The New Hanover County Schools district is facing a roughly $20-million budget shortfall, and there's been considerable debate about how to handle it: significant job cuts, asking the county for additional funds, or looking elsewhere for funding.
Part of the issue is declining student enrollment. Chief Financial Officer Ashley Sutton said she still hasn’t received official student population numbers from the federal or state government, so the district is still operating on its projections. However, Sutton did say she anticipates a 15% reduction in federal funds.
Sutton added that the district is also holding out for the April legislative session where the General Assembly could vote to fund school districts throughout the state “in arrears.” That means that they will fund NHCS with its student numbers as measured in February 2024 — and if that number is higher they would then fund the district for those additional students but if the number is lower, then they won’t take away funding if those numbers decrease.
This past school year, Sutton said that the district had to send back $1.9 million to the state for losing students, so the savings in the upcoming 2024-2025 fiscal year could be significant.
However, this year's reprieve would be a temporary funding measure, so the state could return to recouping funds for student enrollment decreases in fiscal year 2025-2026.
At this point in the budget process, the prospect of at least some layoffs seems inevitable — leaving many district employees concerned about their future and, according to many staff and faculty who have spoken to WHQR, further dampening the district's already low morale. That's led to questions about who is responsible for the current budget situation. To that end, Superintendent Dr. Charles Foust started the meeting by saying that neither the board nor the commission was the “bad guy” during this tough budget season.
The 'ask' for county commissioners
Technically, the budget process begins with Foust and his team drafting a budget, which is then presented to the school board, and which, with school board approval, is sent to the county's Board of Commissioners. But, historically, it's not been uncommon for school board members to meet with county leaders earlier in the process to get a sense of what commissioners might approve — or reject.
Those meetings aren't always done on behalf of the entire school board (although as long as it's not a quorum, meaning only two or fewer commissioners and three or fewer school members, it's technically not considered a public meeting and doesn't have to be announced).
During Thursday's meeting, board members Hugh McManus, Stephanie Walker, and Stephanie Kraybill also took issue with member Pat Bradford, who chairs the finance committee, for a February meeting she had with some of the county commissioners and Foust about the budget. McManus said that he, too, was on the committee — and that Bradford could have emailed to tell him about it.
Nonetheless, both Board Chair Pete Wildeboer and Walker agreed that the school board needed to schedule another joint meeting with the commissioners before the official board budget vote.
Currently, the district staff is asking for a $4.5 million increase from the commissioners to cover “natural attrition” of positions over the next year, according to Sutton. In essence, that refers to positions the district hopes to eliminate through retirement and resignations — not through layoffs. In other words, after the current employee in that role leaves, the district won't hire a replacement, thus reducing the overall, annual budget impact.
But because the workforce reduction is 'natural,' meaning those employees retire or resign at a time of their own choosing, the district has to fund the position in the meantime.
While $4.5 million doesn't cover all the positions the district needs to phase out to balance its budget, board member Josie Barnhart noted they could ask the commission to increase that amount.
Potential cuts
One of the more concerning cost-cutting proposals for the board was to decrease two pre-K classrooms. Sutton said it’s because of the increasing cost of salaries and benefits. McManus said that should go to the top of the asks of the commission — that they continue to fund 12 pre-K classrooms, not 10.
Bradford said, “I can’t imagine the county would sign off on two fewer [preK] classrooms.”
Sutton also presented a proposed list of job cuts based on the worst-case scenario of not receiving additional state or local funding. For school staff, it will be a reduction of close to 8%, which includes losing 48 classroom teachers. For Central Office — meaning the district's administrative staff — it’s a proposed 18% reduction.
Barnhart said that she didn’t feel comfortable with a proposal for cutting 64 exceptional children teaching assistants. Assistant Superintendent for Student Support Services Julie Varnam agreed and said was also uncomfortable and that there had been 'tears' about these pending cuts. However, Varnam did say they could still provide the individualized education services mandated by the federal government.
“We will meet service standards,” she said.
Walker also took issue with the reduction in 14 AIG (advanced or intellectually gifted teachers). Foust said the board could figure out which positions to keep, but he just wanted the district to get an overall balanced number.
In terms of pending cuts, Walker said to Foust that certain staff have already been told they would not be returning next year. McManus said he had heard similar things.
Foust said they have had to discuss pending staff allotments with principals and department heads but so far no one has received an official “letter” telling them their contract had been non-renewed for next year.
Walker responded that while staff may not have received official documentation of the non-renewal, they’ve been verbally told.
As for Central Office staff, Bradford said they were still a “top-heavy” organization — and more cuts needed to happen.
Foust retorted, “We still have a business to run,” asking who would run payroll, and do the ordering, printing, driving, and maintenance for the district. He followed that by saying the 18% reduction is already “huge.”
Responsibility, next steps
McManus also returned to the argument that the board hadn’t been explicitly told in past budget cycles how dire the situation would become for the schools.
He said that it’s an “all-time low for morale.”
Foust pushed back and said he had been telling the board they would have to make tough decisions in past cycles, that the board had decided to keep people instead of cutting positions. Foust also returned to the fact that student enrollments have been decreasing for some time — and that fund balance had to be spent down to give increases in social security, retirement, and benefits for locally- and federally-funded positions.
Bradford returned to the issue of who was at fault for spending down the fund balance. Foust acknowledged that the commissioners told the district to spend it down to support the local supplement increase in 2021. But, he added, the district didn’t cut the positions they needed to in May 2022, and during that time, again, the costs of salaries and benefits increased significantly, all while they were losing students.
Walker brought up a potential school bond, saying she’s been hearing that the commissioners have no “appetite” for one. Assistant Superintendent Eddie Anderson said that the district had prioritized the operating and capital budgets — and that larger capital discussions could “pick back up” after those discussions finish.
Walker said “it’s a shame” that there’s no immediate future for the bond, but that the county still “needed to do something.”
Kraybill added that it was “very disappointing” not to have received any grants from the New Hanover Endowment during the last award cycle.
The board is hoping to continue discussing the budget after the spring break holiday.
[Editor's note: This article has been updated to clarify the number of pre-K classrooms potentially impacted by the budget.]
240321 Budget Presentation by Ben Schachtman on Scribd
