Smith outlines 2022-23 budget concerns for Linn R-2 board members

By Edward Gehlert, Staff Writer
Posted 4/6/22

During a preliminary discussion about the 2022-23 budget on March 15, Superintendent Dena Smith expressed concerns, pointing to salary increases, the loss of Elementary & Secondary School …

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Smith outlines 2022-23 budget concerns for Linn R-2 board members

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During a preliminary discussion about the 2022-23 budget on March 15, Superintendent Dena Smith expressed concerns, pointing to salary increases, the loss of Elementary & Secondary School Emergency Relief Fund (ESSER) money after the next two years, and legislation that would raise the minimum pay for Missouri teachers if passed.

Smith noted that with an increase to the district’s portion of health insurance for employees, the cost will be about $14,681. In addition to steps recently approved for certified and non-certified staff, the total amount to give administrators a step increase would cost the district about $1,777. 

“We have some teachers expected to move across on the salary schedule because they are getting more hours so that is projected to increase a little over $11,000,” Smith added. “If we put $500 on the base it costs the district, well, almost $51,000, and then to do that for those not on the salary schedule, would cost $2,684. Again, to give a comparable raise to your administrators will be $1,777.”

“What’s the drop-dead date on adding to the salary? I mean if we’d add $500 to the base, what’s the drop-dead date? Seems like we did this last year and we put it off a month. I remember doing that,” said board member Dr. Shawn Strong later in the meeting.

“Last year we did it in June,” Smith answered. “You have to adopt a budget before July 1. I would think June would be the latest you’d want to do that.”

“If I remember our discussion, you recommended $500,” Dr. Strong said. “We put $1,000 on knowing that it would pretty well wipe us out for the year but I think we also said ‘Well, if we can’t do it again next year we can’t do it again next year,’ so at least we gave it a shot last year. I see where we’re going to run into a problem this upcoming year.”

“I just think you need to be prepared because, if I heard it once I’ve heard it a hundred times, that the superintendent position got a 37 percent increase … the new superintendent is going to cost the district about $41,801 more than the current superintendent,” said Smith. “So, your teachers and your support staff and your administrators…” 

“I appreciate that. I also know the reality of things too. That’s a tough one,” said Dr. Strong.

“I will tell you I am having a hard time only giving the teachers a $500 on the base raise when the superintendent position got a 37 percent raise,” Smith said. “So, I’m probably going to recommend at least a $1,000 on the base. You guys can decide what to do with that but they are just as important as anybody but that is going to put us at deficit spending a little bit more.”

Larry Hunt, who had spoken to the board in an open forum earlier, said “[The] reality is you need to have teachers. If you have a bunch of turnover … my youngest kid had a new English teacher every year from the time she was in seventh grade until she was a senior. You’ve got to pay the people to keep them.”

“We made up some ground last year and we did better than most districts,” Dr. Strong said. “We are in the top three-quarters for schools our size for teacher pay. I don’t think we’re doing as bad as some folks would think we are.”

If legislators approve a plan to increase teacher salary, that will have to be factored into the budget, Smith noted.

“The governor’s goal is to get it to $38,000,” she said. “Well, if we do that, it adds $284,291 to our salary schedule. Again, that’s not giving comparable raises to support staff or staff not on the salary schedule.”

If the minimum teacher salary increases to $35,000 that is going to add another $81,226 to the budget. “That is only if we take teachers to that level,” Smith explained. “That’s not giving a comparable raise to support staff or staff not on the salary schedule.”

Smith added there has been a lot of talk about how that increase is going to be 70 percent funded. “What people don’t understand is that 70 percent funding is only taking those people who are not at $38,000 and raising them to $38,000,” she explained. “I did a preliminary calculation the other day on what we would get based on where we are right now and with 70 percent funding we’d get about $36,000. So, you’re still looking at $250,000 to get your salary schedule to $38,000. That’s something to be thinking about. I don’t know if steps will have to be compressed. I don’t know.”

Smith also noted the need for a new third-grade teacher next year because second-grade numbers are so high that Linn R-2 will need three third grades next year, which will add, if it’s a brand-new first-year teacher, $46,339.80 to the budget.

“Did we add a second-grade teacher last year and do we still need an extra second-grade teacher next year?” board member Hannah Swann asked.

