Cost Containment
2024-25
2024-25 Cost Containment Information
In our ongoing effort to maintain the district’s financial stability, we are adopting broad measures to manage costs effectively. This is part of a wider challenge shared by school districts across the region, as highlighted by recent surveys indicating a significant need for budget adjustments.
Facing these financial realities means making tough decisions, particularly regarding staffing and expenditures, to ensure our district remains on solid ground for the future.
Several factors contribute to the budget shortfall we are currently facing:
- Navigating through the pandemic had profound financial implications, starting with lost revenue in the 2020-21 school year due to about 200 students choosing other education options. Further, the pause of a decade-long pattern of enrollment growth in the district of about 200-250 students further deepened the impact of the pandemic. The lost revenues for more than 400 students, coupled with staffing plans already in place for the higher projected number of students, significantly decreased the district’s fund balance resulting in a need to enter into multiple years of cost-containment.
- Despite an overall increase in education funding provided by the State Legislature in the last session, the basic formula has failed to keep pace with inflation for decades. While there was a 4 percent increase for the 2023-24 school year and a 2 percent increase for the 2024-25 school year, these figures fall short of projected inflation rates over the same period. Although additional funding was provided in the most recent legislative session to address the special education and English learner (EL) cross-subsidies, the funding gap for these two areas of programming has been a reality for decades. The number of students requiring special education and EL services and those students’ needs is also substantially increasing.
- The 2023 legislative session introduced new school district expectations, programs, and requirements which has created some uncertainty regarding what the actual costs and financial impact upon school districts will be. While some of these mandates were funded, others were only partially funded or not funded at all.
- Although inflation has decreased from historic highs in 2022, substantial increases in utilities, transportation, food, supplies, health insurance premiums, and other costs have significantly impacted school district budgets.
Budget adjustments were identified for the 2023-24 and 2024-25 school years by a committee representing district schools and departments. These adjustments were necessary to address the range of funding challenges previously mentioned, while maintaining our General Fund balance at a targeted amount of 7% in accordance with School Board policy.
2023-24
Wayzata Public Schools Needs to Contain Costs for the Next Two School Years
The district has faced a budget shortfall due to:
- The on-going financial impact caused by the pandemic, including decreased student enrollment in the 2020-21 school year.
- The fact that state funding for education has not kept pace with inflation for several decades. To emphasize this point, the general education per pupil funding formula increased by only 2% for the FY 2022-23. Special education has also been underfunded for decades.
- Additional inflationary pressures for some operational functions impacting the district, such as the transportation budget increasing by about 13% in FY23.
Budget Adjustments Needed for 2023-24 and 2024-25 School Years
In the 2022-23 school year, we shared that a multi-year cost containment process would be necessary to provide on-going, future stability to the school district’s General Fund budget. The cost containment process has allowed us to:
- Address a number of funding challenges, including decreased student enrollment, caused by the pandemic;
- Maintain the district’s General Fund Balance at a minimum of 7%, an amount consistent with School Board policy; and
- Operate within the parameters of the funds we receive from the state and through our voter-approved tax levies. These are our two primary sources of funding.
Frequently Asked Questions during Cost Containment Process
Q: How did we get into this position?
A: The district is facing a budget shortfall due to:
- The on-going financial impact caused by the pandemic, including decreased student enrollment in the 2020-21 school year.
- The fact that state funding for education has not kept pace with inflation for several decades. To emphasize this point, the general education per pupil funding formula increased by only 2% for the current fiscal year, when general inflation is considered to be around 8%. Special education has also been underfunded for decades.
- Additional inflationary pressures for some operational functions impacting the district, such as the transportation budget increasing by about 13% in the current fiscal year.
Q: What about the funding from the State of Minnesota?
A: State funding for general and special education has not kept pace with inflation for several decades. The State Legislature is currently in the process of determining education funding for the next biennium. Regardless of the outcome of the legislative session scheduled to finish May 22, we are expecting there will likely be a remaining gap between revenues and our anticipated expenditures. Once state revenue is known, we plan to revisit the budget planning decisions being made now and determine if adjustments and refinements are possible.
Q: Will there be cuts in administration?
A: Yes, there are reductions recommended in administration and support staff at both the district and school levels. District-level reductions in administration and support total $1,040,100 and reductions at the elementary, middle and high school levels total $522,838 for the 2023-24 school year.
Q: Why isn’t more detail being provided about specific programs or staff being reduced?
A: Specific program and other identifying information is not being provided in the details so that staff affected by these reductions can be personally notified by their school principal or program supervisor at the appropriate time.
Q: What process was used to determine these cost containment recommendations? Who was involved in making these decisions?
A: We started the district budgeting process in November 2022 by forecasting revenues and expenses to determine the projected amount needed to balance the budget for the 2023-24 and 2024-25 school years. In December 2022, we brought all district administrative leaders together to create an initial list of ideas and considerations for potential budget adjustments. A committee representing district schools and departments then met to create a list of cost containment recommendations.
Q: What are the effects of changing staffing ratios at the elementary, middle and high school levels? Does “change staffing ratios” mean larger class sizes?
