The Delta School District is again projecting a shortfall in it annual operating budget.
The district’s draft operating budget for the 2021-2022 school year, released on Thursday, April 29, is $169.48 million, with a shortfall of $2.722 million, or 1.6 percent of its budgeted operating expenses. It’s the second year in row that the district projected a shortfall, after a “modest” $582,000 shortfall in the 2020-2021 budget.
Meanwhile, enrollment in the district is expected to grow by 35 full-time enrolled (FTE) students for 2021-2022, bringing the total projected number of FTE students to 15,586.
To balance the budget, the district is proposing a “gentle, sustainable and measured approach to reducing its expenditure,” according to a press release, with no staff reductions.
“Our focus has been on presenting a balanced draft budget that is gentle as we hope to transition out of the COVID-19 pandemic,” Delta School District secretary treasurer Nicola Christ said in a press release.
“We have looked for cost reductions that have the least negative impact on education while at the same time protecting the school district from risk. As you can imagine, we have had to work hard to find ways to reduce costs that won’t impact our students, staff and classrooms. We hope that the decisions we have made will help to reduce some stress for staff, parents and students in these challenging times.”
The shortfall comes as a result of a $225,000 reduction in provincial funding, a $450,000 loss in investment income resulting from an interest rate reduction in the province’s Central Deposit Program, and a $2.047-million increase in district costs.
The district had anticipated $154.468 million in provincial funding based on the then-known Ministry Operating Grant formula (about $148 million), plus an estimated increase to accommodate 2021-2022 labour settlement costs ($6.44 million).
However, instead of being delivered through a separate grant as in the previous year, labour settlement funding was rolled into the per-pupil funding, resulting in a shortfall of $272,000 despite a 4.3 per cent increase to the per-pupil amount.
Additional funding changes mitigated that reduction by $47,000 thousand, resulting in an overall $225,000 reduction of the anticipated operating grant.
Of the increase in district costs, $495,000 results from staffing cost increases. Those include key positions to support the HR department with staff recruitment, retention and wellness given the competitive job market; the finance department, which is dealing with increasingly complex reporting requirements and standards; the IT department, which is dealing with an increasing technology workload resulting from the increased reliance on online learning resources as a result of the pandemic; and the facilities department.
Another $581,000 in salary costs comes as a result of regular instruction staffing increases, plus $766,000 in benefit rate increases and a $133,000 provision for unfunded salary increases.
Meanwhile, the district is predicting a $92,000 shortfall in income from academy programs, as not all will be operating in the 2021-2022 school year due to the COVID-19 pandemic.
Balancing the budget
The draft budget calls for reducing expenses “in the least impactful way” without “undue reliance on funding sources that are not certain in these uncertain times,” according to a press release, and for using reserve funds to cover costs the district anticipates are temporary in nature.
Noting that the district will hold sufficient funds to buffer against potential revenue shortfalls in light of the ongoing pandemic, the draft budget calls for using $854,000 in one-time reserve funding to cover $450,000 in investment income loss deemed temporary as investments tend to recover over time), $88,000 to cover temporary IT staffing increases, $244,000 in temporary WorkSafeBC benefit rate increases, and $92,000 to cover the shortfall in income from the district’s academy programs.
The budget also looks to save $1.386 million by eliminating a pair of contingency funds — one for unforeseen regular staffing needs ($849,000) and one for inclusive education provisions ($537,000) — that were added in 2018-2019. Instead, the district will revert to the previous system of covering such contingencies using reserve funds, if required.
The district also plans to achieve $482,000 in operational savings — $165,000 from reduced staffing costs at academies not running next year, an estimated $126,000 in unspent salary costs due to unavoidable hiring delays, an estimated $100,000 in unspent funds arising from a decrease in operational need (which, the release notes, stems from making classrooms more inclusive and equitable, resulting in reduced demand for transporation services to take students with unique needs to resource rooms at other sites), and $91,000 from adjustments to the curriculum and learning support grant costs to align with Ministry of Education funding.
Impact of COVID-19
The COVID-19 pandemic has certainly impacted the district’s revenues over the past year — facility rentals were about half of those in a normal year, there were fewer international students and the pandemic’s effect on the economy is reflected in the decrease in the district’s investment income — and it’s too early to tell what effect it will have for 2021-2022.
Still, Christ said, the proposed budget, while conservative, is not a “COVID budget.”
“Our budget is a regular budget. It was so last year and it is again so next year,” Christ said during a media briefing Tuesday.
“It’s a little bit hard to tell exactly how the year will proceed, of course, because like all of us we’re in the pandemic and we don’t exactly know how that pans out for the future.”
One of the question marks is the amount of additional funding — if any — the district will receive from the provincial and federal governments. This year, both governments provided a significant amount of funding to help school districts cope with the pandemic, and it’s not yet known if that will happen again.
As to revenue from the district’s international student program, only 30-40 per cent of the net contribution is factored into the budget, with the remainder to be recognized if and when it materializes.
“So currently what that means is that the budget for next year has not recognized anything we don’t believe we can achieve,” Christ said.
She said about 435 international students have expressed an interest in coming to the district, however it remains to be seen whether restrictions brought on by the pandemic will allow that to happen.
“That ties in very nicely with what we have budgeted for next year, however what we cannot say at this point in time is whether these students are able to arrive here. So there’s a certain amount of uncertainty in there,” Christ said.
“The same happened last year. We anticipated that we would have a significant loss and in the end we did reasonably well. We did not fully recover of course, but we did not have the significant loses that we had worried about initially.”
The effect of the pandemic on the budget is further mitigated by measures the district put in place prior to the start of this school year. As part of its pandemic plan, the district set aside funding to cover the varying costs that might arise, including potential revenue losses.
The additional money granted from the provincial and federal governments meant the district has not had to use much of its pandemic reserves to cover the current year’s budget, leaving the bulk of it to be carried forward to 2021-2022.
“These will serve to cover any shortfalls that we may see when we know more of what that will look like, and they may serve us in other ways that we cannot predict at this moment in time,” Christ said.
“We don’t know yet whether we will receive funding from the ministry, we don’t know what September will bring, we don’t know what our specific circumstances here at the district will look like, and so we’re planning at this moment in time to be ready for a number of different scenarios,” she said.
“But we’re well aware of these circumstances and I believe we are ready to address whatever might come our way in one way or another.”
The public can provide input and feedback on the draft budget at public board meeting to be held on Tuesday, May 4 via Zoom. Those wishing to speak at the meeting can sign up by emailing email@example.com. Those who prefer to submit their input can do so by emailing firstname.lastname@example.org. The deadline to submit feedback or sign up to speak is noon on Tuesday, May 4.
The Delta board of education is scheduled to vote on the budget on Tuesday, May 11.