financial-status

We need to talk about the financial status of the Chapel Hill-Carrboro City School district.

Last week, every parent in the district received a pretty scary email that said the following:

Last night, at our July 18 regular meeting, the CHCCS Board of Education received preliminary financial results for the fiscal year that closed on June 30. We are reporting to you today that our district ended the year with an approximate $5 million deficit. This means our overall expenses in 2023-24 (including staffing, salary raises, instructional supplies, services, building maintenance, etc.) exceeded what we received in state and county funding by approximately $5 million.

In the short term, this $5 million gap was absorbed by what’s called our fund balance, sometimes known as a “rainy day fund”. But in the long term, the unfortunate reality is that our fund balance, now, is nearly depleted. 

(We put the complete email at the bottom of this post, in case you didn’t get it.)

Almost immediately, our group chats and social media forums began lighting up. There’s a lot packed into this email. We thought it would be helpful to lay out some of what we know and what we don’t know, to help the conversations moving forward.

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What we know:

We’ve known about these financial and budget trends for a while

This from the budget presentation given on July 18. Full deck is here: https://docs.google.com/presentation/d/1SyQQoluCeVr_Af8hQFWejEDKpnnUcBtr/edit#slide=id.g2ec41b13026_0_9
This from the budget presentation given on July 18. Full deck is here: https://docs.google.com/presentation/d/1SyQQoluCeVr_Af8hQFWejEDKpnnUcBtr/edit#slide=id.g2ec41b13026_0_9

We started covering this back in February, when the school board discussed the budget crisis due to many different factors, many of which are out of the school board and superintendent’s control. Inflation, for example – it’s tough to overstate what an impact rising costs in, well, everything, have had on the district budget.

In addition, the district says it has something like a 96-98% staffing rate. It’s fantastic to have so few vacancies. Great for kids, great for morale. But it’s unusually high enough that the savings that would normally accrue from vacancies didn’t materialize.

Some of these cuts have already been put in place

If a teaching assistant in a 4th or 5th grade classroom retires or leaves tomorrow, a new one will not be hired. Each elementary school will now only have one TA per school to cover both fourth and fifth grade. This impacts our student:teacher ratio. (It’s always better to have more hands per student.)

Similar decisions were made for other staff, such as a small number of PE teachers and other assistants. This attrition plan was put in place with the hopes that the district would ultimately be able to avoid doing reductions in force. (Crazy to celebrate all-time high staffing rates and in the next breath have to start thinking about potentially laying folks off.)  All these positions are student-facing and comparatively low paid. 

We need additional operating funds from the county commissioners

A big part of the school board budget is allotted from the county commissioners, and the school district then spends it down. Two years ago, the commissioners instructed the district to spend down the fund balance. The thinking seemingly is that it didn’t make sense to hold onto a rainy-day fund when there were teachers to be hired and retained through pay increases. Still, spending down the balance got the district well below the 8% minimum that is recommended by the Government Finance Officers Association. 

The district has said it plans to ask for additional operational funds as a stop-gap, and parent and community support will be key in ensuring that the commissioners also increase the revenue allocated to both Orange County Schools and the Chapel Hill-Carrboro School District. It’s been static for many years. The commissioners have said that they would increase support in an emergency. That time is probably now.

A school bond will be on the ballot in November. We must vote for it.

The district annually receives two “pots” of funding from the county. One is operational, the other is capital (building maintenance and technology).  The school bond is a third stand-alone issue related to one-time replacement or major renovations of our oldest and most worn-out facilities. Building new schools will not only get our students into cleaner, safer, more educationally appropriate buildings, but it will also help save operational money that is going into making the inevitable repairs that come from needing to maintain an aging infrastructure.

Option 5 is the lead option now, which we applaud, and the district is now working on making sure all school communities have ample opportunity to have input into details about scope, implementation, and timing.

What we don’t know

The $5 million deficit presumably doesn’t need to be made up all at once. But the Board will have to engage carefully with the district and the community to ensure that specific criteria can help guide the budget process.

