RACINE — The Racine Unified School District is anticipating some difficult budgetary decisions on the horizon. Early in its planning for the 2020 fiscal year, the district is projecting an $8 million deficit.
But Unified has more immediate concerns to address, as it’s looking at a $2 million deficit in this year’s budget.
The district took an optimistic view when it came to financial planning for the 2018-19 school year, passing a tight budget with no built-in contingencies. Unified’s initial budget plan did include a contingency, but that had to be eliminated to balance the budget due to higher-than-expected open enrollment out of the district.
Unified Superintendent Eric Gallien said the district is doing everything in its power to be able to fund supplementary pay raises for teachers this year, but said this is not a good time for the board to vote to fund pay increases.
Budgetary projections formulated by Unified Chief Financial Officer Marc Duff don’t include an expected increase in state funding from Gov. Tony Evers’ yet-to-be-proposed budget, or Unified’s new teacher-compensation model that would come at an approximate cost of $440,000 at existing staffing levels.
Duff said contributing factors to what he called an “extraordinarily tight” budget were staffing to support the district’s middle-school transformation, which it implemented at the start of this school year, and aggressive estimates for savings in various areas.
“We were basically hoping for good news without a contingency,” Duff said. “It made me nervous. It made all of us very nervous when we passed the budget.”
The district learned a month after it passed the budget, in late October, that it would receive $500,000 less than expected in special education funding from the state.
Duff had predicted large savings from unfilled positions, but he said the district’s human resources department was able to fill openings faster than expected, decreasing those savings. Unified will also take a $280,000 hit from large landowners who contested their property tax bills and received refunds, although the district will get that money back next year.
“So it’s like one after another of bad news, and usually I get some good news as we’re going through the budget year, but this year so far it’s not been a good one,” Duff said.
Duff and Gallien told the School Board during a meeting last week that the finance team and administration are working to put the brakes on spending and find areas where they can make cuts.
Outgoing Board President Bob Wittke said this will likely lead to some difficult decisions for leadership.
“I don’t expect you to pull a rabbit out of your hat every time there’s a deficit,” Wittke told Duff.
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Gallien said that this year’s budget issues will likely spill over into next year, even with a projected property valuation increased of 4 percent.
Although Duff has always managed to present a balanced budget to the board each fall for approval, he has had to find ways to make up for the annual structural deficit.
“It’s one of those things, if we continue to kick it down the road, eventually it’s going to catch up to us,” Gallien said.
The projected 2020 budget deficit is partially due to the continued decline in district enrollment, with an estimated 190 fewer students expected next year. This will make for an approximately $4.8 million cut to the district’s revenue limit.
“As part of the budget planning process, we’ll have to review our staffing and a reduction will be anticipated in order to deal with the structural deficit,” Duff said.
Duff added that Unified typically sees enough retirements and resignations each year that it can address staffing adjustments without layoffs.
A transformation at the elementary level, similar to this year’s middle school transformation, could solve at least part of the district’s funding issues, according to Gallien. No specific elementary transformation plans have been announced.
“At some point we have to right-size the district to adjust for the decrease in enrollment,” he said.
Unified’s enrollment has been in a downward trend for the past eight years, according to figures from the Wisconsin Department of Public Instruction. Enrollment has dropped from 21,275 at the start of the 2009-10 school year to 18,555 this year.
Gallien said the administration will be looking at every variable to create efficiencies, and make cuts in many areas, including possibly employee benefits.
“At some point we have to right-size the district to adjust for the decrease in enrollment.” Eric Gallien, Racine Unified superintendent