Coronavirus costs could complicate Delaware school budgets

It almost goes without saying that the pandemic’s impact can be felt in almost every aspect of the state — including school budgets.

“This is completely unprecedented, as far as the local and the state impact on the revenue sources,” said Oliver Gumbs, director of business for the Cape Henlopen School District.

“We’ve been through tough times when there were budget cuts. A couple years ago, the state cut $26 million out of the public education budget and we had a portion of that and we managed through that. What’s going to happen to our property tax revenue and additional cuts in the future, this is totally unprecedented.”

The full impact on school budgets won’t be felt so soon, however. As the end of the fiscal year closes in at the end of June, districts have received almost all of the anticipated state and local funds for the year.

Coming into fiscal year 2021 and 2022, however, may bring some challenges.

School budgets comprise local, state and federal funding. Local funding comes from property taxes and mortgage payments; state funding is determined by the governor’s budget and voted upon by the general assembly.

Earlier this month, the panel that provides the state’s official financial projections softened prior predictions about how much the state’s revenues will drop, but uncertainty remains on what that could mean for education.

The Joint Finance Committee begins meeting in June.

On the local side, the impact is likewise yet to be seen. Tax collections for the schools don’t begin until the end of September or early October, Mr. Gumbs said, which is when the districts would begin seeing any differences in revenue.

“At this point of the year, probably more so than typical years, there’s just a little bit more uncertainty, but it all tends to come into focus as we work our way through June,” said Jerry Gallagher, finance director for Smyrna School District.

In any school district’s budget, the largest financial commitment is people. Mr. Gallagher explained that the state goes through a “guaranteed unit count” every April, where the state commits to funding a certain number of positions, which allows for the districts to plan for the following year and hire over the summer.

“In all of our conversations with the state they’ve indicated they’re planning on fulfilling that guarantee unit count, so … while we don’t know everything that’s going on, at least we know a baseline, so that we can continue to proceed in that manner,” Mr. Gallagher said.

There have been some costs cut while school buildings have been shuttered since mid-March. Substitute costs, overtime, after school programs all equate to money that can carry over to next year.

“We basically have a spending freeze on and are only buying things that are absolutely necessary for the schools. We may have to put things on hold, like technology replacements, things of that nature,” Mr. Gumbs said. “Anything that we can delay and not impact the classrooms significantly is probably what we’ll target. Obviously, we still need to keep people paid, so that’s going to be the main focus and then we’ll have to react once we know the dollar amount is.”

Sarah Croce, chief finance officer of Milford School District, agreed that there is still uncertainty in how the state’s revenue forecasts will impact education.

“We are closely monitoring the situation and are involved in discussions with state budget officials and the Department of Education to best address the issue,” she said in an email. “Though we are seeing an increase in some costs related to different initiatives supporting students and families during COVID-19, there will likely also be some savings from the discontinuation of school operations in their typical fashion.”

Cape Henlopen School District was slated to hold an operating referendum in March, but put its plans on hold.

“We had identified significant needs in various areas that we needed to address that, without a referendum, we won’t be able to address those now. We won’t be able to address them until we get to that point where we have additional revenue,” Mr. Gumbs said. “So a lot of things will be put on hold and we’ll try to manage through it best as possible. But not having the referendum and not knowing when we possibly could or should, based on the economy, is going to have a definite impact on the things we’re going to do. It’s going to limit our ability to do things.”

Smyrna passed a capital referendum in February for improvements to North Smyrna Elementary School. While — due to the fact the district was retiring other bonds — the referendum would have no fiscal impact on its taxpayers, the district will have to wait and see about beginning construction.

“We haven’t heard anything yet from the state in terms of, with their financial position, are they going to be able, since it wasn’t a project that had already started. Will they be able to fund that for next year? Or will it be something that they’ll have to defer to support projects, which are currently ongoing?” Mr. Gallagher said. “So we’ll just have to wait and see regarding the status of that … We just haven’t heard anything definitive yet because we’ve been primarily focused more on the operational areas.”

Generally, the situation lacks precedent for districts to look toward as a model, said Shelley Rouser, chairwoman of the education department at Delaware State University.

“There’s not much runway for proactive planning in this situation, recognizing that schools will be reopening in some way, shape or form in a few months,” she said, noting that the communication between districts, Department of Education, the budget office and the General Assembly is important.

“That’s going to be key for as much proactive work as can happen when we’re talking 12 weeks and reopening in a very different way than anybody has ever known,” she added.

She added that with the different guidelines coming out targeting what school could look like when students head back to class, changes could come with a cost.

“There’s so many discussions about what would it look like to open up in a safe way, things like having reduced class sizes, having children come on alternate days,” Ms. Rouser said. “Taking all of that and having tight budgets already, and then the fear of any kind of reduction in a budget, and then opening up in very unique ways that could also be costly would, I would imagine, be at the front of their minds.”