NEW HANOVER COUNTY — Another difficult budget cycle is coming up for New Hanover County Schools.
The effects of last year’s state-mandated salary increases, along with a rise in benefit costs and reduction in students, are taking a toll on the district’s general fund. This year the plan is to avoid using its savings to balance the budget. Plus, potential Title IX violations on the district’s high school softball fields are taking up allocations in the capital budget, pushing vital projects below the funding line.
To reduce the budget, Superintendent Charles Foust announced at last week’s school board meeting each district division will need to cut its expenses by 10%, coupled with staff reductions and position allotment formulas at the school level.
“We must scale back our expenses this year to ensure we maintain a balanced budget while providing our students with the resources they need to succeed,” Foust said during the March 7 meeting. The district’s fiscal year runs from July 1 2023 to June 30 2024.
Last year, the state mandated an average raise of 4% for state employees, with any employee paid less than $15 per hour receiving an increase of 4% or $15 per hour, whichever is higher. According to NHCS spokesperson Russell Clark, employer retirement contributions also increased from 22.89% to 24.5% and annual medical insurance per employee jumped from $7,019 to $7,397.
Using these projections, the district estimates an additional $11 million will be needed, but it anticipates the state will provide funding for approximately $8.5 million.
With staff receiving raises in 2022, some positions need to be eliminated. Last year, the district said it would need to reduce 130 positions over the next two years. Port City Daily did not receive an answer from the district on how many of those positions have been removed this fiscal year, nor if additional positions will need to be cut this cycle.
“Our goal is to use employee attrition and an amended allotment formula to resolve any staff reductions,” Clark told Port City Daily. “Every position that is being reduced is examined carefully, and every employee will have an opportunity to shift to a
consummate position within the district.”
NHCS will also have to contend with a loss of students, which affects its per pupil allotment from the state. The district reported to PCD it had more than 26,000 students in 2018, but enrollment decreased after Hurricane Florence and again after the pandemic.
Since the 2019-2020 school year the state has held NHCS “harmless” for its enrollment decrease and predicted the students would return. It continued to provide funding at the same level. However, this school year, the state no longer gave districts a pass and provided funding based on enrollment after the second month of school. For NHCS, this was around 1,000 fewer students than in 2019.
Because the district is reliant in part on the North Carolina General Assembly’s budget, it projects what the state will allocate based on student enrollment. But when the state no longer held public schools harmless, the district received less money than it estimated for this school year. The district had to infuse $4 million from its fund balance to keep the school board’s approved plan afloat.
As it avoids doing that this budget cycle, the district will need to cut out at least $6.5 million in total to cover per pupil losses and employment costs.
That’s where New Hanover County could step in; last budget cycle was mired with complaints from school board members and the community that the county was not providing enough funding to allow the district to cover a $17 per hour minimum wage, which was suggested by a district salary study.
NHCS funding was a major discussion topic at the county commissioners’ budget session on March 2. The county provides funding to the district based on average daily membership — total days in membership for all students over the school year divided by the number of days school was in session — and is the primary provider of capital project monies.
County manager Chris Coudriet informed the commissioners the county actually “shorted” the district last year based on its projected versus actual ADM. Although enrollment has trended downward since 2018, the county underestimated the district’s ADM by 500 students for the current school year — a deficit of $2 million.
The county’s ADM — the ninth highest in the state after commissioners upped it two years ago — is $3,434 per student, but this school year it amounts to $3,359 due the underestimation.
In result, Coudriet suggested the commissioners “true-up” the $2 million in the next budget cycle.
At this month’s budget session, commissioner chair Bill Rivenbark also brought up the tight spot the district was in its facilities, naming the Title IX problems at Hoggard and New Hanover high schools, the lack of trailers at Porters Neck Elementary and the absence of sufficient cell signals at Snipes Academy.
NHCS’ capital request process involves schools’ submissions of prioritized repairs and renovations, technology, and furniture. The facilities division then categorizes the projects as imperative, essential or important.
The administration received $64.4 million in requests; however, the district has only identified $6.6 million in funding based on county appropriations last year. The money will cover eight projects.
At the capital outlay budget meeting on Feb. 27, the Assistant Superintendent of Operations Eddie Anderson told attendees the district normally makes it farther down the list of needs, but the first three items totaling $3.5 million prevent that.
“That’s unusual that we have that many big-ticket items,” Anderson said during the meeting.
The first item is $1 million dedicated to the maintenance of the district’s security vestibules.The next two items provide $1.5 million in upgrades to Hoggard’s softball field and a little over $1 million for the softball field at New Hanover High.
The school board was notified of the results of a Title IX audit in October. An auditor visited last April and found the two high school’s softball fields and facilities were lower in quality than the baseball facilities, presenting the possibility of noncompliance and opening the school up to a civil rights complaint.
While the auditor flagged other concerns — weight room facilities to the detriment of female students at Hoggard, Ashley and Laney high schools, as well as Holly Shelter, Myrtle Grove and Williston middle schools — the softball field projects were deemed the most serious and imperative to fix.
Other funded projects include:
- Track renovations at Ashley High for $550,500
- UST replacements at the transportation building for $250,000
- Door and window replacements at Alderman Elementary for $1.1 million
- Exterior door replacement at Bellamy Elementary for $140,000
- Sewer lift station replacement at Winter Park Elementary for $115,000
- Roof recover at Winter Park Elementary for $200,000
Director of Facility Planning Leanne Lawrence told the February meeting attendees that exterior door and window replacements were important for safety reasons. Roof recoverings were vital to stave off future replacements, she added, which would cost twice as much to repair.
Right at the funding cut-off is a project to reroute failing roof drains at Brogden Hall, the gym building at New Hanover High. The facility just completed a renovation to its gym floor, a $2.7-million project. Now, NHCS staff have identified the nearly 70-year-old building’s roof leaders are basically buried in the wall and failing, causing running water during storms to leak into some of the coach’s offices.
Board members Stephanie Kraybill and Stephanie Walker questioned leaving Brogden Hall out of funding.
“I would hate to ruin any of the beautiful work we’ve done in there,” Kraybill said during capital outlay meeting.
Staff said they do not expect the leaks to affect the gym floor and are continuing to monitor potential mold problems sprouting from the leaking water.
Rivenbark also brought up the Brogden Hall problems at the commissioners’ budget session earlier this month. When commissioner Deb Hayes asked why the district didn’t fix the problem when it was renovating the gym, Rivenbark replied “probably because they didn’t have enough money.”
Coudriet offered a potential funding path for the commissioners to cover more of the district’s capital needs using its revenue stabilization fund. He said that pot of money could be a way to avoid limited obligation bonds that come with Local Government Commission approval. Coudriet added it is ultimately the county’s responsibility to fund the schools’ capital needs.
“There’s no way the board is going to get around having to wrestle with an investment,” Coudriet said.