Hoover superintendent: schools must have more revenue or face significant cuts in personnel, programs

The Hoover school district must find a new or increased revenue stream or make significant cuts to personnel and/or programs in the near future, Superintendent Kathy Murphy reiterated during a finance presentation Monday night.

Murphy focused on state and federal revenue streams during her report in Monday night’s school board meeting, which was attended by at least five Hoover City Council members.

Her report made it clear that Hoover is largely dependent on local revenues to accomplish the tasks that city leaders undertook when they formed the Hoover school district in the 1980s.

Hoover gets about 52 percent of its total revenues — or $86.1 million — from local revenues, financial reports show. About $70 million came from the state in fiscal 2015, while the system received $6.5 million in federal revenues and $1.5 million from other income sources.

The amount the state pays Hoover City Schools per student dropped from $4,488 in 2008 to $3,461 in 2010, according to Murphy’s financial presentation Monday night. That amount has climbed back up to $4,238 per student in 2016 but is still less than what it once was, the report shows.

Also, the state pays local school districts only about 78 cents for every dollar spent on school bus transportation, Murphy said. Hoover’s transportation costs have grown fro $6.6 million a year in 2008 to $6.7 million a year in 2016, but the state’s contribution actually decreased from $5.7 million to $4.9 million, she said. That leaves a $1.8 million shortfall, even though education transportation was originally designed to be fully funded by the state, she said.

Hoover has to make up the difference with money generated locally, Murphy said.

The biggest expense for Hoover City Schools  — about 86 percent of the system’s budget — is for personnel, Murphy said.

When the Hoover system was formed in 1988, one of the guiding principals for the district was that Hoover wanted to  have smaller class sizes to give more personal attention to students, which means hiring more teachers than the state will fund, Murphy said.

In 2012, Hoover was paying all the salaries and benefits for 256 more full-time employees than the state was funding, or 24 percent of its total workforce, Murphy said. That number of locally funded employees has dwindled down to 227 in 2016 and is expected to fall to 196 in fiscal 2017 as the school district trims back, she said.

However, low class sizes and extra electives are still important to the Hoover community, so school officials don’t want to see that number fall too much, Murphy said.

Hoover’s personnel costs also are higher because the district pays its teachers and other personnel more than the state salary schedule in an attempt to attract high-quality employees, Murphy said. But every time the state mandates a percentage pay increase for school employees, it hits Hoover and other school districts that pay teachers more harder, she said.

For example, the recent pay increase the Legislature approved for teachers and administrators cost the Hoover school district an extra $2.3 million, Murphy said. That negated the $2.1 million in savings the district had achieved by eliminating jobs and delaying filling others, she said.

The school system has gained about 1,500 students since 2008, but revenues have dropped from $13,715 per student to $11,288 per student, financial reports show.

The Hoover City Council, when current Mayor Gary Ivey was council president, made drastic cuts in city funding for Hoover schools when the school system received $85.6 million from a Jefferson County bond issue in fiscal 2007. In all, city funding cuts have cost the Hoover school system over $78 million over the past 14 years, records show.

School officials for years have been taking money from the fund balance to pay for operating costs that have exceeded revenues, and Murphy said the school system’s fund balance by the end of this fiscal year is projected to be back to the $80 million that was there in 2006.

School officials are making cuts in staffing and programs to bring expenses more in line with revenues and reduce their operating deficit, but more funding challenges are coming as debt payments climb and the city adds more houses, Murphy said.

Plus, the school system has capital needs that need to be addressed, she said. Needs in 2017 include asphalt and roofing projects, heating and air conditioning systems and painting jobs at various schools, as well as door replacements at Hoover High. Also, the  band room at Hoover High is not large enough to accommodate the 350 band students, and the tracks at Hoover and Spain Park high schools and the artificial turf at Spain Park need attention, Murphy said.

School officials also are running out of room at Hoover High and will need to find a way to accommodate more students there or build another school, she said.

“There is a cost to everything,” Murphy said. “We need to determine what kind of school district do we want to have and is that the kind of school district where we’re all willing to dig in our pockets … We’re going to have to have some additional money coming to our school district or … we’re going to have some very difficult decisions coming to this school system very soon.”

Michael Holt, a candidate for Hoover City Council Place 4, asked Murphy whether anyone had considered seeking an exemption to the state law that limits the amount of property taxes a school district can charge for schools. Hoover could raise property taxes for schools only by another 2.4 mills before hitting the cap put on property taxes by the state. That would raise property taxes by roughly $75 to $85 a year for the average home in Hoover, Councilman John Lyda has said.

Murphy said she’s not definitely calling for a property tax increase, but she is willing to consider all options.

Trisha Crain, a resident of Hoover’s Green Valley community who for the past couple of years has run the Alabama School Connection nonprofit education news website, said the state of Alabama really is the entity responsible for funding education in Alabama. However, everyone has just sat back and allowed the state to shift the burden of funding public education onto local communities, she said.