School district struggles with budget forecast

Somewhere out there is one student who could cost the Mountain Home School District $400,000.

And the district worries it is getting close to finding him.

At issue is Impact Aid money, a source of revenue that can vary each year but averages around $1.5 million in revenue to the district. It's money paid to school districts for students who are the children of federal employees.

There are two categories of such students -- the "A" students, who live on federal land, such as the nearby airbase, which does not pay property taxes, and the "B" students, who don't live on federal land but whose parents work on property that isn't taxed. Impact Aid is a way for the federal government to pay for a small part of the revenue a school district loses for land that isn't taxed. It's a complex formula, but the district gets more money for "A" students than it does for "B" students. However, if there aren't a minimum number of B students, the funding for A students goes down as well.

The number of students who qualify as Impact Aid students is determined by a "survey card" sent to their parents each November. The district always stresses the need to return the survey cards, since it has such a huge impact on its revenue.

Since there are minimum numbers of eligible students required to be enrolled in a district before it can apply for Impact Aid money, few school districts qualify. But with Mountain Home Air Force Base nearby, the Mountain Home School District is one of the few in Idaho that does meet the standards for the federal money. With federal, state and local funding sources allowing a budget of approximately $22 million each year, any major loss in Impact Aid funding would be significant.

The problem is that school enrollment numbers have been declining every since the composite wing left the airbase more than a decade ago. In particular, the number of students living on base has dropped dramatically, down to about a third of what it was at the recent turn of the century. That's reduced revenue to the district significantly at a time when the legislature also has been reducing funding for public schools (it still isn't back up to pre-2008 levels).

So, the number of "A" students has been declining, but so have the "B" students, and right now, those are the student numbers of most immediate concern. At present, the district has about 390 "B" students. If it falls below 375, the district will lose the Impact Aid funding for all "B" students -- a figure that is approximately $400,000. The district can lose 15 students and still keep its funding. That 16th student is therefore worth $400,000 in lost revenue.

"We call that the $400,000 child," said Cliff Ogborn, the district's director of fiscal operations.

"The thing that worries us most," said Supt. Tim McMurtrey, "is sequester," the name for the current across-the-board cuts in federal spending that, Congress decided, will continue until it passes a balanced budget and begins reducing the federal deficit. Sequester alone has already resulted directly in at least $70,000 in reduced funding for federal programs.

But more importantly, sequester has resulted in a number of contracts at the base being either canceled or temporarily frozen.

"If those parents decide to leave and go somewhere else for work, we could see a serious drop in the number of 'B' students. But we won't know until next school year, and by then, we'll have already set our budget and signed contracts (with the teachers)," McMurtrey said.

"You can see why we really push parents to fill out those federal survey cards" in November.

Assuming it gets the full amount of Impact Aid it expects -- and Congress actually appropriates the money for the Impact Aid program -- the district's budget revenue will be roughly the same as last year.

Although the state approved a 2.2 percent increase in funding for public education this year, much of that money came with strings attached (such as pay for performance bonuses) or was directed to other schools (who received some major infusions of technology). The state also is now providing less money than before to cover transportation costs, and those costs, such as fuel prices, have gone up since 2008.

Overall, things remain tight for the school district, and with some costs going up just due to inflation "we're going to have to be very careful how we spend our money," McMurtrey said.

The district doesn't want class sizes in the kindergarten and first grades to rise any higher than they already have, and wants to hold the line in grades 2-8 as much as possible. At the high school level, there could be a slight increase in class sizes.

Around the district, due to attendance zones, there are "bubbles" of high and low class sizes. At North Elementary, for example, kindergarten class sizes are at 18-19 students, "which is where we want them to be," McMurtrey said. But at East Elementary, first grade classes have 31-32 students in them. "That's ridiculous," McMurtrey said. And at the high school, while the averages are in the high 20s, some classes have as many as 36 students in them. More teachers would solve the problem, but the funding isn't there to hire them.

For the first time in years, enrollment appears to have flatlined, so the district's crystal ball into future enrollment numbers is a little clearer than normal.

McMurtrey noted there could still be some overall teaching staff reductions, created by attrition when teachers aren't replaced after they leave or retire, but there won't be any pink slips going out.

At the same time, while McMurtrey and the school board want to maintain programs, some of those programs are going to suffer.

At the elementary level, the district will have only two music instructors and two PE instructors. They will take care of those programs at the four elementary schools, moving between schools as necessary.

And while the foreign language program won't be cut at the high school, the French teacher, who is leaving, probably won't be replaced. As a result, French could be dropped altogether or, if there are enough students who want to take the class, the district might be able to make arrangements for an on-line class for them, McMurtrey said.

"We're not sure how that's going to work out, yet," he said, noting that the budget is still being worked on. But the district really doesn't want to cut any more programs, and if it does, Ogborn noted, "where do you put the kids that were in those slots?"

Teacher salaries (and benefits) make up the vast bulk of the district's budget, so to stay within revenue targets, the number of programs has to match the available teachers.

But there is one way to relieve some of the financial burden on the district, and that is to reduce the number of credits required for graduation. Currently, the district requires 52, four above the state minimum of 48. That would reduce the need for as many teachers as are needed now, but it also would reduce the elective classes that the district feels are enormously useful in helping students make career choices after they leave high school.

"It's not something we want to do, but it's among the options we have to consider" when looking at what the district can afford, McMurtrey said. If funding gets tighter in the future, the options also could include cutting more days from the school year, which is functionally a cut in teacher salaries.

At the same time, he said, this year, "I think we can hang on to the status quo. I don't want to cut anything. I'm tired of making cuts. The board is tired of cutting.

"But we will turn in a balanced budget," he insisted. "We've got two goals -- we're going to educate our students and we're going to be fiscally responsible to the taxpayers. Balancing those two goals isn't always easy, but we are going to do it."