In Caledonia Community Schools, parents and students are accustomed to a district with ample programming, beautiful facilities and expansive athletics. But Superintendent Dedrick Martin said that’s a hard slate of expectations to meet year after year when school funding isn’t keeping up with inflation.
There’s a disparity between his community’s perception and the reality of district finance, he said. Even as its enrollment has risen impressively, the district has felt pinched by the state funding formula, despite the appearance of affluence.
Under Proposal A, the law passed in 1994 that changed the way schools are funded, the district receives a higher foundation allowance than the minimum level – $8,409 per pupil compared to the minimum of $7,871. When that measure passed in 1994, Caledonia was receiving about $2,000 more than its minimum-funding neighbors. That gap has narrowed to less than $500 due to the funding formula, which by design has reduced the gulf between higher and lower income districts.
‘We are much larger, but still operating as if we were back in 2006, and it’s getting to the point where we can’t spread the budget much further.’ — Superintendent Dedrick Martin
The state reduced all districts in 2011-2012 by $470 per pupil. Since that time, Caledonia has received a foundation allowance increase of $490 per student, while minimum-level districts have received an increase of $1,025 per pupil, said Finance Director Sara DeVries.
Those numbers don’t align with the community perception that the district can spend at a rate above and beyond neighboring districts, Martin said.
“That’s another big misnomer: People think ‘You’re getting more than the minimum. You’re rich!’” he said.
See related stories on financial challenges of districts thought to be affluent:
- Inadequate funding – even in affluent districts – still short-changes students
- Increased costs, slow funding increases create tight budget
Cuts Have Been Made
As the state-aid gap has narrowed, that disparity between popular perception and financial reality has grown, Martin says.
“Our community wants us to better support the arts and athletics, but we aren’t able to do that and keep our buildings safe and clean and orderly, or to provide additional levels of support, whether that’s counselors, secretarial or administrative,” Martin said.
The district has had to limit and delay expenditures in multiple “behind-the-scenes” areas that are now feeling the pinch. The goal was always to tighten the budget without reducing athletic programming, clubs, fine and performing arts and curriculum offerings, he said. Now, however, “We are at a point where we can’t continue to do that,” he said.
In fact, the district has made many budget reductions in the past 14 years, including $2.87 million in cuts between the 2009-2010 and 2015-2016 school years, according to DeVries.
“We made severe cuts to a lot of our support services well over a decade ago,” Martin said. Administrative and support staff positions were eliminated and reduced in secretarial, maintenance, counseling and classroom support.
Remaining support staff and administrative groups underwent contract concessions and wage freezes from 2012-2014. Positions were also reduced through retirement attrition. “…Unfortunately, we’ve had to maintain this reduced level of spending for the last decade-plus,” he continued.
Since 2006, enrollment has grown by more than 1,000 students to the current student count of about 5,000. But despite that major bump, Caledonia has not rebuilt staffing to the level it was pre-recession because of the focus on maintaining programs and curriculum, Martin said.
“We are much larger, but still operating as if we were back in 2006, and it’s getting to the point where we can’t spread the budget much further,” Martin said.
Savings Only Go So Far
The district has a healthy amount in its financial reserve, with its fund balance at 16 percent, or $8.2 million, of the $54 million general operating budget. That’s created a sense of affluence that isn’t realistic, Martin said.
“There is a false narrative in our community that because we have a high fund balance we are wealthy. What people don’t realize is the fund balance has been built over years based on providing less than adequate resources in multiple areas (in non-classroom areas) so we don’t harm kids. You can only do that for so many years before you eventually start to experience system failure in a lot of areas.”
The fund balance would only cover two months of expenditures. It serves as a safety net for emergencies, such as the $150,000 to $200,000 recent repair of an electrical line that serves a school. A major emergency would be a significant financial hit to savings, officials say.
But it has delayed needed maintenance and replacements to roofs, mechanical repairs and other infrastructure, which Martin said they cannot put off any longer. They’ve also added only two buses a year in recent years, despite the need for four in a district where buses travel long routes.
To cover shortfalls, the district plans to use some of the fund balance at “a very guarded rate,” but must dip into other areas as well, Martin said. “We are also having to divert general fund money that we would like to spend in the classroom.”
Martin said growing enrollment has been a saving grace for the district, despite its challenges.
“We are fortunate that we are a highly desired district and we’ve seen housing growth. If we didn’t have those two factors, we would have made severe cuts to the instructional program over the years.”
The district has added three new buildings, including Caledonia High School South Campus, Paris Ridge Elementary School and Glenmoor High School – paid for with bond money earmarked for facilities and infrastructure – to meet enrollment needs.
Cutting vs. Quality Is a Challenge
But trying to find the appropriate balance of spending and cutting while maintaining quality instruction is a constant challenge. Revenue growth has lagged behind inflation, diminishing buying power, Martin said.
Martin also believes there was a community misperception concerning the impact a recent ballot request would have had on homeowners’ principal residences – which would have been none.
In November, voters narrowly defeated the district’s request for a two-year override of the Headlee Amendment, which limits tax increases to the rate of inflation, and restore funding of the state-authorized rate on non-homestead properties of 18 mills. The rate had been reduced by Headlee to 17.8452 mills.
With a reduced millage, the district’s state aid per-pupil foundation allowance is also reduced, based on not levying the full 18 mills.
The result for Caledonia is a loss of about $71,000 for this year and an estimated $157,000 next year, DeVries said.
The district levy on non-homestead properties – for second homes and commercial properties – is up for renewal in 2020. DeVries said they may request the Headlee override again depending on the tax rate at that time.
As in household budgets, trying to maintain a lifestyle that’s over budget can only last so long, Martin said.
“If we’ve gone to the well to cut in all the areas away from the classroom – which was absolutely the right thing to do – and we are still living at a level akin to 2005, we cannot go back to that well again without devastating our ability to function. And that will affect everything else.”