Hoover school board considers $231 million budget for fiscal 2024

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Hoover school officials on Thursday proposed spending $231 million in fiscal 2024, which represents a 3% decline from the original 2023 budget of $238 million approved a year ago.

Most of that is due to less money going to capital projects in fiscal 2024, with the capital fund budget decreasing from $34.2 million in fiscal 2023 to an anticipated $13.6 million in fiscal 2024.

Capital projects anticipated in 2024 include $2.7 million to remove a hill at the Hoover High baseball field and add parking, a $1.6 million addition to the transportation building, $1.5 million for new buses, $1.5 million for a theater upgrade at Spain Park High School, $1.4 million for roofing projects at three schools, $1.3 million for heating, ventilation and air conditioning upgrades at three schools and a $1.2 million athletic field upgrade at Bumpus Middle School.

The school system plans to spend $177 million out of its general fund in fiscal 2024, which is $13.9 million (or 8 percent) more than the original 2023 budget. Most of the $13.9 million increase (about $9.4 million) can be attributed to the increased cost of salaries and benefits, Chief Financial Officer Michele McCay told the Hoover school board Thursday.

A lot of that increase is due to a 2% pay increase mandated by the Alabama Legislature, changes in the state minimum salary schedule for teachers and nurses, a new requirement to pay support personnel at least $15 an hour and an additional year of experience for all returning personnel, McCay said.

The Hoover school board also in June approved additional pay increases for teachers and custodians to make Hoover’s salary schedule more competitive with nearby school districts.

Hoover first-year teachers with a bachelor’s degree this past school year made $45,281, but the starting pay for 2023-24 was increased to $47,580. Starting pay for a first-year teacher with a doctorate rose to $63,500.

A teacher with 20 years of experience now makes anywhere from $66,510 with a bachelor’s degree to $83,750 with a doctorate. Teachers with 35 years of experience make anywhere from $72,500 with a bachelor’s degree to $91,800 with a doctorate.

The Hoover school system as of Sept. 3 employed 1,861 people, which is down by about 23 employees from the previous year, McCay said. The workforce includes about 1,120 certified personnel (such as teachers, administrators, counselors and librarians) and 741 support personnel.

Because the Hoover system values having a low student-teacher ratio, the district provides 100% of the funding ($28.8 million) for 203 teachers and 31 administrators, which account for 27% of the certified workforce, with local tax revenues, McCay said. Local funds also pay for 183 support staff, she said.

SPECIAL EDUCATION COSTS

McCay and school board members expressed concern about the rising costs of providing special education services and other services for students with physical or mental impairments that substantially limit life activities.

“Next to salaries, few items drive increases in our district’s budget more than special education,” McCay said. “Hoover City Schools continues to experience a significant increase in the number of students with severe cognitive and behavioral needs. Some of these needs require placement outside of Hoover City Schools, costing the district transportation and tuition.”

The number of Hoover students requiring special education services has grown from 1,079 in 2014 to 1,560 in fiscal 2024, McCay said. The cost for those services has grown to $27.5 million, which is 12% of the district’s total budget.

The district has had to add a fifth psychometrist, two additional speech language pathologists and three more behavioral aides, McCay said.

Claire Jones-Moore, Hoover’s executive director for special education, and her staff have obtained $500,000 in grants to help with special education services, McCay said.

The federal government 46 years ago promised to pay 40% of excess costs to provide special education services, but the closest the federal government has come to doing that was 18% of funding in 2005, McCay said. Today, the federal government provides just 12% of the cost of special education services for Hoover students, she said.

Also, the number of students qualifying for special accommodations due to physical or mental impairments that substantially limit life activities has grown from 350 in fiscal 2019 to 602 in fiscal 2024, McCay said. There is no federal or state funding to provide those accommodations, she said.

School board President Kermit Kendrick said parents who have children with special needs are intentionally moving to Hoover because Hoover does such a good job of providing services for them.

Superintendent Dee Fowler said the district is glad to serve the children. However, he believes state education officials should take into account the number of special needs children, children from low-income families and English language learners when calculating how much money each school system receives from the state. It costs more to educate children in those circumstances, and the state should account for that, he said.

The number of children in Hoover schools whose parents signed them up for free or reduced-priced meals rose significantly from 3,050 in fiscal 2022 to 3,558 in fiscal 2023 and 4,322 this year, McCay, records show. Child nutrition director Melinda Bonner said she believes the end of free meals for everyone this past school year led to that increase in registration.

