New Orleans charter school leaders learned last month that pandemic-driven declines in sales tax revenue will reduce a special district per-pupil allotment this year — on top of a previously forecast annual overall revenue drop next school year.

The financial effects of the pandemic are likely to linger into the 2022-2023 school year, when NOLA Public Schools district officials think revenues will begin to rebound. That means as schools begin the budgeting process for next school year, they’re again going to have to think conservatively. Funding could drop from roughly $9,200 to $8,400 per student, district officials estimate.

One school official also says some New Orleans schools are likely to feel even more pain because of the district’s unique funding formula, which pools all state funding and then divides it based upon student needs, such as special education services. In past years, when the number of students requiring such services has increased — funding unexpectedly dropped. 

First, however, a special district fund created by a 2019 state law will drop an anticipated $100 per student to $60 this spring, district spokeswoman Taslin Alfonzo confirmed. That law directed money away from a facility fund to a “system-wide needs” fund and included a per-pupil payment to schools. While the reduction is not a catastrophic hit, it came as a surprise to Crescent City Schools Chief Operating Officer Chris Hines and others.

“We were really surprised when we got that information. I think all of us school leaders thought that $100 per pupil was enshrined in some sort of law or policy in that legislation that was passed a few years ago,” he said. “We were really surprised that it was not in law or policy and is apparently discretionary from NOLA-PS.”

The law directs the district to give a portion of sales tax revenue to the schools but does not specify the amount. District Chief Financial Officer Stuart Gay informed school leaders of the change late last month. 

“These payments are made with the balance of sales tax revenue that is not dedicated to a specific program under HB 393,” Alfonzo said, referring to the law. “Because of the decline in sales tax, Mr. Gay informed school leaders that the District has reduced the per-pupil payment to $60.”

That drop will equate to roughly $100,000 across Crescent City Schools’ three charter schools, which enroll about 2,500 students, Hines said. 

He said the schools won’t have to cut any programming, but it’s another financial hit in the long pandemic year.

“I continue to hope that NOLA Public Schools will find a way to give that extra $100 per pupil they had promised,” he said. 

He thinks the board can help provide some confidence to school leaders with a policy change.

“I am also hopeful that the Orleans Parish School Board will amend policy so that that $100 per pupil would be enshrined in policy,” he said. “Certainly in presentations to the board and school leaders it was mentioned multiple times that $100 would be dedicated to students.”

The long haul

Following the anticipated per-pupil cut in the spring, charter school leaders are preparing for reduced per-pupil funding next school year as well, as tax revenues are projected to still be recovering. Additionally, the city has seen a drop in public school enrollment, mirroring the state. 

Gay told Orleans Parish School Board members at a January meeting that next school year is likely to be the worst with lingering effects from projected lower tax collections. 

Though Alfonzo, the district spokeswoman, recently said forecasts had improved a bit, the district is still projecting significantly lower tax collections.

“For [the 2022 fiscal year], sales tax forecasts have improved slightly, but there is still a significant decline in per pupil revenue for next fiscal year, as well as projected negative deferred revenue,” Alfonzo said. The 2023 fiscal year “is projected to finally show an increase in per pupil funding, provided sales taxes increase to previous levels.”

Hines, of Crescent City Schools, said recently passed federal relief will help tide schools over. 

“I will say that the one saving grace that I do anticipate is the funding for schools that was included in the relief package Congress passed in December,” Hines said. 

Though they are awaiting final word, Hines said he believes they’ll be able to use the funding for this school year and next, and possibly the year after as well. It will also likely be more than the CARES Act funding schools received in March.

“Looking at what I think funding is going to do over the next year in New Orleans — right now I think we’d be putting all that money into next year’s budget to make up for the loss.”

Many local charter schools have also enjoyed some financial relief in the form of forgivable loans from the Paycheck Protection Program, which traditional public schools could not access. That’s because the program was intended for private enterprises, not government agencies. Though charter schools are publicly funded, they’re run by nonprofit organizations, which were able to access the loans from the Small Business Administration. 

Hines is also concerned about the effect the projected shortfalls will have on the district’s unique funding formula — which pools district funds and provides a base amount for all students, with additional funding for students who have special needs, are over traditional school age, or are learning English. Rates of reduction could be applied to both the baseline allocation and the additional, special needs allocations, meaning a larger per-student drop year over year. 

“We are just starting our budgeting process for next year now. We are looking at a pretty significant decrease in our per pupil funding. And because of the funding formula in New Orleans, schools that have a high percentage of students with disabilities will face an even bigger hit,” Hines said.

He’s budgeting with a projection that base funding will fall about $1,100 per student and for students with the most extreme needs, who require a personal aide all day, it will fall even more.  

“That really compounds on schools like ours that have a 20 percent special education enrollment,” he said.