Decreasing revenue, coupled with the projected costs of complying with President Barack Obama's health care law, have prompted Creston Schools to bridge an estimated $1.2 million spending gap over the next 3 years.
The district took two steps toward this goal Monday.
In its first meeting, a newly inducted Creston-Prescott board approved to set a public hearing for an instructional support levy that could provide the school with an additional $300,000 to $400,000 next year. This combined board will handle all decisions affecting the 2016-17 school year and beyond and become the official board when the two schools consolidate in July.
Following that meeting, Creston School Board approved an adjusted early retirement plan that will go into effect in the spring.
Spending
Billie Jo Greene, Creston Schools business manager, said while school spending has stayed relatively level in recent years, the school's incoming revenue has been decreasing, primarily as a result of declining enrollment, which affects the amount of state funding the school receives. Creston's enrollment dipped 28 students in the 2014-15 year and another seven students this fall.
Greene said at the same time, the Affordable Care Act (ACA) will potentially cost the district $300,000 or $400,000 up front in July.
“It’s kind of a double whammy if everything goes forward with ACA because of the decrease in our enrollment,” Greene said. “We were already $600,000 over, but (with ACA) it’s almost like $1.2 million, so we want to spread it over a 3-year period.”
Greene said the up to 5-year instructional support levy, which provides the schools funding from a combination of property tax and income surtax, could cover the initial cost of complying with the Affordable Care Act in July.
The combined Creston-Prescott board voted to move forward with setting a public hearing for the levy, which will be held 6 p.m. Jan. 20. Roll call vote was three in favor and one against, with Tom Eagan voting no. Board member Sharon Snodgrass was not present. The board will take action on whether to approve the levy following the public hearing.
Early retirement
Creston last offered early retirement to employees 3 years ago. At the time, the early retirement package included a formula allowing employees to receive up to a $20,000 early retirement benefit, with another early retirement package scheduled to be offered in 2015-16.
Staff salaries and associated costs have risen steadily in the past 3 years and currently account for more than three-fourths of the school’s spending.
Superintendent Steve McDermott said early retirement is a financial tool to help replace higher-salaried employees with lower-salaried ones or to absorb the positions entirely.
This year, McDermott recommended setting the benefit’s max $5,000 lower. Since the school has $150,000 available in its Management Fund to pay for early retirements, this would potentially allow more employees to take advantage. McDermott said it’s a “double-edged sword.”
“The unfortunate part is sometimes you encourage some folks to leave that you really don’t want to leave,” McDermott said. “But in line with what we’re planning for our finances and budget planning, we felt like it was time to bring this back.”
After nearly 30 minutes of deliberation over whether to keep the benefit at $20,000 or move it to $15,000, the board unanimously approved a modified version of the plan. Eligible staff with 30-plus years in the district will still receive a max of $20,000, while staff with 15-29 years will receive $15,000 max, based on the same formula and $150,000 cap.
Since the board waived the first reading, the early retirement notice will now go out to teachers to consider. Retirements will be effective after the spring semester.
Greene said along with the levy and offering of early retirement, the next step in decreasing spending will be staff cuts. However, she said the scale of those cuts isn’t clear yet.
In other Creston Schools news:
• The combined Creston-Prescott board elected Tom Eagan as president and Galen Zumbach as vice president. Oaths were administered by Green Hills Area Education Agency Chief Administrator Lane Plugge.
• The combined board voted to purchase an 84-passenger Bluebird bus for $117,177.
• McDermott informed the combined board that Prescott plans to auction the entire school property 10 a.m. Feb. 17.
• Kevin Teno, director of educational services, said Creston Schools missed receiving the Iowa Department of Education's Teacher Leadership Compensation grant by two points. He said the school will adjust its application and reapply.