Something will most likely have to give.
That was the message Tuesday as the Charlottesville School Board kicked off budget conversations for the next fiscal year during a work session Tuesday.
The board discussed how to maintain its current $94.3 million operating budget and ensuring that the long-awaited reconfiguration project that will consolidate the middle grades under one roof actually happens. Doing both might not be possible, but that depends on a range of factors including state funding, local support and non-discretionary cost increases.
“This might be a year that we as a board are being asked to make tough decisions,” board chairwoman Lisa Larson-Torres said during a budget work session Tuesday. “… We need to really prepare to potentially make some decisions about programs that we might need to trim back on.”
The use of $10 million federal stimulus money and the $75 million reconfiguration project dominated Tuesday’s discussion, which ran for more than two hours. The meeting did kickstart conversations about the School Board’s budget priorities and how members want to approach new spend requests during the budget development process. Board members highlighted several needs such as compensation for bus drivers, staff raises and after-school care for preschoolers.
Reconfiguring Walker Upper Elementary and Buford Middle schools entails adding sixth grade to Buford, sending fifth-graders to the elementary schools and converting Walker into an early childhood center.
A majority of board members agreed reconfiguration was the priority but there wasn’t a clear consensus on what making it a priority would mean in terms of the budget. The first phase of the project is estimated to cost $75 million, which would be the largest school construction project since 1974.
“We need to keep our eye on the prize in terms of reconfiguration,” board member James Bryant said. “We have talked about this for a number of years. And as I said in the last meeting, it’s time for us to move forward with it.”
Under the first phase of the project, Buford would be renovated and expanded and Walker would be turned into a temporary preschool facility. The School Board will vote on a conceptual approach at a work session Thursday.
To pay for reconfiguration, city budget officials have said a 10-cent real estate tax rate increase would be needed — half of which would fund other capital projects. Additionally, funding the project at $75 million would exhaust the city’s ability to issue bonds — meaning the city can’t start new projects for at least two years — and double the debt service in six years.
Board members said Tuesday that they wanted assurances that revenues raised from half of the tax increase will go to the reconfiguration project.
In addition to the reconfiguration project, the school division’s use of one-time federal stimulus funds to support all of the $4.9 million in new spending in the current operating budget will have to be contended with during the budget development process.
The new budget items, aimed at helping students and staff recover from the pandemic, included 5% raises for staff members, 17 new full-time positions, Wi-Fi hotspots, online tools and other learning materials. Division officials have said that some of the new positions and other line-items, such as social workers, would be needed beyond the pandemic.
The School Board will eventually have to find an alternative revenue source to maintain those programs or it will have to cut the budget. The division has about $10 million left in one-time federal funds; the money must be spent by Sept. 30, 2024.
The division received $15.7 million total in federal stimulus funds since March 2020.
“There’s an opportunity to provide a ramp for local revenues to recover,” said Kim Powell, assistant superintendent for finance and operations, of the remaining $10 million.
Larson-Torres and other board members said they wanted to see data about the effectiveness of programs started in the last year to help assess what should stay and what should go.
City staff have said that an another five-cent real estate tax rate increase would bring in about $4.5 millon, which would help bridge that gap. Larson-Torres and Powell said they had questions about that proposed increase, which was briefly mentioned at last week’s joint session with the School Board and City Council.
Board members Tuesday night didn’t provide specific direction regarding how additional funds should be spent but will discuss the topic over the course of several meetings this budget cycle.
However, some board members said the division should look to limit new expenses given the magnitude of the request related to reconfiguration that will be presented to City Council next month.
“Our main priority is reconfiguration and in order to make that happen, City Council wants to see us have more restraint in our budget asks,” board member Jennifer McKeever said.
McKeever added that this approach could mean that new schools Superintendent Royal A. Gurley, Jr. could have to wait to implement his vision, as far as the budget is concerned.
The fiscal year 2023 budget will be the first for Gurley, who starts Oct. 4.
“I do think that our main focus needs to be on school reconfiguration and I think that means that there’s going to be hard decisions,” McKeever said.
For this fiscal year, the city allocated $58.7 million to the school division, which made up about 62% of its operating budget. City officials have said they want to reassess the funding formula for the school division if reconfiguration moves forward.
The division also will likely face cost increases related to non-discretionary items such as health insurance, pension payments and contracts, but those specific dollar amounts are uncertain this early in the budgeting process.
However, Powell said the division was bracing for a large increase related to health insurance.
McKeever also suggested that the School Board look at its own capital projects in the city’s five-year capital improvement program, including the elementary modernization project that’s been in place since 2017, especially in light of council’s decision to shelve the West Main Streetscape project to make room for reconfiguration.
So far, the city has updated Clark, Jackson-Via and Burnley-Moran elementaries via smaller projects, each costing about $1 million to $1.25 million.
“One of the things we have to consider in this incredibly challenging funding environment is that we pause this effort and modernize our middle school,” McKeever said.
Johnson, Greenbrier and Venable elementaries have not been renovated yet under that plan. Greenbrier would be up next if the board continues with the project.
The board didn’t make a final decision about the elementary modernization project other than to gather more information about whether federal funds can be used to pay for it.