Wake schools reevaluating financial outlook for next year after proposed state pay raises

The Wake County school district is already reevaluating its financial outlook for next year, as county commissioners weigh the school board's $768 million request for local funding next year.

The school system continues to face uncertainty around the cost of diesel to run its school buses next year. Now it's evaluating the potential impact of a new state budget on how much the district will have to spend next year.

It will be some time before the district knows how any new state budget could affect the district's spending, Terri Kimzey, the district's senior budget director, told the school board's finance committee Tuesday.

The school system has about 1,300 teachers --- and about 4,000 total employees --- funded by county dollars whose salaries would then need to match the new state salaries, necessitating more county spending.

"We have a lot on [county payroll]," Board Vice Chairman Sam Hershey said. People may not understand that's how the county can end up paying when the state raises pay for state employees, he said.

Last week, North Carolina General Assembly leaders said they'd reached an agreement on state employee raises, a key sticking point toward reaching a budget deal more than a year in the making. While a budget hasn't been proposed, lawmakers say they've agreed on average raises of 8% for teachers, with less-experienced teachers getting higher raises and more experienced teachers getting lower ones. The proposal represents a significant increase in early career teacher pay, bringing the state closer to its neighbors.

While the state would ultimately pay the raises of state-funded employees, it won't for any federally and locally funded employees.

To match the state raises, the county would have to fund the difference itself.

That difference is more than the school system budgeted for.

The school board's proposed budget for next year accounts for a roughly 3% raise for all state-funded staff. That matches a similar budgeted amount for the current fiscal year, which won't see any raises. The 3% raises were expected to cost about $8 million.

That leaves potentially millions of dollars needed to match those state increases that the school board's proposed budget doesn't call for.

The school board may consider making changes to its budget after August, once everyone is hired and given their first paychecks, Kimzey said.

Changes could include using savings or deciding not to move forward with the board's recommended 1% increase to its local salary supplement for educators. That supplement increase is expected to cost about $1.9 million, providing an average of less than $200 more per recipient for the entire school year.

Wake school board members have long favored the state giving further pay increases for teachers and other school employees. They've also called on the state to fund more of the employees that the board feels they need to add, using local dollars.

The county funds those additional teachers in part to expand programming. About a quarter of the district's schools have magnet programs, which add special programming to those schools. Those programs are spun up typically with a five-year federal grant, after which the county puts up the funds to continue them.

Funding to match anticipated salary increases is something the school board budgets for every year.

The impact of higher diesel prices for school buses isn't causing a shortfall yet, said Trisha Posey, the district's finance officer.

The district buys in bulk and pre-purchased diesel for the rest of this school year and for the first quarter of next school year at lower prices than are being seen now, Posey said.

"We're stable right now," she said.

School district leaders across the state have recently spoken with the North Carolina Department of Public Instruction leadership, which is aware of everyone's concerns, Posey said. They're awaiting a final budget proposal from state lawmakers, which includes school bus funding, before concluding what the impact will be.

The district is monitoring prices, which have been affected by the war in Iran and subsequent shipping difficulties. Leaders are not seeing a change in the trend any time soon.

"Prices are expected to be higher," Posey said.

Earlier this school year, DPI released all of the more than $6 million in savings from this year's diesel fund --- typically kept for emergencies --- to all school districts. About half went to schools for equipment, and the second half went to schools on April 1 to cover diesel costs.