As we’ve outlined throughout this series, Afton identified 8 ways that school districts can mitigate the effects of enrollment decline (and these were highlighted in CRPE’s “Better Together: Ensuring Quality District Schools in Times of Charter Growth and Declining Enrollment”):

1. Uniform intra-district funding formula for district and charter schools
2. Continued operational efficiencies, with an eye toward making costs more variable
3. School closures and corresponding real estate transactions
4. Redistricting / efficient enrollment planning
5. End “last in first out” methods of reducing staff
6. End unsustainable/unfunded salary commitments (step/lane/raise)
7. End proliferation of long-term fixed cost obligations (pension/OPEB)
8. District commitment to decision-making based on long-term planning

In the final installment of this series, we will highlight remedy 8.

Affording Quality Schools – Remedy 8: Make a Commitment to Long-Term Planning

Districts need to maintain a well-informed long-term plan including detailed projections of enrollment patterns, such that their planning can be adjusted to accommodate student needs. Almost all of Afton’s recommendations for school districts coping with financial challenges from enrollment migration stem from this long-term planning point, and almost all of Afton’s findings for school districts struggling with this issue could have been identified as issues and potentially mitigated through better long-term planning by school districts.

Policies, practices, and infrastructure that drive costs to be fixed or partially fixed take time to adjust – significant changes to contractual commitments, facility footprints and enrollment boundaries, school closures and openings, size and type of central and shared services to be provided, and capital/debt plans take time to develop and execute. But most districts are operating without a long-term plan for serving students that encompasses enrollment migration and the impact of potential charter school authorizations. As evidenced, most of the inefficient money is caught up in organizational policies and facility structures, which could be adjusted given enough time, making seemingly fixed costs more variable with enrollment decline.

Any capital bond program being contemplated by a District should be carefully balanced with the reality that many school buildings may not be needed in the future. One risk with this kind of financing planning is that Districts will incur long-term debt to make significant upgrades to buildings that may need to be closed or reconfigured in the next decade. Comprehensive long-term planning with an eye toward enrollment patterns can lead to better capital planning decisions.

And, while Districts typically have a small amount of perfectly fixed costs, they are still relevant in that the District must pay them no matter how many students it serves, and therefore the long-term planning of the District must ensure there is funding set aside to pay for these obligations. And sometimes there are off-balance-sheet obligations such as OPEB which further increase fixed cost obligations and must be considered as commitments that need funding during long-term planning.

Districts tend to focus on the annual budget and not the long-term enrollment and school-type mix forecasts. Districts need to consider the implications of potential enrollment shifts as they plan their organizational structure, building operations, capital investments, and financing plans.