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APS outlines ‘dire’ FY21 budget projections

Copyright © 2020 Albuquerque Journal

Albuquerque Public Schools is bracing for major hits to its budget for the fiscal year that begins July 1.

APS CFO Tami Coleman

Another enrollment decline and a state budget crisis due to an oil and gas bust and the COVID-19 pandemic are among the projected hurdles.

Chief Financial Officer Tami Coleman painted a bleak picture this week when she presented the outlook to the Board of Education.

APS released figures on Monday projecting a multimillion-dollar shortfall in fiscal year 2021 – and that’s even before lawmakers revisit their allocations to schools and other state agencies in light of a projected state budget shortfall of up to $2 billion.

The APS operating budget for the current fiscal year is $770 million.

“As you know, we’re facing some unprecedented times. We are also facing unprecedented budget challenges,” Coleman said. “While we are legally bound to build a budget based on the last legislative session, this pandemic is impacting our whole world and has the potential to unwind a lot of the hard work that has been done toward our upcoming school year.”

Coleman and her team are essentially building a budget that could drastically change, though how and when are unclear.

The precariousness is due largely to the state budget’s uncertainty. Although the state approved a $7.6 billion budget plan that included 4% educator pay increases, Gov. Michelle Lujan Grisham has said a special session is inevitable.

A revised state budget during that session is expected to decrease the dollars going to education.

Coleman said districts are bracing for the possibility that approved raises may not be included in the final state budget and districts’ cash reserves could be on the line.

“What could result out of that special session when we do get there? It could result in a decrease in cash balance,” Coleman said.

APS has about $50 million – or just under a month’s operational costs – in reserves, according to Coleman.

The baseline dollar amount that’s used to fund schools could also decrease.

Nancy Martira, spokeswoman for the state Public Education Department, said districts have been instructed to work on their budgets based on enacted legislation. But the PED is aware that there will be a special session and that puts plans up in the air, she said.

“We can anticipate that education will be facing cuts,” Martira said.

She said the department is urging districts to keep budgets conservative until things are solidified.

“The circumstances are pretty dire. I don’t want to paint this with rose-colored glasses at all,” Coleman said.

The APS chief financial officer told the Journal timing is a big concern. Coleman said APS has to submit its budget to Santa Fe in May, and Lujan Grisham recently said that a special session could take place in mid-June, which would require districts to change course on a dime.

Other fiscal challenges

The district is also looking at a 1,649-student enrollment decrease to hit the fiscal year 2021 budget, maintaining the yearslong trend of a downtick in students. That results in about a $15 million projected decrease in funding, because the state funding formula is based on the number of kids in schools, according to Teresa Scott, executive director of budget and strategic planning.

And the district will also need to do some fiscal restructuring to come into compliance with a new mandate that requires APS to put 80% of its operational budget into student instruction. Now, it’s at 79.45%. Shifting between $5 million and $6 million would put the district in compliance, Scott said.

Without changes to the state budget, APS was anticipating being $10.2 million in the red for the 2021 fiscal year, as of Monday’s presentation.

Coleman said it’s too soon to say what is on the chopping block to make up the deficit.

“We are almost certain that this is going to be a one-two punch. … Right now, before any budget reductions are initiated through a special session, we are looking at a deficit, and you can see that deficit is fairly large,” Coleman said, adding that the second punch would be a decrease in funds during a special session.

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