“We do,” Smith replied. “We added a third second-grade teacher last year because we wanted to keep those class sizes small to be able to help them progress. Well, lo and behold, we had all these transfers in second grade this year, so it’s a good thing we added a third second-grade position this year because if not, we’d have been adding one as school started. So, that’s why we need a third-grade position. Our kindergarten and first-grade classes are both big enough that they need three teachers as well so we’re looking at three teachers in grades K, one, two, and three next year.”

An increase to the minimum wage for hourly employees is coming as well, moving to $12.02 per hour in January 2023. Smith said if the district doesn’t maintain that minimum wage, it will be difficult to get paraprofessionals to apply. That additional pay will cost the district about $8,138 next year.

“So, to increase the budget to fully fund the salary schedule right now looks to be about $222,666.80,” Smith noted. “I know it’s been said many times that we get about $100,000 a year increase revenue through taxes, and that’s true, but as you can see that doesn’t even fund the additions to your salary schedule.

“With adding in football expenses next year of $35,000 if we do all of that, and again this is preliminary, but that puts the district deficit spending about $99,000,” she continued. “Now, you have ESSER money coming in so for the next couple of years it will be fine but this has to be sustained after that.”

Earlier in the meeting, Smith told board members that if she transferred from Fund 1 to Fund 4 this year as planned, fund balances would be at 37 percent. Next year, there is a planned transfer in the preliminary budget of $198,433 and that would set the district up to have approximately $340,000 in Fund 4.

“That sets you up for a track project and whatever other project you decide to do,” Smith said. “If we do that, and deficit-spend $99,000, our fund balances will drop to around 29 percent by the end of next year.

“Again, you’ll have ESSER money so will that happen? No, it won’t because you’ll have ESSER money to shore up the budget for the next two years,” she added. “Starting next year, for the first year since I’ve been here, you will start funding recurring expenses with non-recurring money. That’s a little bit concerning.”

Smith explained that the district is planning to use ESSER-3 funds for youth expenses next year. The high school wants new textbooks for science and geometry, which will cost around $30,000. “We need to purchase around 50 new Chrome Books just to keep up with our rotation, which is around $15,000,” Smith said. “We would like to go one-to-one through first grade. They’re using the heck out of their Chrome Books so that is another $9,600.”

To help with some reading and math gaps addressed by Elementary Principal Tracy Kingsley, the district also needs another part-time special ed teacher, so Smith recommended hiring a part-time special ed teacher/part-time intervention teacher. Again, that’s estimated with a first-year teacher salary.

“Mrs. Kingsley and I have talked about that,” said Smith. “She understands that’s a two-year position that likely will go away after ESSER money is gone but at least in those two years we can help raise some of those kids to where they need to be.

“We have furniture needs estimated at about $7,000,” Smith continued. “Special Ed resources are about $10,000. So, the estimated additional cost out of ESSER is about $117,939.08. We get about $700,000 in ESSER money so, again, that will help shore up the budget for the next couple of years but I just feel like you need to be aware that for the first time we’re going to take recurring expenses out of non-recurring money.”

Board member Mark Baker said, “I looked a while back, I don’t know if it was the December or November meeting, and the last time we kind of discussed the ESSER funds there were a couple of other grants that you had on that list. A teacher recruitment grant … well, they were both different types of teacher recruitment grants. What’s the status on those?”

“We have received both of those,” Smith said. “They will not be used until next year. No ESSER money at all is in this preliminary budget because I wanted you guys to be able to see where we are without any ESSER money. We have received approval for both of those. Our application has been approved, our budget application has been approved so they are all set to go but they will not go into effect. We could use them this year but what our plans for them are it’s better to just wait and start at the beginning of the year. So, those will go in for next year as well.”

“In our current year that we are in right now, we have over $600,000 budgeted for capital improvement projects with HVAC, the roof, things of that nature,” Swann noted. “We have another $400,000 budgeted next year for the track potentially. So, we haven’t actually put the budget for the track in there but we have the transfers from our regular Fund 1. 

“In a normal year, if we’re not spending $400,000 on a track or $600,000 on our roof or HVAC, we’re not going to be deficit-spending,” she continued. “I mean, we will have ESSER money to cover some of those one-time costs and I don’t know how many of those other types of capital expenditures we should be planning on for future years but hopefully if we spend a million dollars on all of those things this year and next year though we should be good for a little bit.”

“I don’t think so,” said Smith. “The parking lot needs to be redone again, at least the front side of the parking lot, so that’s an issue. Again, I think that between the grandstands and the announcer’s booth that are needed for football, that’s an expense we’re going to have. I would have to look back at all what … we need new cafeteria tables in the elementary. There’s a pretty good list of things that I think are going to cost the district in capital improvements over the next five years.”

