York County Schools could be facing another difficult budget season, with the threat of possible sequestration looming large over the division.
York County Schools Chief Financial Officer Dennis Jarrett gave the School Board an outlook for the budget in fiscal year 2014 at the board’s Monday work session. His outlook included several unknowns, including how much money will come from York County, what changes could come from amendments to the state’s 2013-14 biennial budget and the possible effects of sequestration.
If Congress cannot agree on a way to cut the deficit by January, the 2011 Budget Control Act requires sequestration, a $500 billion across-the-board cut in defense spending over the next decade. That could have a serious impact on York County Schools, where 43 percent of students are connected, through their parents’ jobs, to the federal government.
In fiscal year 2013, the division received $9.5 million in federal impact aid, given to divisions with high populations of students attached to the federal government and military. In addition, the division received around $700,000 in aid for heavily impacted schools; York County Schools has already projected a decrease of $40,500 in those funds.
If sequestration occurs, the division’s impact aid would be cut more than 8.2 percent, but the impact of the cuts might not be felt immediately, Jarrett said, because the payments usually run behind. The cuts couldn’t just come from impact aid, however. Other federal grants, such as Title I aid for schools with high populations of low-income students or funding for special education, would be cut. Overall, Jarrett estimates sequestration could cost York County schools $1.2 million.
The division also anticipates a rise in health care costs for the second year in a row. Jarrett said the worst-case scenario would be a 20 percent increase, which would cost an additional $2.6 million. He said that last year, the division had 17 claims costing more than $75,000 — well above the average of three claims for a group that size. This year, the division had the exact same amount of claims, triggering another increase.
The good news is that two previous budgetary challenges — increases to the contribution rates for the Virginia Retirement System and changes in the Local Composite Index that determine locality’s ability to pay — are set to remain the same this year.
Last year, faced with implementing a mandatory 5 percent pay increase all at once or over five years, the division had to choose the latter option and gave employees a 1.1 percent increase to offset a new required contribution to their retirement plans. On Monday, board members and administrators noted the smaller pay increase had lowered their appeal when recruiting employees. If the board continues to spread the costs over the next four years, it will cost the division $150,000 annually. But, if the board wanted to implement the remaining 4 percent increase in 2014, it could cost between $600,000 and $608,000.
The board believes the time has come to increase pay for faculty and staff, who have received no raises, step increases or position re-grades in the past four budgets. In the same period, the division has cut 124 permanent positions through attrition and layoffs, shifting more work to the existing employees. Jarrett told the board on Monday that doing one step increase for all eligible staff would cost $1.3 million.
In addition, Jarrett said the board will have to consider allocating more funding for contractual services, special education teachers and utility costs.
The picture for state funding will become clearer on Dec. 17, when Gov. Bob McDonnell releases his proposed amendments to the biennial budget. Using that proposal as a base, the administration will begin reviewing its budget Jan. 7.
