NEW HANOVER COUNTY — The New Hanover County commissioners made clear their past contributions to public education per an op-ed released Monday morning, but the local leaders are less clear on their future commitment amid a tough budget season for them and the school district.
READ MORE: Board looks at ‘worst case scenario’ budget, tacks $10 million more onto shortfall
The 628-word statement outlines the commissioners’ “unwavering” financial support of the New Hanover County school district. Its FY23-24 funding totals $140 million, which the op-ed describes as an enhancement and acknowledges the county can only do so much. This comes as the school district faces a shortfall of $20 million in the upcoming budget cycle.
“While resolute in our efforts, we must also acknowledge the limitations in the scope and extent of our Board’s capabilities and responsibilities,” the op-ed states.
The budget shortfall is due to expiring federal ESSER dollars, a decline in enrollment, stagnant state funding and unsustainable financial practices, such as pulling money from its fund balance to balance the budget over the last three years.
Since the district revealed it’s facing the deficit last month, the commissioners have faced dozens of calls to increase its funding for NHCS. Commissioner Rob Zapple told Port City Daily Monday he lost count after 173 emails, many sent using the same template.
Covering the entire $20 million would be a hard ask of the district, as the commissioners are contending with ESSER funding cuts and budgetary constraints of their own. Commissioner Jonathan Barfield told PCD the $20 million deficit would require a 4-cent property tax increase to fix.
“I don’t foresee us raising taxes,” Barfield said Monday. “So, if anything, my goal was to keep things where we are now.”
Though Monday’s statement was labeled an “op-ed,” it lacked a clear opinion on how the county should fund NHCS this year. Barfield and his fellow commissioners Zapple and Dane Scalise, who also spoke with PCD Monday, said it was too early to rule anything out at this point, but the op-ed’s purpose was to give proper context to the budget process moving forward.
“This is something that has been, I don’t know, let’s say litigated in the public sphere,” Scalise said. “And we felt that it was important for us to make clear that we have a track record for very good funding of our school system, we believe in the school system, and we want to be good partners with the folks over at the school board.”
The op-ed states that since 2006, New Hanover County has committed more than $273 million to capital costs for the schools.
Since the Great Depression, local governments have been charged with funding the capital needs of their school districts, while the state has covered operation expenses and salaries. For several decades, however, state funding has failed to keep pace with the expenses of school districts.
According to 2019-2022 data from the Education Law Center, North Carolina’s per-pupil funding level was $10,791, which is $4,695 below the national average and ranks the state 48th in funding level. The report also found that North Carolina dedicated 2.32 percent of its GDP to support the public K-12 school system — the lowest percentage in the country.
Local government has increasingly been left to cover the gaps, which the New Hanover County commissioners point out they have done.
In FY 23-24, the county appropriated $94 million in operational support for the county schools “by choice and not by legislative directive,” the op-ed states. New Hanover County provides $3,434 per student, ranking the county 7th out of all 100 counties in North Carolina in operational support when accounting for tax rate. The per student allocation is also up 27% from the amount provided in 2018.
However, NHCS is still in need. Of its $20 million shortfall, half is attributed to the sunsetting of Covid-19 ESSR relief funds, which the district used to pay for around 65 positions.
“I think that there’s been kind of kicking up the can that’s occurred,” Scalise said. “And now they really don’t have a choice but to address it, and we’re going to help them, we’re going to support them. We’re not exactly sure what that looks like, but they’re going to have to do some difficult things to cycle.”
The remaining $10 million deficit accrued due to waning state funding as the district sees a decline in student enrollment. With less students, less funding will come through the state allotment formula and county.
Including ESSER, around 279 positions — 160 of which are teachers or teacher assistants — will need to be cut in NHCS to balance its budget.
For the last few budget cycles, the district has pulled money from its fund balance, $4.6 million on average, to cover budget deficits.
“That one time money is going to run out and you’ve got to have a plan on how to replenish those resources,” Barfield said. “It can’t be a last minute panic attack to figure those things out.”
According to NHCS Chief Financial Officer Ashley Sutton, spending down the fund balance was done, in part, at the behest of the county when they were strapped with paying for state-mandated salary increases in 2022; commissioners asked the district to help support the increases with its fund balance.
“I and many other commissioners have been telling the school board ‘Please, put that money only into the schools,’” Zapple said. “Because that’s what it was meant for.”
As a result of this practice, the district is left with less than $3 million in reserves, leaving it impotent in emergency situations. After Hurricane Florence in 2018, the district used $3.3 million from its fund balance to frontload the costs of repairs; the district was reimbursed by the feds three years later.
“The county and our fund balance, which is why it’s there, will be there for emergency situations,” Zapple said. “There’s no doubt we’ll be the first ones at the door with help.”
The district also has a long list of capital projects deemed necessary, and without an additional commitment beyond the county’s traditional allocation around $3.8 million, some crucial projects will go another year without upfit. However, Barfield portended a more dire picture on Monday.
“I’m not sure we’re going to fund any capital projects this year with their hole being as deep as it is,” Barfield said. “We’ve got to figure that part out first.”
All three commissioners were adamant that the budget process was in the early stages; the district is not mandated to submit its budget to the county until May.
“I would certainly hope, given the circumstances, that we hear from them before that,” Zapple said.
PCD asked the district if it planned to submit a proposal before the deadline; district spokesperson Salvatore Cardella responded after press. Per information from CFO Sutton, the district’s goal is to submit the county request budget for school board approval at its April board meeting and then submit the budget request to the county in mid-April.
Even if the commissioners did want to provide additional funding, the county may not have the funds to do so.
“It’s not a bottomless pit coming from the county,” Zapple said. “We’re trying to be really conscious and intentional with the county taxpayers’ money.”
Reach journalist Brenna Flanagan at brenna@localdailymedia.com.
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