A Basic Guide to the School System’s Budget

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Wake County schools is a $1.4 billion business. That’s on par with Red Hat’s and fantasy football’s yearly revenue. It’s also 40 percent more than what Facebook paid for the photo-sharing application Instagram—then again it’s only half as much as America’s biggest bank, JP Morgan Chase recently lost due to a single trading scheme.

The $1.4 billion Wake spends annually comes from a combination of state, county, and federal funding, as well as money raised from previous school bonds.

This year the school system will also use a very large chunk of its savings account, or “rainy day fund” to pay for the services it provides.

The “building program” money is generated through bonds and only goes towards building or renovating schools, which makes the actual operating budget $1.2 billion. Despite rising inflation and a growing student population, this marks the fifth year that number has stayed roughly the same.

The vast majority of funds (59 percent this year) have always come from the state. But since 2009-10, the amount of state money per student in Wake County has dropped by 11 percent. In the 2009-10 school year, state funds made up 62 percent of Wake schools’ budget.

Overall funding since 2009-10 has managed to stay steady up until this year because of increased federal funding courtesy of the American Reinvestment and Recovery Act to the tune of $30 million per year.

But this year that money is gone and the rainy day fund—the school system’s last defense—will have to plug the leak.

Gov. Bev Perdue has introduced a budget that would raise taxes and money for schools, but Republican lawmakers, who control both houses of the state legislature, have said her budget will be dead on arrival.

How Would You Spend $1.2 Billion?
Combining all salaries and benefits from the pie chart, Wake plans to spend 84 percent of its budget on employees. That’s up 4 percent from last year, which shows that Wake is still finding ways to trim from everything but personnel.

Just 3 percent of the budget goes to school supplies and 2 percent goes to food costs. While it doesn’t represent a percentage change from last year, spending on school supplies is down $3 million.

One major decrease since last year is the “unbudgeted funds” the board will set aside for savings. Unbudgeted funds make up, in large part, the amount that will transfer over to the rainy day fund.

For 2012-13 less than 1 percent ($8.5 million) is set to transfer. Last year that amount was nearly 4 percent ($32 million.)

Budget Timeline
The budget is a constantly moving target, because it is always under revision. Here is the general timeline for how the Wake school board figures out where it will have money to spend.

May 15: Wake School Board must adopt a budget and ask for money from the county commissioners before May 15. It adopted this year’s on May 1.

June 18: The county must then adopt a budget by June 18, which dictates how much money the schools will get

July 1: The school board must make any adjustments depending on cuts or surpluses by July 1.

July: The state adopts a budget sometime in July

Final: The school board then makes adjustments as needed before completing the budget.

This year the school system already plans to use a whopping 84 percent—or $28 million—of its current savings to close the budget gap.

“In normal times the appropriation of 84 percent of the undesignated fund balance towards the operating budget would not be wise,” said Chief Financial Officer David Neter on May 1 when the board adopted the budget. “But we are not in normal times. We have faced significant budget reductions over the past four years.”

At best, officials say they’ll be able to get the fund balance back up to $20 million, which won’t be enough to fill the potential gap for the 2013-14 school year.

The board has been divided about how to use savings. Neter stressed the importance of savings and put the sum in perspective this way: “28 or 29 million… is the equivalent of about 500 teachers, about 1,000 teacher assistants. It’s the equivalent of more central service administrators than we have in our system.”

Using such a large chunk of savings required a waiver of board policy and a two-thirds majority vote from the Board of Education.

See County Commissioner Tony Gurley and School Board Member Jim Martin go head to head on the issue in this video.

A mountainous molehill
On top of the controversial rainy day fund spending, the school board asked county commissioners for an $8.8 million increase in local funds to bridge the gap left by the reduction in federal and state dollars. After the county’s proposed budget was released Monday, that amount seems highly unlikely.

County Manager David Cooke presented a budget that gives schools a $3.9 million increase, and Republicans who control the Board of Commissioners indicated that number will not change before they pass a final budget next month.

The $8.8 million request from the school system represents 2.4 percent of the county’s contribution to school funding and just 0.7 percent of the overall budget. $3.9 million represents just 0.3 percent.

Cooke said that the increase is in line with the county’s growth in its tax base. However, Wake schools have been adding roughly 3,000 children per year, while county funding has stayed flat for the past three years.

Superintendent Tony Tata has said that even if the schools can’t make up the $5 million difference, there won’t be any cuts to teachers.

Supplemental Pay
Looking at how the school system uses its budget, Wake spends seven percent of its budget on what’s called “supplemental pay,” which is used to attract teachers to the district.

The state funds Wake’s teachers based on how many students attend Wake schools. Moreover, the state pays the market rate for whatever kind of teacher Wake can hire, whether it is a certified veteran or a first-year teacher.

The school system then uses county money to supplement the state salary. It’s a technique used by most of the big school districts in North Carolina.

Wake ranks near the very bottom of per-pupil spending statewide, but it ranks near the top in supplemental pay, said Assistant Superintendent of Human Resources Steven Gainey.

You can email Will Huntsberry at wehberry@raleighpublicrecord.org or follow him on twitter @willhuntsberry or #wakeschoolboard

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