Public schools in New Orleans could experience years of declining revenue due to COVID-19’s lingering effects on the city and state economy, NOLA Public Schools district Chief Financial Officer Diane Allison told Orleans Parish School Board members at a virtual meeting Tuesday.
Allison provided both “optimistic” and “pessimistic” projections for board members, depending on how quickly the economy bounces back. Even the optimistic model projects a 13 percent drop in local per-pupil funding next year. The pessimistic one spreads the damage out over years, with an initial 10 percent drop and another decrease the following year. Multiple models show declining sales tax revenue into the 2021-2022 school year due to the virus, which Allison called “the great unknown.”
“Again we are unsure of the economic shutdown. The duration of the economic shutdown and the speed and trajectory of the recovery,” she said.
The news comes as parts of the state’s economy are preparing for a gradual reopening. On Monday, Gov. John Bel Edwards announced that he would allow his stay-at-home order to expire Friday, allowing more to open at reduced capacities. Mayor LaToya Cantrell also announced the city will begin to reopen additional sectors this weekend, but New Orleans may have tighter restrictions than the rest of the state, she said.
Allison said school district staff worked over the weekend to distill a 78-page report from Louisiana Legislative Auditor Daryl Purpera about the effect of the virus on local governments. Orleans Parish was predicted to have the biggest decline in sales tax collections across the state, with “11.2% in fiscal year 2020 and 30.4% in fiscal year 2021,” according to the report.
A portion of sales and property taxes, collected by the city, are then sent to schools.
The good news for schools? In the fall, the district “rolled forward” its property tax rates, resulting in an effective tax increase for many New Orleans residents who had seen their property assessments skyrocket. Advocates argued the money was much needed for schools. Now, in a best case scenario, it could bail out the district, Allison said.
“Essentially, the ad valorem revenue roll forward increase is enough to offset the legislative auditor’s optimistic projected decrease of sales tax revenue in the current year,” Allison said. “Which is very good.”
It appears that many schools in New Orleans’ all-charter district may enjoy unique financial protections because they are run by private nonprofit groups, and unlike traditional, government-run schools, they are eligible for Paycheck Protection Program loans from the federal Small Business Administration. Some charter groups have received the loans. The NOLA Public Schools district itself, as a government entity, is not eligible for the program.
Board member Ben Kleban, who requested detailed financials at last month’s meeting, was surprised by Allison’s projections.
“I am startled by the actual numbers and I would ask here that we begin to assemble some contingency planning to mitigate the more pessimistic assumptions,” he said. “If we could be facing as much of $40 million a year for the next two or three years … in less resources, almost $1,000 per kid, we’re talking about a major impact.”
He asked that a range of solutions be considered.
“Whether it’s through continuing to use our reserves as a district, whether it is through financing the schools, or what have you. Everything we can think of should be on the table,” he said. “Obviously our biggest priority right now should be to minimize impact on schools.”
Kleban said he hoped to see more planning next month.
“Yes sir, we continue to have those discussions hourly,” Allison replied, noting she and other staff had spent the weekend digesting the state auditor’s report. “This is just a moving target.”
Board member Sarah Usdin urged the district to work with charter school boards.
“This situation, the magnitude of it, I know you all are meeting with the charter CFOs and CMOs, but making sure that those board members as well are appraised. Just making sure there is more information, rather than less, can help people do their own planning.”
In other financial news, the board also approved a salary schedule change to ensure OPSB staff working in special education and direct-run schools earn at least $15 an hour. Staff employed directly by the district have plummeted since the charter school conversion of the city began. But, after becoming an all-charter district last summer, the district is taking over Mary D. Coghill Charter School this summer.
NOLA Public Schools Chief of Staff Dina Hasiotis said the district has hired many of the staff needed to run Coghill this fall.
The district is also working with schools on remote learning plans for the fall, should they be necessary. Across the district, Hasiotis said they estimate a need for 36,000 devices for students. While a percentage of these students currently have their own or school provided devices, the district’s number is reflective of a goal to ensure students have access to the same quality of devices, she said.
The board also accepted a donation for technology at the meeting. Allison announced that the 10,000 laptops and 8,000 hotspots were covered by more than $468,000 in donations from New Schools for New Orleans and $100,000 from Entergy New Orleans. The emergency funds initially set aside for technology were replenished, she said.