LAS CRUCES — The Las Cruces Public Schools budget situation is dire, according to school officials, as the district looks ahead to the 2015-16 school year.
“We’ve built a house we can no longer afford,” said Terry Dean, the district’s associate superintendent for finance, at last Tuesday’s board meeting. “In my professional opinion, the district could be bankrupt by the end of next fiscal year, if we don’t correct our course.”
At the current trajectory, and at current staffing levels, Dean said that the district could run a $6.5 million deficit next year, “and that’s an illegal budget.”
When fully-staffed, the district is currently using 92 percent of its budget on employee compensation — salaries and benefits. That’s a figure that school officials say is way too high.
The district’s cash reserves, which Superintendent Stan Rounds likened to an individual’s savings account, has become dangerously depleted. The cash reserves are expected to be diminished by about $5 million this year, leaving the district with only $3.2 million cash on-hand. When asked what has led to the protracted depletion of cash, Rounds’ answer is concise.
“Spending 91 percent of our budget on staff, versus 87 or 84 percent — clearly and simply that,” said Rounds. “It’s the overstaffing. We bet that our enrollment would grow a little bit, and that funding would increase, and that we could incrementally deal with the issue. Neither of those things happened, and now we have to adjust. If we had stayed at 84 percent, we wouldn’t be having this talk.”
Ultimately, the goal is to reduce staffing to 84 percent of the budget, but it will be an incremental process.
“If we could even get that down to 87 percent, we could start building up the cash reserves without all of the stressors that we’re currently facing,” said Rounds.
The Cash Reserves
While the state doesn’t require that the district maintain cash reserves, maintaining about 7 percent of the operating budget as cash balance is recommended to allow districts to address problems that arise.
The district is able to dip into the cash reserves to pay for board-approved budget items — payroll, benefits, utility bills and transportation costs, for example — without asking board approval. From 1987-91, the state required that the cash balance be kept in a restricted fund, and couldn’t be used without the approval of the school board and the state education department.
“In past practice, we set that cash aside, so that the board had to be cognizant that they were dipping into the cash reserves,” said Rounds. “Now, we have gone to the practice of folding every penny into the budget.”
The situation has become so dire, the district will have nowhere near enough cash on-hand at the beginning of the 2015-16 fiscal year on July 1 to meet expenditures.
“We’ll have $17 million in expenditures in July, and only $3.2 million in our cash reserves,” said Dean. “That’s a dangerous place to be. If there’s a glitch in receiving our State Equalization Guarantee funding on time, we won’t be able to make July’s payroll.”
But it’s more than a cash flow problem, Rounds explained.
“We’ll have $3.2 million cash, $17 million worth of checks to write, and about $15 million inbound — the state funding — sometime in July,” said Rounds. “So you’ve got to dip into the cash for another $2 million. That gets real critical. If anything deviates at all from that, we’re upside down, and can’t make payments.”
Because of the low cash reserves, the district’s bond rating is likely to be downgraded by Moody’s.
“I would say that we have an 85 to 90 percent surety that our bond rating will drop next year,” said Dean.
Ultimately, the fix lies in staffing, which will result in cuts from Central Office down to the classroom level.
“We’re going to have to properly size staff at each of the high schools,” said Dean. “That is where the problem is. When we staffed up Centennial High School, Centennial is the one high school that is closest to what staffing should be. But what we failed to do is to move staff with the students as aggressively as we should have.”
The district believed that the other schools could be staffed down by attrition — through retirements and teachers leaving the district — but that attrition didn’t come at the level, or in the positions, that would right the budget. Instead of moving teachers in from other schools, the district hired about 82 new employees, including 60 teachers, to staff Centennial when it opened in 2012.
“I made a conscious decision not to significantly downsize the other high schools,” said Rounds. “Each school lost about 300 students, and we could have moved the staff to support those students with them. We didn’t, and now we’re paying for it.”
Rounds said that the problem can be solved with some staff cuts and some creative scheduling. While decisions about staffing levels for the schools will be made at the administrative level, it will be up to each school’s principal to decide how they will operate within those levels.
“I suspect that we’ll see a mix of straight scheduling and block scheduling,” said Rounds. Block scheduling utilizes four 90-minute periods each day, allowing students to complete a course in a single semester. Straight scheduling offers seven or eight periods per day, each less than an hour, with courses spanning two semesters.
“Block scheduling is more staff-intensive,” said Rounds. “The least costly way to deliver high school curriculum is to go to a straight, period-by-period schedule. It optimizes staff. In fact, it’s 16 percent more efficient than block scheduling. But some teachers prefer block scheduling over straight scheduling.”
Rounds said that, in order to reduce staff, we’re likely to see blended schedules — a mixture of block scheduling and straight scheduling — on most campuses.
“I suspect that what most will do will be to go to a blended schedule, and just save 8 percent, for example,” said Rounds. “Some may also shrink class sizes, use more teachers and save less money.”
The school board has directed Rounds to see that more decisions are made at the “building level,” allowing principals to make more decisions that affect their staff and schools. As a result, Rounds has agreed to allow those decisions to be made at each campus, with savings targets in mind.
“We’re telling principals, ‘Here’s your staff, now you decide how you deploy them.’ To make that work, they’re going to have to be more efficient in their scheduling,” Rounds said.
Not just the schools
Central office will also feel the squeeze, school officials said.
“When I first came to the district, eight years ago, we downsized the support staff at Central Office by about a million dollars,” Rounds said. “We’ve gained a little of that back. But I’m not going to ask that we downsize at schools, and not go through the same architectural change at central administration. We’re going to be doing that work, too.”
Rounds said that the workloads that are carried by central administration staff is often misunderstood.
“It’s all of the federal and state compliance work. It’s all of the support — financial, administrative, evaluative, legal — and we’re going to stress that system more than we do the (schools), but they don’t always understand that,” said Rounds.
Currently, the high schools are staffed at about a 16/1 rate — 16 students per teacher. The goal, for high schools, is to get to a 19.1/1 ratio. Rounds understands that it can’t happen all at once.
“Elizabeth Marrufo, our associate superintendent for human resources, has been working with the principals to move toward that staffing level,” said Rounds. “It won’t be perfected at that. It will be something smaller than that — because some hopes are impossible to sustain, programmatically.”
A sudden depletion in staff would create a shock to the system that could negatively impact the educational atmosphere, said Rounds.
“So we’re going to make a dramatic step, but we’re not going to get there in one year. We’re going to have to do it over several years,” Rounds said.
For example, if a high school has to cut 17 positions to increase the ratio by three students per teacher, “that would be a lot to absorb, so maybe we cut 12,” said Rounds.
Damien Willis can be reached at 575-541-5468.
©2015 the Las Cruces Sun-News (Las Cruces, N.M.)
Visit the Las Cruces Sun-News (Las Cruces, N.M.) at www.lcsun-news.com
Distributed by Tribune Content Agency, LLC