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OCN > 2311 > Monument Academy School Board, Oct. 5 and 26 – Enrollment shortfall causes budget challenges

Monument Academy School Board, Oct. 5 and 26 – Enrollment shortfall causes budget challenges

By Jackie Burhans

The Monument Academy (MA) School Board met twice in October. In both sessions, they reviewed the finances, including the 2023-24 budget, and explored the challenges caused by lower than projected enrollment. The board also continued to discuss the employee handbook and leave policies. Finally, the board heard committee reports from board members and spotlighted its science teacher.

Budget challenges explored

At the Oct. 5 meeting, financial consultant Glenn Gustafson reported on the September financial statements and reviewed the fund accounts. He said the business services expenses were significantly over budget due to the conversion from the Netchex payroll system, as were the maintenance and operations expenses due to costs on the modulars. He noted that the budget anticipated 1,180 students, but the actual number was hovering around 1,100, which represented a significant decrease of $1.3 million. The good news, he said, was that MA stopped hiring as soon as they saw the drop in enrollment. He added that money budgeted to purchase the leased parking lot at West Campus might have to go. However, he noted that MA had reduced its expenditures with D38, received $350,000 in special education (SPED) revenue, and increased its interest income.

At the Oct. 26 meeting, the board heard more about the administration’s effort to amend the proposed 2023-24 budget. Gustafson noted that charter schools are funded on a per-pupil revenue (PPR) basis, so enrollment is a key driver. When a school district needs a new neighborhood school, they can run two ballot issues—a bond to pay for building the school and a mill levy override (MLO) to fund its operations. If passed, the district’s general fund is not impacted since the bond and MLO are paid out of property taxes.

In MA’s case, paying back its bonds costs 25% to 30% of operating expenses. Gustafson said he had been talking with state Sen. Paul Lundeen about how to increase charter capital funding to make it a more level playing field but that, as an employee of the Colorado Department of Education (CDE), he is not allowed to lobby. At the Oct. 5 meeting, Gustafson discussed the possibility of applying for a Building Excellent Schools Today (BEST) grant to get money for its building.

He explained that Lewis-Palmer D38 was providing funds to MA based on enrollment but that he had been having trouble reconciling the numbers on the spreadsheet used with the numbers from the state intercept program, which takes money to pay for the bonds. It turned out that the district had been relying on a spreadsheet they got from CDE that was incorrect. When they received a corrected spreadsheet, it turned out that MA owes D38 about $189,000. He said he would ask D38 for help but that MA was overfunded. Additionally, since the intercept is tied to the bonds, West Campus will see a reduction in expenses of $100,000, and East Campus will see an increase in expenses of $300,000. He said West Campus net revenue will increase from $400,000 to $500,000, while the East Campus loss will increase from $70,000 to $350,000. Gustafson said that MA would still meet the bond covenant requirements for cash on hand.

Gustafson also noted that he was very optimistic that MA would get an Employee Retention Tax Credit (ERTC) refund and estimated it would be around $1 million. This is non-recurring money that should not be spent on annual operations costs, he said, suggesting that a good use of it might be to buy the modulars to get out from under onerous leasing terms. He noted that the application had just been submitted and would take six months to process and another month to receive the payment.

The board then turned to the enrollment shortfall to try to understand how to avoid this problem in the future. Gustafson noted that enrollment was 116.5 below budgeted projections but only 4.5 below last year’s enrollment, so essentially flat. Interim Chief Operating Officer Kim McClelland said while it wasn’t possible to forecast with 100% accuracy, in March MA had looked at the currently enrolled students, families who had indicated an intent to return, and seats that had been offered and accepted.

MA estimated 1,022 returning students plus 184 seat offers for a total of 1,206. By April, returning was 1,016 plus 186 seat offers for a total of 1,202. The proposed budget was submitted in April, she said, but by May 31, the returning students dropped by 23 to 992, and the number of seat offers increased by four for a total of 1,187 students. By August, the number of returning students had dropped to 930, down by 62. McClelland said that when MA noticed the drop, it decided not to hire staff. They had originally thought they’d end up with five classes in each of three grade levels. At this point, she said, the registrars stopped offering seats going over the policy on student-teacher ratio. When they opened offers again, they only got two of the 13 potential students. The board explored different ways to market the school, keep parents engaged, and change registration processes in the future.

Board President Ryan Graham noted that from March to August, elementary had the biggest drop of 55 students, with middle school down 16 and high school down 17. McClelland said the registrars sent out a survey to families of students who did not enroll. The biggest reason was that families chose to homeschool their kids; some left due to program opportunities and school environment; and a few families had moved. McClelland said she would like to see a history of returning student rates and conversion rates and timeframes. Board Vice President Lindsay Clinton said she did not see the trend of homeschooling changing and had discussed with Graham whether MA could create a homeschool program.

McClelland said it takes time to put together a homeschool program but could come together for the next fall with a dedicated person to get the program going. She would need to know where to pull from the budget and where to find the space to run the program, noting that closes off the use of that space for students who bring in full PPR. She noted that six months might be feasible but not for a full K-12 homeschool program, and it might take three years to build out fully. The board, she said, would need to decide if it needed the program to break even initially or whether it could sustain a loss due to the start-up costs. Graham noted that almost 5% of MA’s enrollment left for homeschooling.

