Economic Factors

There are some factors Douglas County School District must consider as it plans for the future. The failure of the November 2008 ballot measures, together with a diminished fund balance and declining revenues (due to slower student enrollment growth and escalating costs), requires DCSD to undertake multi-year budget reductions. A brief overview of the variety of factors is below.

State of Colorado

As has been broadly reported, the fiscal health of the state of Colorado is down. Every general fund revenue component is underperforming in the current year and the forecast is for a slow economic recovery. The state is experiencing severe fiscal constraints. With respect to the Douglas County School District, the declining economic health of the state negatively impacts all public school systems.

School Finance: DCSD enters the FY2009-10 concerned that the factors underlying the calculation of per-pupil revenues will be modified in such a manner that DCSD’s expectations of growth in per pupil revenues will come in under-forecast.

PERA (Public Employees Retirement Association): PERA has experienced unprecedented market declines. PERA’s Board of Trustees has directed PERA staff to review all alternatives to improve PERA’s funded status. With past experience as a guide, DCSD believes we will need to anticipate among the options PERA will bring forward to the legislature will be proposals to increase District contribution levels – a cost to school districts.

Local Factors

The local economy is also under severe fiscal pressure. For DCSD, the primary areas of concern can be summarized as follows.

Local Support: The loss of the budget override measure this November resulted in DCSD not being able to collect $17M in 2008-09 and another $85M over the next four years. These funds were needed to merely maintain the current-state of Operations in the School District. Without new revenues, DCSD will not be able to selectively restore any of the $21M in cuts made entering the 2008-09 year nor continue to operate the status quo of programs without making additional reductions.

Student Growth: DCSD continues to experience growth in student enrollment (funded pupils). However, student growth for DCSD is slowing. From 2007-08 forecasts of 2,700 pupils per year to a current revised forecast of 1,700 new students a year results in an annual reduction in revenues of roughly $7M.

Other Local Revenues: As the economy as a whole has slowed, the District’s receipt of revenues derived from local spending is down. Notably, Specific Ownership Tax receipts are depressed, as are revenues from user fees.

Expenses

In general, DCSD has been able to manage its expenses within its means. However, one area of expenses has proven to grow more aggressively than forecast. DCSD operates a self-insured Medical Fund for purposes of providing medical benefits for its employees. Over the past two years, the costs incurred by this Medical Fund have been higher than the forecast and much higher than this Consumer Price Index cost of living increase provided by state Per Pupil Funding. As a result, the Medical Fund has required additional financial support to maintain solvency. The School District has modified its forecast of expenses based upon increasing costs and is evaluating methods to lower the annual cost of Medical Fund operations.