$20M revenue loss just the start of Mesa schools’ fiscal woes The Mesa Tribune | The Hometown Newspaper for the city of Mesa, AZ

$20M revenue loss just the start of Mesa schools’ fiscal woes

$20M revenue loss just the start of Mesa schools’ fiscal woes

Tribune Executive Editor

Declining enrollment could cost Mesa Public Schools $20 million in the 2021-22 school year, administration officials told the Governing Board last week.

And that could be just the beginning of the school district’s fiscal challenges as it struggles to address the impact of the pandemic.

The $20 million revenue loss could mean cuts in personnel and services, Assistant Superintendent Scott Thompson suggested without elaboration.

“We do know that the school district has seen a big decline in enrollment and that will have a major fiscal impact as we move into 2022,” Assistant Superintendent Scott Thompson said.

Thompson did not provide any enrollment data and a district spokeswoman said the data were not readily available.

The bulk of money that  school districts receive from the state is based on average daily membership, or ADM.

Thompson said it the district must “be prudent with our dollars spent” in 2021 “to be prepared for what’s to come in 22.”

“We can make adjustments but as we always talk, about 85 to 90 percent of our budget is people,” he continued. “So, when we’re talking about the kind of dollars to adjust, for example, to the amount of ADM we’ve lost at this point, we’re talking over $20 million and that’s not going to be found in some closet. That’s going to involve people.

“So, we’re trying to understand where we’re going. We’re certainly hoping students return. We’re hoping ADM improves. We don’t know all of that yet, but our reality is Fiscal Year 22 could be a very difficult year.”

The impact of the long campus closures on enrollment has been a consistent worry for Mesa board members.

They have frequently voiced concern over the last few months that frustrated parents might transfer their children to private or charter schools – which have provided consistent competition for students long before the pandemic.

In a presentation to the board earlier this year, surveys indicated that as much as 10 percent of parents of kindergarten children in the district were not planning to send their kids to Mesa schools and district officials said they would be making an effort to persuade them to change their minds.

Even without transfers, state reimbursement to Mesa and all other school districts has been impacted by online learning because the per-pupil reimbursement rate is lower than it is for each student in a classroom.

Gov. Doug Ducey in June allocated $200 million in stabilization grants to hold school districts harmless from enrollment declines and that lower reimbursement rate for online learning.

To qualify for those grants, districts have to meet several accountability requirements, such as conduct benchmark testing for students in math and English within the first six weeks of the school year.

Thompson told the board that Mesa could get as much as $17 million in stabilization money. But he warned that because the pot of available money is only $200 million, it was too early to tell if MPS would get that much.

“We’re in a dynamic situation and doing the best we can,” he added.

He also said Mesa is not alone on the loss of enrollment and subsequent decline in state reimbursement.

“There are districts throughout the Valley and throughout the state that have lost enrollment,” he said. “It’s the number one concern of many traditional school districts that there be some stabilization into next year fiscal year.”

Chief Financial Officer Daniel O’Brien also discussed how MPS is spending the $17 million it received from the state in federal pandemic relief.

In the last fiscal year ending June 30, MPS spent $10.4 million of that money on salaries for workers who would otherwise have been laid off.

Employees such as bus drivers and cafeteria workers were redeployed to other duties related to school closures in the spring. The district also spent $278,281 on virus-related supplies like disinfectant.

The balance of those funds will be spent in the current fiscal year, with $6.4 million going to supplies such as masks and other protective gear for students and staff and $78,968 for salaries, according to O’Brien.

Thompson also advised that the district is still studying how it will spend the rest of that pandemic relief money and final allotments would be determined in the near future.

“We all know that we already had a budget that was strapped and wasn’t rich in resources and, yes, we’re getting additional assistance and that’s important,” Thompson said. “But we also have a lot of new demands and we’re learning and understanding what those demands are.”

As an example, he said maintenance personnel told him that three-gallon spray systems they were using to disinfect classrooms were “cumbersome and hard for our crew to get through the classrooms and they’re really having difficulty.”

“We need to move to a smaller version of that they can use just as effectively but we’re basically going to have to purchase something different because we didn’t quite understand how it was going to work when we started…That’s the learning experience.”

Thompson said the cumbersome system was “a reasonable cost item and now we’re replacing it with another reasonable cost item.

“We didn’t buy some fancy off $400 unit that doesn’t work anymore,” he continued, but added, “Those are the kind of things we’re kind of dealing with on a daily basis.”

While the district saved several million dollars on transportation costs during the closures, it also lost significant revenue in other budget areas, O’Brien said.

For example, while it received federal assistance to distribute free meals to students, he said, “we did not have the cash that was typically coming in from students either paying for lunch or receiving reimbursement on the federal lunch program, so that fund became very depleted because there was really no source to pay for that.”

While “we were getting some down payment for the curbside meals,” O’Brien said, that reimbursement “was on a much more limited basis than we typically get” for feeding students when campuses are open.

Consequently, money set aside for feeding students “got massively depleted,” he added.

O’Brien said one small bright spot is that the state’s overall revenue loss last fiscal year from business shutdowns and other pandemic-related factors was less than initially feared.

Yet, he said that unless the Legislature increases ADM reimbursement rates or provides additional budget stabilization money, Mesa could see at least a 6 percent gap between overall revenue and expenditures.

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