, part of the federal COVID-19 relief spending package sent to school districts.
Part of the district’s budget crunch comes from having students — since they receive state and local funding on a per-pupil basis. Sutton said that the North Carolina Department of Public Instruction (NCDPI) enrollment projections still haven’t been released, but according to the last projection, the district is down 341 students. She added that DPI has advised that the district needs an across-the-board 10-15% reduction in programs, which means decreasing staff associated with them.
Sutton also touched on the $13.4 million in federal funding (13.3% of the overall budget) and $10.7 million in local and state funding for capital projects (6.2% of overall); those funding streams are typically either more stable, or don’t impact staffing decisions.
A major cause of the district’s financial woes is that ESSER funding is expiring in September, about three months into the next fiscal year. A total of roughly $40 million that was part of this year’s budget is running dry; a little over a quarter of that, $10.8 million, was tied up in recurring funding for staff — meaning the district now needs to find a new funding source, or make cuts.
Over the past couple of weeks, to better understand the overall budget deficit and answer some of the public’s questions, WHQR repeatedly asked the district for an interview, but they declined. However, they did eventually respond to some questions in writing.
Sutton acknowledged that the $10 million shortfall (actually closer to $11 million) that was announced in early February, represents ESSER-funded positions.
What complicated matters is that in recent years, if local funding ran out for a specific position, they moved the role into the federal ESSER funding bucket. Now, that those funds are mainly exhausted, and without additional funds from state or local sources, they’ll have to eliminate them.
The totals for the ESSER positions that are within the $10.8 million federal shortfall are the salaries and benefits for instructional facilitators and support staff, mental health workers, some directors/supervisors, and exceptional children (EC) teaching assistants. The EC staff account for $1.9 million of the overall federal fund deficits (*See the accounting of this at the end of this report).
According to Christina Beam, communications director for the district, “Knowing that funding was ending and as phases of ESSER have completed, we had already started transitioning people from ESSER positions into locally-funded positions. However, the rate of retirements and attrition has been much lower than expected and there aren't enough vacancies to absorb all of the positions.”
The other $10 million shortfall, presented back in January, was from a combination of ESSER funding loss, declining enrollments, and the draining down of fund balance to give staff a higher local educator supplement — and to make payroll when state and federal dollars arrive later in the fall.
While there is no set lower limit for fund balances, the Local Government Commission, part of the State Treasurer’s office, does advise government agencies when their reserves are too low. Sutton said for the coming budget year, they’ll only have about $1.3 million in fund balance, which is not enough to cover payroll during the lag time between when payroll checks go out at the beginning of the fiscal year and when state and federal funding arrives later in the year.
Some in the public have asked WHQR, why can’t the education lottery funds be used to patch some of these holes?
Beam said, “In our current budget cycle we received about $1.75 million in lottery funds that we can use only for repairs and renovations.” She added that it’s a “very small piece of our operational budget.”
Board, superintendent discuss plans for pending job cuts
At the board’s last budget meeting, Superintendent Dr. Charles Foust presented a worst-case scenario of having to cut 279 positions if there were no retirements or resignations. About 70 of the 279 were ESSER specific, meaning most of those were dissolving at the end of September 2024 as federal funds expire.
Board member Hugh McManus asked Foust if the district could simply ask county commissioners to help support a budget with all the positions the district wanted to keep. Foust responded that he could not send a budget to the commission that was not balanced, saying, “I cannot send a budget without cuts.”
McManus pushed back and said that the board needed to at least make the ask, but Foust told McManus that would then mean the commissioners would be on the hook for providing $20 million as a recurring amount each year to sustain the positions.
Foust said that would be “OMG and you can quote me on that.”
Board member Pat Bradford said the district could not ask for more because of the “budget down cycle,” alluding to tightening budgets across local governments in the region.
Board Chair Pete Wildeboer said that the district is in a good position for staffing, although even before these proposed cuts, teachers and principals were saying that they didn’t have the employees they needed, but not in a good position in terms of financing.