Now, 32.8% of Hoover students qualify for free or reduced-priced meals, McCay said.

Additionally, the cost of food and processing supplies is expected to be 20% higher in fiscal 2024, McCay said. Total costs are expected to be $12.4 million, which is $895,000 more than expected revenues, but Hoover has sufficient reserves in its child nutrition fund to cover that, she said.

The Hoover school district also is expecting an 8.1% increase in water costs, 5.3% increase in sewer rates and 18% increase in custodial and maintenance supplies, McCay said. The cost of diesel fuel is expected to decline by 13%, she said.

Hoover’s annual debt payments should stay the same at $12.7 million but are expected to drop to $10.3 million in fiscal 2027, McCay said. The school district by the end of fiscal 2024 should have its total debt down to $129 million, she said. The district, although it has refinanced its debt, has not borrowed any new money since 2007, she said.

REVENUES

On the revenue side, the Hoover school district expects to receive $222 million in fiscal 2024, which is just slightly more than the $220 million that was expected in the original 2023 budget. That includes $194 million in revenues for the 2024 general fund.

About 53% of the revenues for the Hoover school district are expected to come from local funds such as city and county taxes, while 40% of revenues should come from the state, 6% from the federal government and 1% from other sources.

The vast majority of Hoover’s local revenues ($51.2 million) should come from city property taxes designated for schools, while other revenues include $13.6 million from Jefferson County property taxes, $7.9 million from Shelby County property taxes, $5 million from the city of Hoover, $2.2 million from interest income, $1.8 million from the Jefferson County Commission, $1.8 million from Shelby County sales taxes, $480,000 from Medicaid reimbursements for special services and $450,000 from rental income.

McCay said she is anticipating a 1% increase in county property tax revenue and 10% decline in Shelby County sales tax revenue.

Revenues from the state are expected to decline from $99.8 million to $87.5 million, mostly due to a decrease in enrollment of 66 students last year. Federal revenues are expected to rise slightly from $12.4 million in the fiscal 2023 budget to $13.1 million in fiscal 2024. All of the $19 million in federal emergency funds received to cope with the COVID-19 pandemic should be spent by the end of fiscal 2024, McCay said.

The school district’s enrollment currently is at 13,172 students, which is 62 less than this point last year, which will cause another state revenue reduction for fiscal 2025, McCay said.

While the state increased its annual allocation for teacher supplies from $900 to $1,000 per teacher, the state still is underfunding numerous areas, McCay said.

For example, the state currently supplies only $75,810 for a new school bus, but the buses cost $128,588, so the Hoover district has to pick up another $52,778, she said.

Also, the state currently is providing just under $1.1 million for school nurses, but Hoover’s cost for putting a nurse in each school is $2.2 million, McCay said. The state also so far has provided no money for reading coaches this year, and Hoover pays $1.1 million each year for that, she said.

Hoover’s 2024 general fund expenditures, after transfers for debt payments and capital projects, should come in $7.8 million more than revenues, but McCay expects to carry over about $4 million in unspent capital funds from 2023, so the actual deficit for the year actually will be about $3.7 million, she said.

But the district is not spending money it does not have, she said. The general fund balance is expected to be $115 million at the beginning of the fiscal year and $108 million by Sept. 30, 2024, which is enough reserves to cover 7.3 months’ worth of expenses, she said. She feels confident as long as the district can maintain at least five months’ worth of expenses in its general fund balance, she said.

Across all funds, 2024 expenditures for Hoover City Schools are expected to come in $8.2 million greater than revenues, and that should reduce the overall fund balance to $116 million by Sept. 30, 2024, McCay predicts.

While that’s a solid reserve, she still has concerns about rising costs for things such as special education and how the school system can continue to afford future raises approved by the state Legislature, she said. Plus, a new school soon will be needed, she said. The school board’s five-year capital plan includes building a new elementary school in fiscal 2027 and 2028.

The Hoover Board of Education plans to hold a second public hearing regarding its 2024 budget at 4:30 p.m. on Tuesday, Sept. 12, and is expected to vote on the budget at its action meeting at 5:30 p.m.

See the complete proposed 2024 budget presentation on the school system’s website.