In a year’s time, the Kent School District’s general fund balance has dropped $16.7 million, much of it due to expenses outpacing revenues.
The district’s fund balance is $41.7 million through the end of January, according to its financial analysis report in March to the Kent School Board during a work session. In January 2021, that balance was $58.4 million.
“The $41.7 million fund balance we are at now is the lowest we’ve had over the last two years,” said Ben Rarick, district executive director of budget and finance, to the board.
Rarick told the board the district is OK for now financially because of funds approved by Congress as part of the American Rescue Plan Act in response to COVID-19. For schools, those funds are known as elementary and secondary school emergency relief fund or ESSER.
Kent will receive nearly $100 million in those federal funds, distributed over four allocations. The district has until the end of the 2023-2024 school year to spend the money.
“Kent and other districts are not in short-term danger,” Rarick said. “ESSER makes sure of that. The federal government understood there would be a short-term crater, but it’s (funding) not here forever.”
Rarick said his next financial report later this spring will reflect the use of ESSER funds to keep the fund balance solid.
“We’ll start to see the significance of ESSER as a mechanism for stability in our district in terms of enrollment loss and to not have to cut staff,” he said.
The district spent its first federal allocation of $7.32 million.
That included $3.9 million for additional days for reopening; $1.2 million for food service and bus driver costs; $902,083 for technology and equipment; $698,240 for indirect expenses; $277,302 for personal protective equipment (PPE) and other health and safety costs; and $215,000 for instruction supplies for students, according to an email from district spokesperson Melissa Laramie.
A second allocation of $28.28 million has been partially spent, with $1.23 million to assisting the disadvantage; $247,357 to sanitization (includes PPE); $89,274 for indirect expenses; and $22,648 for an HVAC system.
Laramie said the district receives ESSER funds from the federal government through reimbursement of allowable expenditures.
“We have submitted claims totaling approximately $20 million for February and March,” Laramie said. “These claims are for allowed expenditures, including about half for keeping our staff whole this school year to date despite the decline in enrollment, and roughly half for PPE, sanitization, COVID-19 training, contact tracers, and other health and safety allowable expenditures.”
The other two federal allocations are for $50.85 million and $12.71 million, none of which the district has claimed yet.
Declining enrollment
Despite all of the federal funds to spend, Rarick told the board it needs to watch closely the declining district enrollment.
The district had 26,122 students in January of 2018 school year. The numbers fell to 25,426 in 2019, went up slightly to 25,533 in 2020, dropped to 24,247 in 2021 and declined again to 23,712 in 2022, according to district documents. That’s a decline of 2,410 students from 2018 to 2022.
“Keep your eye on the enrollment chart every month,” Rarick said. “It’s a big deal in KSD right now. We’re very hopeful we will see a rebound in enrollment in the spring and into next school year, perhaps with the introduction of the virtual academy and a safe post-COVID-19 environment.”
Rarick said steady enrollment is needed to reinforce long-term budgeting and staffing. Fewer students means less money from the state.
District officials didn’t anticipate a drop of 1,821 students from January 2021 to January 2022.
“Our enrollment projections last year we made an assumption, informed by discussion with our demographer, that we lost students because we closed buildings and went virtual,” Rarick said. “But when we opened buildings again we thought we’d have the opposite reaction. It did not happen. …We assumed a third of a rebound. It was not a rebound but went down further, which was certainly unexpected.”
Rarick told the board, in preparation for the 2022-2023 budget it will need to adopt later this year, that district staff will project enrollment with a more or less flat assumption, meaning the numbers will remain about the same.
High expenses
District expenditures in January 2022 were about $182 million, which is $19 million or 11% higher than January 2020. Much of the higher costs were for increases in paying the district’s nearly 3,600 employees.
The certificated salaries (teachers, administrators, nurses, counselors) jumped by $5.8 million; classified salaries (paraprofessionals, school office staff, custodians, grounds crews) increased by $3.4 million; and contractual services were up by $7.4 million. Contractual services cover contracts outside of staffing, such as with a nursing agency to provide services or agreements with community-based organizations, such as Communities in Schools of Kent.
“Just to be clear, those increases are not necessarily salary increases,” Rarick said in an email. “They can be increases attributed to increasing staff as well as other factors.”
The cost of supplies and materials increased $2.14 million.
The increase in salary budgets will compound through the end of year, since they are recurring, annual expenditures, according to the district’s financial statement. When the remote learning want away, expenditures for supplies and contractual services went up.
Despite the drop in enrollment, staffing has increased in the district, which has improved students-to-teacher ratios. The district had 1,799 certificated employees in 2018-2019 and 1,016 classified. That number is up to 1,977 certificated in 2021-2022, a jump of 178 employees. Classified has basically remained the same with 1,013 employees this year.
Board Director Michele Bettinger plans to keep a close watch on the numbers.
“I continue to remain concerned that we are spending more money than we take in and that our staffing is higher than it’s been in the last several years,” Bettinger said during her March 23 board report.
A recent decision by the board to pay principals and assistant principals at the district’s 42 schools a stipend of $7,000 in March and another $2,000 next January for their extra work during the pandemic will cost $756,000, which will be paid out of the general fund, Laramie said.
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