“One big thing that has been put off a couple of times now is air-conditioning in the field house,” said board president Dennis Gravedoni. “I don’t remember what the figure was but we checked it out a couple of years ago.”

“I’m sure it’s double whatever it was,” Dr. Strong said.

“It was $200,000 but I’m sure it’s $400,000 now,” said board member Tye DeCramer.

“One thing I’ve noticed because I looked at your preliminary budget for this year and then I looked at your most recent adjustment, it looks like we went up about five percent,” said Dr. Strong. “Your budget for this year looks like you budgeted two percent, which is fairly conservative. Assuming that property values continue to go up there’s potential to pick up maybe another, it looked to me … like if what happened last year continues this year, another $56,000.”

“Potentially, if property taxes … what’s not in the preliminary budget is … because our kids are all [eating] free right now, two things are happening,” Smith replied. “One, we’re getting a lot more money in food service revenue than we are when we’re not on free lunches so if they don’t go free lunches next year, we’re going to lose a pretty hefty amount in food service revenue.

“The other thing that’s happening is that because everyone is getting free lunches they’re not filling out their free and reduced lunch forms,” she continued. “So, we are about 62 kids less on free and reduced lunch forms this year. The impact then to our revenue just from that is about $35,000 to the negative. What we might pick up in tax revenue, I’m afraid we’re going to lose because of the free and reduced-lunch issue. That’s why I was pretty conservative on the tax part.”

“Explain that to me one more time so I have a better handle on it,” said Dr. Strong.

“On our formula, there is a modifier for free and reduced lunch,” Smith replied.

“Okay. Was that the … move the number from whatever it was … seven to six percent or six to five. No, that was a different line. That was the adjustment of weighted average (attendance).” 

“The weighted average. You adjusted that down so is that something else altogether different?” asked Dr. Strong.

“It is and that adjusts down because that is based on our attendance, it’s based on our summer school numbers,” said Smith. “There’s a modifier in there for your special account. There’s a modifier in there for free and reduced lunch and there’s a modifier in there for limited English proficient kids

“Is that on that line or is that in multiple lines?” Dr. Strong asked.

“That’s all on your formula,” said Smith.

“It’s all in that percentage,” said Dr. Strong. “Okay, that’s what I thought.”

“What’s not in the preliminary budget, because I just looked at our previous lunch numbers the other day, is the fact that we dropped 61 kids in free and reduced-lunch approvals and so that’s going to negatively impact our budget by about $35,000,” said Smith.

“And that’s because the kids … they actually qualify, they just didn’t fill out the forms,” said board member Naomi Klouzek.

“Right. Because everybody is getting free lunches this year, parents aren’t filling out the forms like they normally do,” said Smith.

“So there will be a one-year lag on that,” said Dr. Strong. “I mean, we’ll see that and then next year when they start having to pay again the following year then they’ll probably fill out the form again.”

“But then we’re going to lose quite a bit of revenue because we get paid more revenue by the fact that everybody gets free lunches,” said Smith. “We’re going to lose revenue because we’re not going to make as much.”

“But then we’ll pick it back up the following year, potentially. When the 62 families say ‘Hey, I want free lunch again,’” said Dr. Strong.

“We’ll pick up about that $35,000 again but we’ll lose more than $35,000 because not everybody will be getting free lunches,” Smith said. “Our reimbursement rate through the state for free lunches is almost double what we get on a paid-lunch kid. So, we’re making quite a bit more with everybody getting free lunches than we will when they go back to pay.”

“Is that something we can ask parents to review?” Baker asked.

“What is that?” asked Smith.

“To fill out the form,” Baker clarified.

“We have,” Smith replied. “Over and over and over. Just in society, as a whole right now, there’s kind of this feeling of ‘what do they need to know that information for.’ If they’re not getting anything for it, they’re hesitant to give us all this personal information, and right now they don’t have to because they are getting free lunches anyway. They’re just not filling it out.”

“We ask every parent when they register to fill that out,” Kingsley added.

“What’s the expectation?” Baker asked. “Do we have any idea if they are going to extend that at the end of the year? Has there been any talk?”

“There’s always scuttlebutt but nobody knows for sure because that comes down from the federal government,” Smith answered. “So, nobody really knows.”