Complex equations: Districts brace for pandemic’s economic fallout

Even before the coronavirus pandemic shuttered schools along with nearly every sector of the economy, the Newport School District was under financial strain. In February, voters slashed next year’s proposed school budget by $1.2 million at the district’s deliberative session, and in early March, they passed the reduced budget at the polls. 

“The process was very challenging for us,” said Newport School District Superintendent Brendan Minnihan, whose team had to eliminate six teaching positions and several support staff positions for the district’s neediest students in order to balance the budget. 

Now, amid the turmoil and uncertainty of the pandemic, with state revenues plummeting, taxpayers feeling the strain of the economic shutdown, and educators pondering how to re-open schools safely, Minnihan wonders how next year’s budget will hold up and whether budget battles will grow even messier in the coming months. 

“I think poorer communities are hit by this pandemic doubly,” Minnihan said. “They’re paying a higher tax rate and they’re also more likely to have been affected directly by the pandemic. …It’s also going to be harder for the state to continue to fund schools.”

Sudden impact, ongoing struggles

The pandemic hit with instant and drastic force, but its budgetary effects will be felt in multiple ways across multiple school years. 

In the short-term, administrators in many districts say they may actually come out ahead. Although remote learning has forced new investments in technology, these have been offset by savings in areas such as utilities, transportation, and substitute teaching staff, said Scott Laliberte, superintendent of the Londonderry School District.  

“It looks like we’re going to come out with a pretty considerable surplus,” he said. 

Unfortunately, those savings can’t be rolled over directly into 2021-22 budgets even if those budgets haven’t been completed yet. Fund balances go back to taxpayers and the budget process starts anew. 

There are still some wrinkles that need to be ironed out of this year’s budgets, too. For example, many districts are keeping paraprofessionals on the payroll even though they aren’t able to deliver all the special education services in their job descriptions. Those services will have to be compensated at additional cost over the summer or next year. 

“I was very dedicated to keeping everyone employed,” said Berlin Superintendent Julie King. “We know that for some employees, there’s a gap.”

Meanwhile, districts are trying to figure out how to put price tags on the multitude of uncertainties ahead, while balancing the needs of taxpayers hurt in the economic crash.

Prior to the pandemic, the outlook for school budgets was relatively sunny. “The economy was great. Unemployment was super low. I think people were very supportive of schools in general,” said Duane Ford, regional chair for the New Hampshire Association of School Business Officials and business administrator for SAU 67, which oversees Bow and Dunbarton schools. 

There were exceptions to that rule. Newport was one of several districts where voters reduced or defeated the proposed 2020-21 budget even before the pandemic’s shadow fell on the economy. 

Now, even those stripped-down budgets may result in unaffordable tax bills for homeowners who’ve lost jobs. 

“I think it’s important for us to be mindful of the impact that this is having on our larger community and try to find mechanisms to minimize costs even for this upcoming year,” Minnihan said. 

Planning for the unknown

At the same time, schools are likely to encounter costs they didn’t plan on when they wrote their budgets. Even those who hadn’t passed budgets prior to the crisis are struggling to put a price tag on the new realities.  

“It’s hard to plan for the beginning of the year when you don’t know what it’s going to look like,” Ford said. 

 To re-open safely in the fall, schools may have to limit the number of students in the building at a time, a change that will probably necessitate increased staffing and transportation costs. They’ll also need to invest in personal protective equipment and additional cleaning supplies.

There will undoubtedly be other, harder to measure costs associated with the pandemic too, said King. In her district, teachers started the school year without a contract and were only a few months into a one-year contract when the pandemic hit. 

“They’ve been extremely flexible and supportive of everything and working their hardest … but if we have to go into this chaos again next year, I don’t know how flexible they’ll be,” she said. 

The worst financial effects of the pandemic may be months or years away. That’s especially true for districts that rely more heavily on state aid, Ford said. State revenues have taken a drastic blow from the shutdowns, which will likely be felt at the local level in the next biennium, beginning July 2021. That will leave local taxpayers shouldering more of the costs.

And if unemployment rates remain high, these costs will prove onerous for many families. 

“We’ll have pressure to keep taxes as low as possible,” Ford said. “If people don’t have the ability to pay, they’re going to show that with their vote.” 

Seeking solutions

To deal with the financial challenges ahead, districts are employing a variety of strategies. A major piece of the puzzle is the Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law in March. Through the act, New Hampshire K-12 schools will receive an estimated $37 million of the $13.5 billion package, which will be disbursed to schools based on their share of Title I funds. Schools will receive another $8.9 million through the Governor’s Emergency Education Relief Fund. 

In recent interviews, superintendents said they were still awaiting guidance on how they could spend the CARES funds, which are earmarked for coronavirus-related expenditures. Some have developed initial plans for the anticipated funds. 

The Londonderry School District’s allotted share, about $207,000, will likely go toward purchasing personal protective equipment and cleaning supplies and repairing or replacing Chromebooks for students, Laliberte said. He also hopes to use some of the funds for food service costs, which have gone over budget in the months since the closure as the district waived its usual requirements for free and reduced lunch. 

King, whose district will receive about $650,000, hopes to use some of the money to fund a social-emotional learning program that was started a few years ago with grant money. 

“We’re expecting more social-emotional issues coming back because of this whole crisis,” King said. “It’s even more important that we continue this program.” 

It’s also important to remain transparent as they grapple with the financial complexities of the pandemic, Laliberte said. 

“We try to stay in touch with the community as much as we can and develop trust with taxpayers, students and parents,” Laliberte said. “Our whole goal is to make sure we’re meeting the needs of our students and staff while still being fiscally responsible.”

Reaching Higher NH has been sharing stories of districts’ transitions to remote learning as part of a new series. Read more: