The 2017-18 budget is providing yet another challenging financial situation for South Lane School District.  Currently the Ways and Means Committee has allocated $7.8b to the State School Fund.  This allocation is approximately $600m short of Current Service Level (CSL).  The 2017-18 Proposed Budget is built on the Governor's Proposed Budget allocation of $8.0159b.  The impact on South Lane School District for either allocation is a General Fund reduction of somewhere between $1m and $1.8m.  Other factors contributing to the budget challenge include the ending of the elementary PE grant, uncertain federal dollar allocations, a significant increase to the PERS rate, and a continual loss in the district's average teaching experience.  Each of these factors causes a further decrease in the funds available for the upcoming school year.

Major factors affecting the 2017-18 proposed budget include the following:

• Enrollment is fairly steady for the first time in two years.
• The incoming kindergarten class appears to be bigger than the last two years.
• A reduced ending fund balance for 2016-17 and continued reliance on an EFB.
• A 4.5% increase to the employer's PERS rate
• An unsettled contract for the Classified Association and a 1.25% COLA increase for the Licensed Association.
• We are currently two years behind in the state's textbook adoption cycle and need to adopt elementary mathematics.

The district's general fund expenditures are heavily weighted toward staffing.  Nearly 85% of the district's general fund budget is dedicated to personnel.  The only avenue for making significant reductions to the budget is to reduce staff, or to cut days.  The district has cut 41 days over the past nine years.  Students in the 8th grade have only experienced two years with a full school calendar.  The district has not fallen below the instructional hours requirements any of those years, however, the reduction in days has resulted in a major loss of instructional time.  The is particularly difficult on students struggling to meet critical benchmarks.  For 2017-18, we are seeking the ability to cut up to four days if necessary.  This action requires the Licensed Association to agree.

At the writing of this budget message the district is in negotiations with the Classified Association for a successor contract.  The district's practice for more than two decades has been to provide a COLA increase to the salary schedule.  This proposed budget provides a 1.25% COLA increase to the classified salary schedule.  This increase is consistent with the increase for both the Licensed Association and Administrators.  Layoffs of staff are not anticipated although many vacancies will likely go unfilled, thus increasing workloads and class sizes.  There are a number of Head Coaching vacancies - more than ever before - and these can be difficult to fill without teaching jobs as a companion.

With the passage of the May 2016 bond, a number of projects are well under way.  The construction of the new Harrison Elementary School has begun as has safety and security, technology and deferred maintenance projects.  The planning for the Early Learning Center is almost complete, and the planning for the Pool Renovation should begin in the fall.  The Deferred Maintenance Transfer to Fund 450 has been decreased, as many items will be handled through the bond funds.

By the end of the 2016-17 school year, Kennedy High School will have completed their move to the Delight Valley campus.  This will provide a true campus for Kennedy and will allow ample space for their many outdoor programs and pursuits.  Immediately following the completion of their move, the portables on the old high school campus will be removed to clear space for the building and renovation of the Early Learning Center and the renovation of Daugherty Aquatics Center.

South Lane School District reserves or cash balance has been approached the same way as in previous budgets.  The district sets aside $1 million in a contingency fund to be used for catastrophic, unforeseen circumstances.  Anything above $1 million in cash reserves at the end of the school year is figured back into the expenditures of the next year's budget.  The amount of funds available in the ending fund balance for 2016-17 is anticipated to be $2.3m.  Although this is not a good, long-term strategy, the district has been able to manage this approach for the last 17 years.  The contingency amount of one million is approximately 3.4 percent of the general fund-operating budget.  Recommended levels of contingency generally range from 5-10%.  This level is at the low end of recommended percentages by most standards.  South Lane School District continues to seek additional outside funding in the way of grants.

It is South Lane School District’s mission to have “Children Come First.” This budget continues to live that mission.  Regardless of the final State School Fund allocation, South Lane School District will do everything in its power to provide a high quality education for all South Lane students.

Sincerely,

Dr. Krista D. Parent, Superintendent