However, all board members agreed that state legislators need to change the allotments for staffing based on student population numbers. Last budget work session, Assistant Superintendent Dr. Christopher Barnes said this allotment formula hasn’t changed in ten years. The commission does provide funding for the positions over these allotments.
Board members Stephanie Kraybill and Stephanie Walker said they needed to have another joint meeting with the commissioners to help them understand the needs of the district.
Kraybill also said she took issue with how the county is trying to lump in the services of Port City Unitedviolence interrupters, the Elements program, and the ‘Too Good for Violence’ program with the per-pupil spending amount, with the county manager Chris Coudriet saying it equates more to $5,200 with the inclusion of these programs, instead of their current $3,434. Kraybill said those programs are not student-facing positions that deal with curriculum and other classroom needs, implying that would be inflating the per-pupil amount.
She also brought up that at the February 19 commission meeting, some of the commissioners — including Dane Scalise and Jonathan Barfield — were upset with the amount of constituent feedback they were receiving via emails and calls. Kraybill said, “That’s old hat for us.”
[Editor's note: Barfield later told WHQR he was not upset during the meeting, and was simply explaining the budget process as he saw it.]
Because of the pending cuts, education advocates are planning a rally right before the school board’s Tuesday, March 12 meeting.
No overarching fix to overcrowding in NHCS or new construction or building upfits
The district plans to ask the county commissioners for about $8.7 million for facility and other capital improvements. The overall capital budget will be $10.7 million, with $2 million coming from the state.
Funded for next fiscal year, which were improvements left over from last year’s county budget, are safety and security upgrades ($1 million), a facility needs assessment ($500,000), a culinary classroom, and structural repairs at New Hanover High School ($3.4 million combined).
Assistant Superintendent Eddie Anderson said most of these projects will take place this summer.
The new capital asks will be items like intercom replacements at Sunset Park, Murray Middle, Ashley High, and Masonboro Elementary. The district will also repair the roofs at Winter Park Elementary and Carolina Beach Elementary.
They’ll also ask for $1.8 million in technology requests. That money will go toward servers, cameras, and iPad upgrades. There will also be $210,000 in spending for furniture and equipment and $414,450 for vehicles.
There are significant renovation needs that are left unfunded — to the tune of $29.5 million. When Board member Stephanie Walker asked about how projects get picked to move to the front of the line, Anderson said that it was a difficult process and that his department matches the needs with available revenue.
Neither Sutton nor Anderson touched on the district’s long-term infrastructure projects or addressed a potential school bond. New Hanover County Manager Chris Coudriet said at a joint meeting between the commissioners and the school board, that they would have to start planning now for a bond ask in May from the Local Government Commission. Neither the county nor the school district has made mention of this since January.
At the most recent county meeting, the commissioners signaled their interest in a half-cent tax cut amid these school budget shortfalls.
Over the past two budget cycles, there have been talks of immediate needs to build RiverLights Elementary and significantly upfit Pine Valley Elementary and Mary C. Williams Elementary.
Adjusted for inflation from 2022, to build RiverLights it would cost $50.2 million, and for the upgrades to Pine Valley and Mary C. Williams would each be $51.1 million. The budgeted amount for the management of these projects is $782,496. These projects total $153.3 million
None of these projects are currently funded.
Additionally, from the recent Cropper GIS school demographic study, the following ideas were presented to ease the current level of overcrowding in the district:
According to Anderson, no cost estimates exist for these ideas, either.
Prior NHCS budget reporting
- School committee prioritizes New Hanover High repairs regardless of county funding, Port City Daily
- Public pushes New Hanover County commissioners to help address NHCS’ budget crisis
- Facing $20-million shortfall, hundreds of positions could be cut from NHCS budget
- Memo: New Hanover County Schools implements “strict hiring freeze” ahead of budget negotiations
- Consulting firm: “Overcrowding exists at all levels” in New Hanover County’s schools
- NHCS financial officer: “It’s going to be a difficult budget process this year”
