Update on proposed 2020-21 fiscal year budget - a message from the superintendent

To meet statutory requirements, PSD staff presented the district’s proposed 2020-21 fiscal year (FY21) budget to the Board of Education at Tuesday’s school board meeting. 

The proposed budget captures the district’s financial position as we know it now, accounting for the fact that the state's budget has not been finalized and that PSD may have to make additional adjustments after it is.  

PSD's proposed FY21 budget to-date is approximately $318 million. This includes the district’s anticipated state funding reduction of between $15 million and $28 million. Schools and departments are making cuts to operating and staffing budgets, and we are also considering sources of one-time money to make up for the anticipated deficit. As part of this work, we’re thinking longer term, considering what fiscal challenges we may face in the next three to four years. 

Our primary uncertainty around next year’s revenue shortfall hinges upon how much the state legislature will ultimately cut K-12 funding, which makes up about 36 percent of the state’s overall budget. 

PSD staff plan to present an updated proposed budget to the Board of Education at its June 9 special meeting. At another meeting later in June, the board will be asked to formally adopt the balanced FY21 budget. 

In a typical year, there are minimal or no changes between the proposed and adopted budgets. However, due to COVID-19, the Colorado legislature experienced a significant delay and have not yet approved the Long Bill and School Finance Act. The legislature plans to cut about $3.3 billion, or 25 percent, from the State of Colorado’s 2020-21 fiscal year budget, according to the most recent information. 

A memo from the State of Colorado Joint Budget Committee, or JBC, released May 18 gave us our first clues to understanding how reductions might play out. Currently, the JBC estimates the Budget Stabilization Factor – the amount of K-12 funding Constitutionally owed to Colorado’s 178 school districts but held back due to past budget challenges – could increase from $572 million to $1.17 billion statewide. That equates to an estimated $39 million PSD is owed – but will not receive – in state funding.  

Additionally, we are in the early stages of determining how much PSD's other revenue sources may decrease as a result of the COVID-19 pandemic. We are anticipating declines in specific ownership taxes and interest income, as well as a decrease in the property tax collection rate. A short overview of estimated expenditure adjustments for the FY21 budget is below: 

  • $14.7 million increase to implement the salary restructure promised as part of voters’ approval of the 2019 mill levy override, (Ballot Issue 4A) 

  • $2.0 million increase for mental health staffing included in 4A 

  • $1.8 million increase for district portion of Public Employees Retirement Association of Colorado (PERA)/benefits 

  • $7.3 million decrease for school-based-budgeting (SBB) allocation reductions 

  • $1.5 million decrease for teacher-capacity funds reallocation 

  • PSD cut $1.5 million from central administration two years ago. This work was done in preparation for possible budget cuts at the time. Ultimately, the budget shortfall anticipated at the time did not come to fruition, so PSD decided to distribute the $1.5 million to schools to use for teacher professional development until it was needed – as it is now – for challenging budgeting times. 

  • $4.2 million decrease for central budgets and programs 

Layoffs – for licensed, classified and administrative staff – have occurred. Some cuts have been made to existing positions. Other cuts are due to not filling open positions due to resignations or natural attrition. For some sites and departments, new positions that were planned and budgeted for will not be filled. In addition, some employees' hours and total number of workdays have been reduced to account for required budget reductions.  

Many are wondering how the federal CARES Act, or coronavirus relief funds, play into this. Although we are still awaiting more specific guidance around the use of funds, we know this funding will come with a range of restrictions (i.e. Some funding may only be used for COVID-19 response-related costs like meal distribution, the purchase of masks and more). As we understand it currently, we could potentially use some – but not all – CARES Act funding to backfill some lost revenue. Contrary to public perception, we likely won’t be able to use PSD’s allocation to simply make up the state funding deficit. We will share more as we confirm additional information. 

Because this work is actively underway and cuts at the state level have not been finalized, we are not yet ready to release the final numbers of layoffs due to budget cuts. PSD will share the impact of state budget cuts when that information is finalized. 

The work we do in the weeks and months ahead will be trying, possibly more so than the work we’ve done so far. Difficult decisions have ripple effects – for our staff, students, families and communities – not just now but for years to come. Through all of this, our values are steadfast: It is critical that we protect our capacity as an organization to serve our students and maintain short- and long-term district stability. 

As we’ve said before, these circumstances are not unique to PSD; school districts across Colorado and the nation are also preparing for cuts. This is work we have been preparing for over the past several weeks, and our planning will flow into preparation of budgets in years to come. 

Board of Education meeting recordings are posted online after the meetings. A copy of the May 26 proposed budget is available on the district’s Financial Transparency web page.  

The Colorado legislature reconvened May 26, and we do not know for certain when the Long Bill, School Finance Act or state budget will be passed; though, we are hearing it could be around May 30. Staff will present an updated proposed budget to the board June 9, with a June 23 board meeting scheduled to approve the final budget. 

Sincerely,  
 

Sandra Smyser, Ph.D. 
Superintendent