A: "Change in staffing ratio" is a more accurate term to describe the specific changes that are taking place within the system. To indicate "increase class size by 1 or 2" suggests that all classes would have one or two more students in them next year, which is inaccurate. An example of this would be that if a grade level is staffed with a districtwide goal of 24 students, we use a range of +/-3 to determine staffing levels to maintain an appropriate budget. If the staffing ratio is increased, it does not mean that every classroom will automatically see an increase in students. *Staff ratios vary across the district depending on grade level.
Q: Why isn’t more detail being provided about specific programs or staff being reduced?
A: Specific program and other identifying information is not being provided in the details so that staff affected by these reductions can be personally notified by their school principal or program supervisor at the appropriate time.
Q: Why is it necessary to identify multiple years of budget reductions?
A: The State of MN determines its funding over the next two year period (biennium). With the current budget assumptions, the district needs to reduce expenditures by about $6.5 million in 2023-2024 and another $2.5 million in 2024-2025 in order to keep its fund balance above 7%, which is consistent with district policy. Some of the budget containment ideas will take further review and consideration and will require some time to ensure their feasibility.
Q: Why does the elementary level face a reduction of programs larger than any other school group?
A: The proposed budget adjustments are as proportional as possible. The elementary is larger because there are nine schools, versus three middle schools and one high school.
Q: Does this mean the elimination of specialist classes?
A: No, while we regularly review our curriculum offerings, elementary specialist classes are likely to continue to be offered just as they are in the current school year.
Q: Has the decision been made to move to a 2-mile walk zone or is it under consideration?
A: Changing to a 2-mile walk zone is under consideration as part of the district’s cost containment process and if implemented, planning would occur this summer after the completion of summer school. Additional busing information would be shared with affected families at that time.
Safety is always the first priority in the establishment of bus routes. Regardless of the distance, district policy 724 would continue to be followed. Policy 724 states, “students will be transported if walking to school or the bus stop would require crossing dangerous highways unaided by signals, student patrols, or police officers, or if other hazards exist along the walking route. Dangerous highway crossings and other hazards will be identified by school administration and parents/guardians will be informed of available transportation service.”
Q: Could the district save costs if students were asked to “opt-in” to use transportation services?
A: In the past, the district did offer an opt-in option for transportation to high school students. This option was discontinued because, in general, it did not eliminate the need for many routes which would have helped cut costs. Because student numbers are so high in our neighborhoods throughout the district, having students opt-in to using busing, or automatically removing students who have a high school parking pass, would not have a significant effect on the number of routes we need to run each day.
Q: What happened to the pandemic relief funds that the district received? Why can’t they be used to help with the budget shortfall?
A: Very little of the COVID relief funds could be used to cover or supplant existing expenses. The district was required to use the funds in the manner prescribed by the federal government. While the district received nearly $11.7 million in COVID relief funds distributed over a four-year period, it was one-time funding and not an on-going source of revenue. The funds had to specifically be used for: personal protective equipment (PPE) used during the pandemic, sanitation services and supplies, ventilation, mental health support, social workers, summer school, transportation and wi-fi hotspots.
2022-23
We're Facing a Budget Shortfall for the 2022-23 School Year
One of the many unfortunate consequences of the COVID-19 pandemic is its financial impact on our public schools. Many Minnesota school districts are projecting a shortfall for the coming school year.
The shortfall is the result of 2020-21 enrollment and staffing
Enrollment
Enrollment did not meet expectations. About 200 students left the district for either a private school or home school. The 250 new students we anticipated and budgeted for did not arrive. In total, our enrollment was at least 450 students short of projections, with a loss of revenue of approximately $5 million.
Staffing
We aren’t able to confirm our enrollment numbers until late summer. It is not possible to significantly adjust staffing at that point. It was particularly challenging in late summer 2020. The combination of staffing commitments and State mandates that we keep staff on the payroll resulted in overstaffing. While we made some staffing reductions for the 2021–22 school year to align with student enrollment numbers, additional adjustments must be made for the 2022–23 school year.
COVID-19 federal relief funds will not continue
Our district received some one-time pandemic relief funds. A portion of those funds, in combination with our district’s fund balance, allowed us to avoid significant cost containment measures in the 2021–22 school year. COVID-19 relief funds are not an on-going source of revenue for our district.
Here's what we've done
We brought together a team of administrators representing all district schools and departments. They created a list of recommendations for reducing the General Fund budget by $5.2 million (2.9%) for the 2022–23 school year. They used the following guidelines.
- Use conservative assumptions to project enrollment, staffing and expenses.
- Assume a 2% increase on the formula, already approved by the Legislature.
- Do not assume any additional funding from the Legislature.
- Incorporate $5.2 million in budget adjustments as part of a multi-year cost containment process.
- To the extent possible, achieve recommended staff reductions through attrition.
Here's what the budget adjustments mean
- Slight increases in class sizes
- Staff reductions, primarily through retirement and attrition
- Smaller supply budgets
- Fewer professional development opportunities
- Slightly higher parking and athletic fees
2022-23 Cost Containment Fact Sheet
2022-23 Cost Containment Details
We welcome your questions and ideas about Cost Containment at communications@wayzataschools.