Driven largely by a projected enrollment decline of about 1,250 students, Kyrene School District faces a nearly $6 million budget hole in the coming school year that two upcoming rounds of federal pandemic relief won’t come close to covering.
That sobering news was delivered to the Governing Board March 30 by district Chief Financial Officer Chris Hermann, who focused solely on the district’s 2021-22 revenue picture – leaving until later this spring Kyrene’s plans for addressing the shortfall.
Nevertheless, Hermann indicated that the board faces some tough decisions over the next two months as it crafts a spending plan for next school year.
“This means that we do not have the financial resources to address all of the budget shortfalls that we’ll be facing this year as well as next,” he said.
Compounding the impact of enrollment decline on revenue is the wide disparity among Arizona’s school districts in the amount of pandemic relief funds that will be coming in two waves.
Kyrene is getting the short end of a multimillion-dollar stick, Hermann demonstrated.
“These amounts have not been distributed equally or proportionately across all public schools,” he said, adding what Kyrene is likely to receive “will unfortunately not be enough to completely stabilize all of our finances through this pandemic and address all the areas that have created shortfalls in this year as well as next year’s budget.
“This includes offsetting the loss in funding that was due to enrollment and funding reductions for distance learning, funding for additional resources and services to address learning gaps and learning loss, addressing all the financial and economic issues related to the COVID-19 pandemic, providing the capital needed in our facilities, supplying the technological infrastructure to support our students as well as hiring and retaining all of our valuable staff through this crisis period.”
Multiple pressures are at the heart of Kyrene’s looming financial crisis but the district’s demographics are the driving factors.
Kyrene’s anticipated loss of 1,250 students “is a sizable decline and it should be noted that it’s not related to families leaving the district,” Hermann said.
Instead, he explained, that decline is largely driven by “declining birth rates and the lack of neighborhood turnover across our district.”
While the size of that enrollment loss might shrink a bit in the coming school year, he warned, “it’s not enough to offset the declines Kyrene will experience from just having smaller incoming kindergarten classes versus the size of the eighth-grade classes that will be leaving the district and being promoted into high school.”
Hermann said a more detailed picture of the district’s demographics will be presented at next week’s board meeting.
But even without the data that will be shared April 13, Kyrene’s demographics have been no secret for several years. They also are the same demographics driving Tempe Union’s enrollment down.
A demographic study presented at a Tempe Union board meeting last year showed that fewer young families with children are moving into both districts.
Discouraged by rising home prices and a low inventory affected in part by aging homeowners who are staying put, those families look elsewhere for homes.
The other major demographic component is Kyrene’s relative affluence.
That plays a role in what the district is receiving in federal Elementary and Secondary School Emergency Relief funding.
The first round came through the March 2020 Coronavirus Aid, Relief and Economic Security (CARES) Act, which provided a total $277 million to Arizona for L-12 education and resulted in about $1.2 million for Kyrene in the last school year.
The second round of ESSER money comes what could be called “CARES Act II” – the pandemic relief bill Congress approved last December.
That provided just over $1 billion to Arizona schools but what each district will receive is driven by the number of children in low-income households.
Kyrene School District’s relative affluence compared to many other Arizona and Valley districts means “districts that may have similar overall student populations did not necessarily receive the same or similar funding amounts,” Hermann said.
The disparity was even starker when broken down on a per-pupil basis.
Hermann said Kyrene had the ninth lowest per-pupil allotment among the state’s 207 school districts.
Hermann was careful not to criticize the fact that districts with far more low-income households got far more money.
For example, he produced a chart of 10 districts – both unified and elementary districts – to show the disparity but cautioned:
“In no way are we trying to say or suggest that other economically disadvantaged school districts do not have significant needs and challenges. And we believe they should absolutely receive a higher ratio of funding.
“But we simply want to help the public understand how different the contributions have been, especially since every student has been impacted from the COVID-19 pandemic, and really tell how Kyrene’s story is very different when it comes to these federal funding amounts.”
While he didn’t attach names to those school districts, state Department of Education made it easy to identify the districts on the list.
For example, Tucson and Mesa school districts will be getting $76.4 million and $70.2 million, respectively – making them the two largest recipients. The third district on Hermann’s list was Cartwright Elementary, which is projected to receive just under $33 million.
Fourth and fifth on his list were Roosevelt Elementary and Glendale Unified, respectively. They are receiving $19.3 million and $17.1 million, respectively.
Kyrene’s share totals just under $4 million even though its approximate 15,750 students are nearly double the number of Roosevelt’s and only a few hundred less than Glendale’s.
Broken down by Hermann on a per-pupil basis, here is how the five districts’ allocations break down: Mesa and Tucson are getting roughly 1,800 per pupil; Cartwright is getting $2,214; Roosevelt, $2,455; and Glendale, $1060.
Kyrene’s per pupil allotment?
The recently approved American Rescue Plan put $2.6 billion into Arizona for K-12 education but the state Education department has not yet released individual districts’ allotment.
There are other major factors – particularly Arizona’s chronic underfunding of K-12 public education – that are impacting Kyrene’s budget gap.
For example, for every student who learns online, districts receive only 95 percent of the per pupil state reimbursement they receive for students in classrooms.
But Hermann stressed that when it comes to the projected budget shortfall for next school year, “the majority of that decline is coming from the impact of lower enrollment numbers on the overall state level of funding for next year.”
Hermann’s presentation provoked discussion among the board members on a variety of issues.
Michelle Fahy said she wished she understood better the formula used to determine the district’s ESSER funding – to which Hermann replied they were federal guidelines, “so there was very little opportunity to change that.”
Fahy bemoaned the federal formulas for distributing pandemic relief money, noting “every one of our children across our state was impacted by COVID-19 and not just” those from low-income households.
There also was discussion of other revenue issues, such as the money that the state gives districts to help retain experienced teachers – something Kyrene has prided itself on accomplishing.
Hermann noted that state funding “is not astronomical,” adding, “I think if our community thinks it’s millions and millions of dollars, it’s not.”
“Kyrene typically has had a higher-than-the-state average for years of experience,” he added. “Unfortunately, there just aren’t big dollars that necessarily follow that proportion.”
Other vagaries in state funding mechanisms were mentioned as well.
For example, Fahy noted that while the district provides full-day kindergarten, Kyrene is only reimbursed for half that time.
Board President Kevin Walsh also noted that Kyrene, like every other district across the state, is currently trying to formulate a 2021-22 budget that is based heavily on projected enrollment.
Those projections have been impacted by pandemic-driven campus closures, which in turn prompted thousands of parents to pull their children out of public schools.
State officials have been unable to account for what happened to at least 30,000 K-12 students across Arizona because charter enrollment data doesn’t reflect the enormity of the statewide enrollment loss.
Arizonans for Charter School Accountability last week said enrollment data statewide shows Arizona’s public school districts lost 55,000 students in the current school year, with charters picking up 18,000.
The group said the biggest losses statewide were in Pre-k and kindergarten, followed by grades 1-6 – in other words, the bulk of Kyrene’s student body. High school enrollment was slightly up, the group said.
Walsh noted that Kyrene’s budget calculations are “based on what we think the enrollment next year is going to be. And in normal years, we have our demographer that’ll come in and we think it goes along a pretty steady line.
“But because of all the tumultuous effects of COVID, I feel like every district in Arizona right now is trying to extract how much of this change in enrollment that we saw this year is temporary and how much of it is more permanent.”