School districts in Appalachia struggling to keep doors open after losing students, revenue; senator says pension reform needed before legislature can help schools

Lexington Herald Leader, Aug. 20, 2017

‘There’s no fixing it.’ As coal falls, Appalachian schools face dire choices.
BY VALARIE HONEYCUTT SPEARS

Knott County Public Schools Superintendent Kim King said that despite a “distinguished” state rating, she doesn’t have any money for new programs and is wondering how she’s going to pay teachers next school year.

Knott is among the Eastern Kentucky school districts struggling to keep the doors open after taking hits of $1 million or more in a year from a combination of economic and demographic factors. A steady decline of the coal industry has resulted in a significant decrease in unmined mineral property assessments, which, in turn, resulted in significantly less tax dollars for school districts. Education officials are calling on Kentucky’s General Assembly to look for new ways to fund the Appalachian school districts.

“If they don’t come up with something we may survive this year. But then we will either be running in the red or we will have to shut down,” said King, whose district has lost an estimated $2 million over the past two years. The district, classified as “distinguished” in the state’s accountability system, lost $1.2 million in 2016-17. Knott school officials were told last week they could be losing at least another $1.2 million in 2017-18.

“There’s no fixing it. We’ve tried to combine, cut. But you can’t cut $2 million, you can’t cut $1 million from a district our size,” said King, who works with an annual operating budget of about $30 million.

Leslie and Pike County school officials say their districts, classified as “distinguished” and “distinguished/progressing,” respectively, are in the same financial boat.

“We took a huge hit. We were lucky to make it this year,” Pike County Schools Finance Director Nancy Ratliff said.

“We’ve been devastated,” said Linda Rains, the new superintendent of Leslie County Schools. “It’s so scary. People in Eastern Kentucky are used to being successful by pure grit, they’ve always had to depend on their determination and grit to get the job done. That’s what we’ll continue to do. But it sure would be nice to have some funds and to give these kids the same chances that all students in Kentucky have.”

Leslie Assistant Finance Director Harold Morgan said students in third through ninth grade have Chromebooks — laptop devices — but because of the loss of money, school officials could not afford to purchase them for kindergarten through 2nd-graders or for all 10th- through 12th-graders.

Kentucky Education Commissioner Stephen Pruitt told the Kentucky Board of Education at its August meeting that the situation was dire. “We have some districts that are in really, really rough shape. In the short term, they need some Band-Aids just to stay open,” Pruitt said.

Morgan said Leslie County lost $1 million in 2016-17 and would lose that much or more in 2017-18. “We can not depend on any coal revenue for funding,” Rains said. “Our schools have to get funded in a different way.”

Pike County Public School officials are looking at every area of the $70 million budget, Ratliff said.

“We can’t buy buses or vehicles for our maintenance department,” Ratliff said. “We took all our textbook money and put it toward teacher salaries. Our goal is to keep teachers and teacher assistants because they need those as well. We might have to cut buses, we might have to cut maintenance vehicles, we might have to cut textbooks. But our last option is to cut teachers. We’ll never do that unless we have to.”

Pruitt told state school board members that the situation in the districts “has not been a function of mismanagement.”

As the decline in the coal industry led to a loss of coal-related jobs, the school districts started to experience a decline in student population and tax collections which, in many cases, reached the lowest levels in the last 10 years, further exacerbating funding issues within the districts. In some cases, a declining property assessment has led to increased tax rates. In order to manage through these declines in revenues, the districts often had to use fund balances, essentially dipping into a “savings account,” Pruitt said in his August Commissioner’s report.

Property assessments over this same period for those same districts are down 14 percent and tax rates have increased 28 percent. Tax collections for those same districts have declined over 20 percent during the same time period, Pruitt said. Using the most recent estimates, