Pierce County Schools are facing at least a $4.5 million cut in state funding, but school officials anticipate they can absorb the hit by dipping into reserves and not raising taxes — at least for now.
“Nothing in (the budget projections) is popular,” said Assistant Superintendent for Finance LeVance Gay. “We are in unprecedented times and we are just going to have to make the best of it.”
The school board held its third discussion on the proposed 2020-2021 budget at their regular monthly work session Thursday morning.
The news was bleak from the beginning, but Gay says the system can weather the coming storm — at least for a while.
The $4.5 million cut would be Pierce County’s share of an across-the-board 14 percent budget cut ordered by Governor Brian Kemp as the state tries to make budget cuts in response to the economic downturn related to COVID-19 (coronavirus).
Gay said in addition to the state cuts, he anticipates local tax revenue could be down as much as $355,000. While the bulk of the revenue for the school system comes from state sources, local taxpayers contribute about $7.8 million for maintenance and operations. Federal resources account for about $4 million of the school system budget.
The $4.5 million cut will be only partially offset by about $750,000 the system will receive from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The system currently has about $11 million in cash reserves built up since the last recession in 2008. The school system could dip into those reserves to offset the state and local cuts in funding. Even covering the $4.5 million in cuts, the school system is still projecting to have about $7.7 million in reserves at the end of next year.
The board had initially projected a $34.8 million budget. That figure has been trimmed down to $34 million.
“We have taken and trimmed everything we can. It is going to be very tight and it will pinch a little,” said Gay.
The assistant superintendent said that adjustments are still being made to the budget projections.
He pointed out that no adjustments have been made to salaries, benefits or local supplements and he is not recommending furlough days.
“I think it is important we keep that in place for our employees to take care of their families,” he said. “That money will also turn over in the local economy and be a big benefit here at home. We are going to need that in the coming year.”
Third district board member Chip Griner asked if the school system had saved any money since the system has been closed for over two months. Gay said that the school system has saved money on energy costs and transportation costs throughout the system.
Gay said sales tax revenues were steady in March and April at about $150,000 each but he warned those numbers reflect the time period before the pandemic hit.
“Those numbers are from when the economy was humming along nicely,” he said. “There generally is a lag in time on sales tax receipts. We won’t see April and May totals until the summer.”
Gay said there is enough in the sales tax accounts to make bond payments on the new high school and also pay for the rider canopy at Midway Elementary.
No binding decisions were made at the work session. The board will discuss the proposed budget again at their next regular meeting.
By law, the budget must be set by the end of June, but Gay said the school system might have to operate on spending resolutions if a budget is not approved by the state deadline in June.
“We have to be able to have public hearings and we have to wait on the state Legislature to set the state budget,” he said. “Neither of those have happened. We can’t legally operate without a budget. A spending resolution would be necessary until we can approved the budget.”
A spending resolution allows the superintendent to spend funds in the new fiscal year until the new budget is adopted.