Gustafson reiterated that MA needed to reduce its budget to match the loss in revenue. He mentioned that, due to the budgeted revenue expectations, the staff had been given a larger-than-normal pay raise and that he expected it to be lower next year. He also said he would add the SPED funding MA had received along with $220,000 in fundraising, which he had hoped not to depend on. After going through the budget line by line with the leadership team, they came up with a portion of what is needed to bring the budget into balance but are still $311,000 short. The plan is to increase revenue, cut staff and other expenses, and legally reallocate as many expenses as possible from East to West Campus. He said they would save money from staff vacancies, pursue grant opportunities, and optimize interest income. The ERTC money would save MA’s bacon this year, but it would still need to solve the budget issues for next year. Graham proposed to have the Finance Committee review the budget and asked if they could push the budget approval from the Nov. 9 meeting to the December meeting to have more time. Gustafson agreed so long as the leadership team understands they cannot spend the money shown in the current budget. McClelland said that MA is under a spending freeze. The deadline for the budget is Jan. 31, 2024.

Clinton raised the issue of the $29 million balloon payment due on the East Campus bonds in May 2026. She said that MA had been discussing for two years the goal of presenting as attractive a package as possible to refinance the bonds. Gustafson said that if MA were to refinance right now, the annual debt service would require a cut in the budget. He is looking into the interest rate outlook and noted that Cesar Chavez charter school had a similar problem. He told Lundeen that there would be a charter school crisis if the state did not provide help. The bond for East Campus was a bad deal that expected interest rates to remain low and to be refinanced every five years, he said. McClelland noted that it would be better if both schools could be covered under one bond since elementary programs help offset the high school costs.

Employee Handbook and leave policy

At the Oct. 26 meeting, McClelland thanked the board for adding the draft handbook leave plan to the agenda, saying that with all the feedback, including meetings at each campus, MA was now proposing a grandfathering option that was better than the original plan. McClelland noted that some changes to the handbook were required for legal compliance and that, per the strategic plan, they were looking to improve the leave policies. She noted that the Employee Handbook is a living document that can be changed anytime. She said she had reviewed the new plan with the West Campus principals but hadn’t shown it to the teachers yet pending board review.

Graham said the West Campus feedback asked why not wait until the next contract cycle. He agreed wholeheartedly that they should honor the contract and let teachers decide next year if they want to agree to these changes. McClelland and Director of People Operations Krista Pelley explained that the current handbook limits the payout to 20 days at $50 per day for anyone separating, and the changes would give them full payout for all their accrued days.

Board Director Karen Hoida said it sounded like this was an incentive for people to leave. Pelley said the payout was unavailable for those who haven’t served five years, so it also serves as a retention benefit. She said staff can continue to accrue days and, if they’ve been grandfathered, don’t have to leave now to get the payout. Hoida said they can say they are grandfathered but it won’t help if they’ve lost trust. Clinton said this wasn’t well communicated and some teachers might feel their contract doesn’t mean anything. She would love to see and attend another meeting with teachers to show their feedback was considered. Pelley said staff can continue to accrue days and, if they’ve been grandfathered, don’t have to leave now to get the payout.

Graham said that he heard that some teachers still can’t access the new SDS payroll system to see their hours and are being told the board has to approve something before they can see it. Pelley said she had given everyone a breakdown as of Aug. 1 but didn’t let them access it directly due to the need to convert from hours into days. Graham said it wasn’t right that teachers have to make an appointment to come and ask about their leave. He said from the teachers’ perspective, something was proposed in September that they didn’t see, and they felt something nefarious could be happening. When they don’t have access to see their accrued leave, it is all unsettling, he said.

McClelland said that the system switchover was not operationally planned out as well as it could have been and was not rolled out effectively. Pelley said they would have access as of Monday to payroll information. Clinton said these changes probably started with good intentions to improve policies, but it feels like signed contracts can be changed anytime. She felt that required legal changes should be implemented, but any improvements should be in the next contract.

Graham said he would prefer to have a meeting during teachers’ paid time, and he would attend. He asked that the required Employee Handbook changes be brought back for approval at the November meeting. The changes could exclude or include the leave policy changes depending on feedback from the teachers.

Highlights

Board meeting highlights include:

  • Board member Craig Carle spotlighted Karl Brown, eighth-grade science teacher, for stepping up as a leader for his grade level team and the school, providing excellent instruction and setting high expectations.
  • Graham reported that the recirculation road around the West Campus is complete.
  • Board member Emily Belisle reported that the curriculum committee discussed new math curricula and would send the three options to West Campus teachers to solicit feedback and then to the parents and community according to the new curriculum policies. The committee hopes to bring the new math curriculum to the board in December for approval and that it could be implemented in the next academic year.
  • Graham thanked the East Campus administration team for getting the modulars up and running with a certificate of occupancy, noting that this had been a long project.
  • The board unanimously approved the list of authorized signers on the raffle bank account.
  • The board unanimously approved the board calendar for 2023-24 to continue with the second Thursday of the month.
Above: At its Oct. 5 meeting, board Director Craig Carle, right, spotlighted Science teacher Karl Brown for his excellence in teaching as well as his leadership in supporting other teachers by helping them set up the Canvas learning management system. Photo by Jackie Burhans.

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The MA School Board meets at 6:30 p.m. on the second Thursday of each month. The next regular board meeting will be on Thursday, Nov. 9, at 6:30 p.m. at the East Campus. See more information at see https://bit.ly/ma-boe.

Jackie Burhans can be reached at jackieburhans@ocn.me.

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