ILWACO - The Ocean Beach School District (OBSD) is entering uncharted territory, driving a budget that is untested for the terrain. District leaders hope the cuts they have made will be enough to keep things running in a proper order, but until they actually start to use the machine, they just don't know how well it will work.

This year's budget is based on a projected enrollment of 920 students. That is 110 fewer than the projection last year of 1,030. The district ended last school year with only 968 students enrolled.

The budget total of $10,040,997 is nearly $200,000 less than the budget last year - though the difference was closer to $500,000 before the district began making cuts to help reduce that deficit.

How did we get here?

With the trend showing a steady enrollment decline, how is it that the current situation caught the district by surprise? Isn't there something that could have been done to plan better for an occasion like this one? Could they have stocked away more money in reserves to be used? The simple answer is, sort of.

"I don't think anybody knew that we'd see this happening as quickly (as it has)," said Superintendent Rainer Houser on Monday. "I think we saw a level of gradual enrollment decline and I think there was some anticipation that with an improving economy or more people moving to the Peninsula that we would see either a stabilization or an increase."

As for the building of reserves, Houser said there was a specific emphasis put on that by past boards and superintendents, and "Thank heaven's they were built (as much as they are) because they allow us to make some of the decisions that we're making now."

He said they won't be able to fall back on reserve funds in coming years, as they will take a big chunk out this year just to help get by. In fact, this year the district plans to spend nearly $500,000 from reserves - leaving a projected balance at just over $300,000 at year's end.

"It's not that there were bad decisions made in the past. I think it's forecasting the future which is a difficult process," he said of the process overseen by former Superintendent Tom Lockyer. "When it was decided that we'd build community schools, that was the key element to getting the bond passed. I think along with that came the anticipation that we'd see student population stabilize, that new schools would help bring people in."

Unfortunately, while the Peninsula does see people moving in and lots of new homes constructed, a vast majority of those are people without young children.

Nine years of declinesEnrollment has been on the decline for the last nine years, after peaking in 1997-98 with a total of 1,357. Following that year the district saw losses of 56, 61 and 86 students respectively over the next three years. The writing was on the wall even in 2002-03 when the district was able to sell the idea of new schools to the community and passed the school improvement bond - that year, the district lost another 50 students.

With declining enrollment comes declining revenues for the district, a "domino effect" as they call it. For example, each full-time enrolled student equals out to around $4,500 a year for the district, and with more than 100 fewer kids, it's easy math to figure out the revenue lost. Lower enrollment also means less money coming in from base state allocation of funds, federal and state categorical funds (like special education), as well as local levy funds - that alone is a potential loss of around $120,000.

Unfortunately for the district, there is no safety net to help them get through the current enrollment crisis, no extra state funding or assistance offered for this kind of situation.

"There is none at the federal or state level, even your levy safety net gets diminished just by the fact that you have fewer students," Houser said. "It's kind of a triple hit between the feds, state and local levy. It makes then having to provide an educational system for the kids in the district that much more difficult."

One way the district is looking to help fill the gaps is by raising the price of some services or activities. The biggest of these is the pay-to-participate fees for student athletes. These will be raised to $50 per sport for junior high (with a $100 cap) and $75 per sport for high school (with a $150 cap).

Some of the reduced funding also affects the food service program, so there will also be an increase in the prices for school lunches: K-5 will go up to $1.55, grade six goes up to $2 and high school lunches go up to $2.25. The price of milk also goes up to 30 cents per carton. The price of school breakfast however will not change. Houser said that these funding reductions have the potential to slow the implementation of changes in the school lunch nutritional plan (as detailed in the Chinook Observer last month), but said he still sees that developing over time.

And while Houser said he can relate with people who are understandably upset with the increases, there really is no other choice for the school district.

"Our first priority has to be the instruction in the classrooms. Everything else is secondary," he said. "Our commitment has to make sure that we have adequate staffing, materials, so that students can learn in the classroom. As we go through the categories, they're all going to take a hit, it's simply unavoidable."

Formidable futureAll of this leads to a possible future that Houser said he does not enjoy considering, but feels it is prudent for the district to consider due to the continuing trend. The future could include the possible closing of one of the district school buildings. Since the three new schools are required by state law to stay open for at least a minimum number of years, this would only leave the current high school facility.

Options abound for what the configuration would look like if in fact this did come to pass, including having Hilltop become a 7-12 middle/high school building, changing the configuration at the elementaries to include kids up to eighth grade, or even switching around the building set-ups to make Hilltop the high school, or turning one of the elementary schools into a middle school while leaving the other to the younger grades.

"If we get to that point, we're looking at three buildings," said Houser.

The number that will determine all of this is 900. If, indeed, the enrollment does not gain or stabilize and plummets to a sub-900 mark in the next year or two, this plan will go into effect.

"We've got to look ahead. I think realistically if we talk about a district of less than 1,000 kids and we're not growing - it's expensive to maintain four educational buildings," said Houser. "What we have to take a look at is if we do continue to decrease, we are going to have to have a plan for potentially two years out from now that says we can only staff three buildings with the resources we have available."

Essentially, the budget this year is like a test-run. The district will see if it can indeed operate on a budget of this size, with this many kids and staff. Other cuts may still be made if needed, or they could be pleasantly surprised by a few dozen extra kids.

"We may still have to make cuts if we find that we're interfering with some instructional things that we don't want to interfere with"

Cutting in order to build

Houser and district Business Manager Linda Thompson, in preparing the budget proposal, took care to aim low at the enrollment projection on purpose.

"There's no guarantee, though indicators (suggest) that we'll start reasonably close to what we ended the school year with, which was 968," said Houser. "Our original projection was 935, but then we got a little more conservative (at 920), just in case."

The biggest cuts came to district staffing, where they had to let go 3.59 certificated (teaching) staff and reduce the number of classified staff hours by 1,200. In the case of classified workers, there really weren't any cuts made in the grand scheme of things, due to attrition and the fact that the people who were essentially let go were rehired to work at Hilltop Middle School, which was in need of staffing.

"We did more cutting in hours than cutting in bodies," said Houser. "We tried to minimize the number of people we had to let go. We were able to bring people back as other people left and the positions opened up again."

And as if that wasn't enough, there are also some notable increases in some areas this year factored in. These are based on federal or state mandates or district need. One example is a state legislature-passed 3.3-percent salary increase for all education employees - even if it isn't covered by state allocation.

"There is an amount we have to pay," said Houser. "You can't just give an increase to the required number and then ignore the others."

Others include special education needs - the state funds are based on 12.7 percent of the student population, while OBSD has a special education percentage of nearly 18. There was also a reduction in state transportation funding, along with rising fuel costs.

"This budget frightens us all," said Houser, noting that it will be continually monitored closely, especially in the first few months, when additional cuts may be deemed necessary.

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