When an internal memo stated that our regular program district cost would grow by $5,189 under the proposed 2.5% supplemental state aid (SSA), I had a few employees believe it was a typo. It is not. If it sounds like a small number, it is. Contextually speaking, our heating bill for the month of January alone was $6,078.89. To remind everyone, SSA is the percentage by which the state cost per pupil grows annually. Under this proposal, the cost per pupil would increase by $181, from $7,227 to $7,408. Over the last five years, SSA has averaged 1.77%.
Holistically, Iowa school finance is very complex. But, the calculation of the regular program district cost is rather simple: number of resident students multiplied by the cost per pupil equals regular program district cost. It it the largest component of the budget and as such gets quite a bit of attention. Now, when the number of students in the base year is larger than the following year, the result is smaller growth in the regular program district cost, or in some cases (in some districts) it is a decrease.
This is where things begin to get complicated, particularly for a school like Hudson. You see, we are a district that is fortunate to have a large volume of students open enroll into our district. This year we saw an even greater influx due to the late change in the open enrollment law. The fact is, growth in our open enrollment population flipped the script so to speak. Our latest estimates for the current fiscal year project revenue growth from open enrollment at over $200,000. Although I anticipate our open enrollment numbers will continue to trend upward, it is unlikely we will realize the same growth spurt as the current year due to the quirky way in which the law was written and subsequently rolled out. In other words, this anomaly won't be repeated next year. Instead, it is likely to become part of the regular budget with which we will need to appropriately staff.
What this discussion has hopefully illustrated is that two, seemingly diametrically opposed variables can both be true at the same time: resident enrollment can actually be down while total students served in the district can actually be up. Additionally, it over emphasizes the importance of enrollment trend as a determining factor when it comes to school funding. Rightly so. But the fact is, enrollment can't be the only determinant because year over year fluctuations can't be controlled or even planned. I'll admit, this year we have the wind at our back and will likely be able to make strategic and budgetary decisions a bit easier than many of my colleagues.
Yet, that hasn't always been the case and, using statistics as our guide we can expect the tide to turn at some point. Which is why it is so important we tend to the other, equally [if not more] important variable: SSA. Unlike enrollment, SSA should be less prone to wild swings up and down. Typically during this time of the school year when it comes to setting SSA, we focus on timely and adequate. This begs the question, what is adequate? For certain that will be the crux of the debate in our legislature the coming weeks. However, if we let data and the trendline be our guide, it's a pretty tough argument to beat. According to the Iowa Employment Relations Board, the Consumer Price Index (CPI) for the month of January is 5.9% and is expected to climb to 7.5% by June.
With over 80% of school budgets consumed by personnel costs, this suggests larger wage increases for employees for the next fiscal year. That, coupled with the labor shortage only exacerbates the issue. These two reasons alone suggest the district will need to take a more aggressive posture when it comes to wage increases across all sectors. And by aggressive, I don't mean shortchanging staff. If this becomes an arms race for talent, I believe we need to be positioned toward the front of the pack.
So, if it appears we don't have a horse in this race I say not so fast. Enrollment projections are fickle and difficult to gauge. SSA on the other hand can be stable. We just need to ensure that it is adequate to meet our needs now and in the future.
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