Possible 35% state funding cuts

By Robert Cloud

Carl Hayek, director of business services for Waupaca School District, told the school board Tuesday, June 9. that the district will face difficult challenges while determining its next budget.

“Our absolute educational needs versus the way it has always been, now more than ever, must become the laser-like fiscal focus of the district while continuing to provide quality education to our students as we navigate together through these uncharted turbulent fiscal waters,” Hayek said.

He noted state revenues are projected to decline by at least $2 billion.

Hayek said the district could face general funding cuts of up to 35% for the 2020-21 school year.

“If that becomes a reality, this is how that would look for us in Waupaca: A $26 million Fund 10 Budget reduced by 35% equals $9.1 million,” said Hayek.

Hayek said the fund balance is the cash the district uses to pay its bills while waiting for state aid and property tax revenues to arrive.

State equalized aid comes to the district in September, December, March and June.

The district receives its share of local property taxes in January, February and August.

Cash flow problems are most likely to occur during the months of October and November and in May and early June.

Without an adequate fund balance, the district would have to short-term borrow to pay its bills. It would also pay a higher interest rate on all other borrowing, such as capital improvements.

“Without making any reductions or cuts, $9.1 million would wipe out the district’s entire fund balance and basically dissolve the school district financially,” Hayek said.

At a minimum, Waupaca faces a 5% cut in state revenues.

No salary increases

Hayek suggested that teachers may not receive salary increases in 2020-21.

He said salaries and benefits account for 75% of the district’s budget.

Applying the consumer price index of 1.81% to salary and benefit raises would increase budget expenditures by $400,000.

Hayek said the district is unlikely to have the extra $400,000 in revenues.

“Ideally this is a time for all staff to come together and collectively freeze their salaries or hourly pay from within as it is for the noble good.” Hayek said, noting school districts are not immune to these economic times.

“If we are not wise fiscally we won’t be in the educational business like we want to be or even at all,” Hayek said. “As we have seen, read or heard about, many businesses will not survive this unprecedented economic disaster.”

Board member and retired teacher Dale Feldt asked Hayek to clarify what he means by freezing wages.

While there will be no cost-of-living raises and no raises for years of service, Hayek said the district will continue to bump teachers into a higher salary lane to reimburse those who earn academic credits or advanced degrees.