Classroom deficit

The Hoover school system’s revenue has dropped by almost $2,500 per student since 2008. This is one of several reasons that the school board’s budget for the 2016 fiscal year, $168 million in total, includes a deficit of $10.4 million.

It’s the latest in a string of budget deficits for Hoover City Schools since 2008. The only year in recent years where revenues exceeded expenditures was 2011, when the school system took in $1.7 million more than it spent, thanks in large part to an influx of federal money that year.

New Superintendent Kathy Murphy told the school board she felt very uncomfortable presenting a $10.4 budget deficit for approval, but staffing levels for the current fiscal year were set back in April, before she was hired.

Murphy, who did not start as superintendent until June, said she needs time to figure out ways to address the issue. Personnel costs make up the vast majority of the school system’s budget, and work already has begun to figure out how to staff Hoover’s schools at a more sustainable level, she said.

The 2016 budget passed on Sept. 14 includes 60 new employees, even though enrollment is down by about 60 students this year to about 13,840. Thirty-two of those new employees are support personnel, and many of them are custodian positions brought back in-house after two years of contracting out custodial services. Another 23 new positions are teachers.

Murphy said she also wants to study expenditures for overtime, travel, cell phones and technology and examine potential ways to increase revenue, she said.

The bottom line is that Hoover’s revenues are declining, and the gap between revenues and expenditures is widening.

Certain characteristics have made Hoover a unique and excellent school system, such as smaller class sizes and a wide array of extracurricular and academic activities, Murphy said. But school officials must be able to pay their bills, she said.

“We’re really at a point where our community needs to say to us what you expect from us, and are you willing to fund that?” Murphy said.

It’s unfair to have high expectations for a school district but not be willing to fund it, she said.

School board President Derrick Murphy said the superintendent needs a full fiscal year to evaluate the school system’s needs and to find efficient and innovative ways to balance the budget.

“We have new leadership, and we have a leader that wants to get this thing done right,” Derrick Murphy said. “With state and federal funding continuing to be reduced every single year, that’s something you can’t control, but we can prepare for it, and she’s going to prepare for it … I feel certain we’re going to make some changes next year.”

Board member Stephen Presley reminded the board that former Superintendent Andy Craig told the board a year ago that it might take three to five years to get the budget balanced.

Cathy Antee, the school district’s chief financial officer, noted that online classes offer opportunities to decrease personnel costs.

Former Hoover Councilman Jody Patterson said during a public hearing on the budget that when he hears the words “revenue generation,” his chest starts to hurt.

“I hear increased property taxes. I hear increased sales taxes,” Patterson said. “I think it scares a lot of older people in Hoover. We don’t want any more taxes.”

When he was a student at Berry High School in the 1970s, the overall sales tax in Hoover was 5 percent, he said. Today, it’s 9 percent in the part of Hoover that is in Jefferson County and 8 percent in the part of Hoover in Shelby County.

Dan Fulton, a resident of Hoover’s Bluff Park community who has long pushed for a 1-cent sales tax increase to benefit Hoover schools, said such an increase would generate $20 million a year for the school system and enable it to build a third high school and provide pre-kindergarten classes at all of Hoover’s elementary schools.

Fulton said the best tax is no tax, but “I think it would be a super investment.”

The $157 million in projected revenues this year is down from $170 million in 2008 and doesn’t show any signs of getting back to that level. This year’s budget represents a 2 percent drop in local revenues, 1.7 percent drop in federal revenues and 1 percent drop in state revenues.

Revenue received per student has fallen from $13,715 per student in 2008 to an expected $11,288 in 2016, Antee said. The amount coming from the state’s foundation program has dropped from $4,488 per student in 2008 to an expected $4,237 in 2016.

The expected expenditures of $168 million for fiscal 2016 are up $1.3 million (or less than 1 percent) from the 2015 budget.

Transportation operations are expected to cost the Hoover school system $6.7 million in 2016, but the state provides only $4.9 million, leaving Hoover to cover a $1.8 million shortfall, Antee said.

Hoover officials expect to begin fiscal 2016 on Oct. 1 with $83.3 million, giving them plenty of cushion to handle a $10.4 million budget deficit this year. School officials expect to end fiscal 2016 with $72.9 million in the bank, which is enough to cover five months’ worth of expenses.

Antee said the big question that needs to be answered is what level of fund balance is appropriate for Hoover schools.

School board member Craig Kelley said the purpose of the fund balance is not to support operational budget deficits but to help the school system have money in reserves in case the state declares proration and cuts funding.

The superintendent said she wants to hear from Hoover residents about what they want from their school system and whether they are willing to pay for it.