We think this process should be as participatory as possible. Are there unnecessary consultants? Conference rooms being rented off-site when meeting space might be available on-site? Paid memberships in organizations that aren’t necessary? Any office space that can be consolidated? Some of the elementary schools have empty space in them. Is there really no way to make use of that space, such that some of the administrative offices can be moved? Can more administrators shift to hybrid or work-from-home? Any wasteful spending, whatsoever?

While the district’s budget indicates that 85% of spending is personnel, we’d like to be confident that every rock is being overturned to see where we can find ways to save money before cutting positions. We suspect that teachers and school staff can be valuable thought partners in this process. 

What questions we have:

There’s a narrative that’s been circulating for quite some time that the staffing at Lincoln Center is larger than it needs to be given the size of the district. But some of the district’s important initiatives – equity, gifted education, curriculum changes – require centralized staffing. 

Looking at the district’s organizational charts, it’s apparent that there’s important work being done at Lincoln Center. At the same time, it’s undeniable that the staff there has grown while enrollment has gone down. We think it’d be helpful for the community to be provided a clear explanation for why each of those positions is essential for the fulfillment of the district’s strategic plan. It wasn’t a great look for the previous save-money-by-attrition plan to completely bypass Lincoln Center. 

There’s also conversations about the space itself at Lincoln Center. That’s tricky and needs a much larger community conversation, centered around the alumni and descendants of Lincoln High. When Lincoln High closed, Black students were transferred to Chapel Hill High School but lost their community, their teachers, their mascot. Many of the interviews in the Southern Oral History Program and the From the Rock Wall collections of Lincoln alumni touch on this; there’s a sense of pride that the building that housed Lincoln High now houses the administration for the entire district. 

This is all tough stuff. 

We believe that the board and district are people of good faith, and a non-defensive, open-minded attitude will be indispensable in the coming months. We’re hoping the community can engage constructively (without holding back!) as the collective endeavor proceeds.

Letter from CHCCS sent July 19

This message is being sent to all CHCCS staff and families. It is for informational purposes only, and no action is required. 

Last night, at our July 18 regular meeting, the CHCCS Board of Education received preliminary financial results for the fiscal year that closed on June 30. We are reporting to you today that our district ended the year with an approximate $5 million deficit. This means our overall expenses in 2023-24 (including staffing, salary raises, instructional supplies, services, building maintenance, etc.) exceeded what we received in state and county funding by approximately $5 million.

In the short term, this $5 million gap was absorbed by what’s called our fund balance, sometimes known as a “rainy day fund”. But in the long term, the unfortunate reality is that our fund balance, now, is nearly depleted.

It’s a message we’ve been sharing for almost two years, when we told the Board of County Commissioners and the public in September 2022 that due to reasons including declining student enrollment, the high level of services, staffing and compensation that CHCCS provides, inflationary pressures and the insufficient allocation of state and local funding “…we face the possibility of cutting services and positions a year from now that will directly impact students.” Since then, we have indeed reduced services and some student-facing positions through attrition (known as our “Corrective Action Plan”.) We regret to share that more will need to be done, at both the district and school levels, in the coming months.

The Board and district leadership recognize and agree that we must either receive additional financial support from the state and the county, or we must take action to reduce our current spending by several million dollars annually. Last night, the Board of Education directed district administration to return at the August 15 Board meeting with various options for difficult decisions that the Board will consider in August, September and beyond.

The CHCCS administration will work with the Board, along with school and district leaders, to outline additional plans to restructure our district and operate effectively within the current budget realities. For now, all we need is for you, our staff and families, to continue to stay aware and informed about the current situation. We will encourage you to follow the Board’s deliberations and guidance at the next appropriate times.

We thank you for your time and attention during the summer.

Sincerely,

George W. Griffin, Ph.D., Board Chair

Riza Jenkins, J.D., M.B.A., Board Vice Chair

Nyah D. Hamlett, Ed. D., Superintendent

Get caught up (examples of prior communications and public meetings/discussions):

 

Melody Kramer is a Peabody-award winning journalist whose work has appeared on NPR and member stations around the country, as well as in publications ranging from National Geographic to Esquire Magazine....