Superintendent Charles Wilson, speaking Thursday night to the Board of Education, laid out what he hopes will be the worst-case scenario for the Bulloch County Schools’ finances in the aftermath of the Covid-19 pandemic.
“It has gone from a growth model to a survival model, almost overnight,” Wilson said.
Emphasizing that the projections of what could happen were his own and not from any state sources, Wilson reported that he and his staff estimate a loss of between $15 million and $25 million in state and local revenues for fiscal year 2021, which begins this July 1. In the current year, the school system’s general fund budget totals almost $102 million.
What would have been the presentation of a new budget, for the board’s approval in the near future, was replaced by a discussion of “how can we look long and get this school system through … and out on the other side,” he said.
Board members sat farther apart than usual, in the William James Educational Complex cafeteria, instead of their boardroom nearby. Some wore masks. Wilson stood at a lectern to face them, and also advanced a slide show.
“We need to be very aggressive and proactive and responsible in how we handle this situation,” he said. “Again, everything in this presentation is subject to change, and I’m telling you what I believe I think I know. I hope that I’m overreacting and that we can scale it back from there.”
State QBE loss?
If Wilson’s dire, cautionary projections prove true, the largest single funding loss will be a 15% to 30% decrease in state funding through Georgia’s Quality Basic Education, or QBE, formula. The funding is based on the number of students in various grade levels and programs.
Since the Bulloch County Schools received about $67 million in QBE funding during the current fiscal year, a 15% reduction would amount to about $10 million. A 30% reduction would be $20.1 million. Wilson also charted 20% and 25% reductions as possibilities.
“You can call me pessimistic if you like, but these are my opinions based on what we’ve seen in the past and what’s happening in this economy,” Wilson said.
He noted that in the post-2008 recession, the cuts in QBE funding to the local schools peaked with a 20% loss per student in 2010. The International Monetary Fund and other organizations predict that the decline in U.S. economic output this year could be much greater than at that time, he said.
Wilson, who was the school system’s chief financial officer before becoming superintendent in 2013, remains a certified public accountant and holds a Master of Business Administration as well as an Education Specialist degree.
Local sales taxes
While any cuts in QBE funding await decisions by state lawmakers, a decline in sales tax revenues is certain, although the extent remains speculative. Consumer spending has been stunted, and most of Georgia Southern University’s students will be away from March until August, he noted.
So something that has long been a boon to the Bulloch County Schools, “a mixed portfolio” of local funding sources in sales taxes and property taxes, has a downside, Wilson noted.
In fact, the schools receive the full benefit of two 1% sales taxes. In addition to having the Education Special Purpose Local Option Sales Tax, or E-SPLOST, the Bulloch County Schools are one of a few school systems in Georgia that receive all of their counties’ original Local Option Sales Tax revenue.
Providing a rollback in property taxes, the LOST goes directly to school operations. Meanwhile, the E-SPLOST, traditionally used for building projects, has recently been applied also to purchases of technology, school security devices, books, school buses and playground equipment.
Wilson and his staff projected that Local Option Sales Tax revenue will be reduced as much as 50% from July through December 2020 compared to last year and could remain 25% below previous levels from January through June 2021.
They tentatively project a $4.5 million loss in sales tax revenue for school operations through the fiscal year.
Mitigation plan
Wilson also outlined, for discussion, a mitigation plan that would freeze and re-evaluate all non-critical spending, such as equipment purchases and travel, freeze hiring for positions left vacant by retirements and resignations and implement up to 20 furlough days for all employees.
With about 2,100 employees, approximately 1,486 of whom are full-time, including about 750 teachers, the school system is Bulloch County’s second-largest employer.
Wilson described the hiring freeze and potential furlough days as parts of a strategy to avoid layoffs.
“In addition to safety and the instruction that needs to occur, we want to protect people’s jobs, but with that comes some shared sacrifice,” he said. “We’ve done this before.”
In 2010 through 2012, the local schools’ calendar included up to six furlough days, he recalled.
For teachers working 190-day contracts, 20 days of furlough would amount to about a 10.5% pay reduction for the year.
Wilson said he will use all other available measures, and hope his projections are proven incorrect, to reduce the number of furlough days or eliminate them.
Big hit to reserve
However, even 20 furlough days would save only an estimated $6.7 million.
He projected that $2.5 million could be saved by the freeze on filling vacant jobs and another $2.5 million by non-payroll spending cuts. Another $2.5 million could come from emergency federal aid to the schools provided under the Coronavirus Aid, Relief and Economic Security Act, Wilson projected.
But all of those things add up to a projected $14.2 million. So this mitigation plan, applied against a $25 million state and local revenue reduction, would still leave a $10.8 million loss for the year.
The school system has a $21 million general fund balance, long considered a very healthy amount for a budget around $100 million. But subtracting $10.8 million would cut that reserve in half in a single year.
Staff reassignments
Wilson called his approach to the hiring freeze “managed attrition” and suggested that he would fill vacancies in essential positions through reassignments whenever possible, beginning with reassigning some central office staff members to work as administrators in schools. Administrators, teachers and support staff could also be reassigned from school to school as needed, he said.
This drew words of concern from District 4 board member April Newkirk, an educator of teachers. Relating the reassignment strategy to Wilson’s transfers of principals and other administrators in previous years, she asked him to consider the emotional toll on teachers and students.
“We know what that did when it wasn’t a stressful time, when it wasn’t a lockdown and when teachers were able to be with their kids…,” Newkirk said. “So I beg you to please make sure that those shifts are minimal and that they are truly seeking out what is best for the faculty, staff and the kids and the community.”
“That is the last thing I want to talk about is moving anybody anywhere,” Wilson replied. But people need to consider it in light of keeping others employed, he said, and suggested that the moves could be temporary.
In the current fiscal year, the system has continued to pay all employees, despite classes having been cancelled since mid-March. Teachers are expected to check on students twice each week and provide instructional materials or ungraded online classes when possible. Administrators and support staff continue to maintain the schools, and some work in the free meals program for children.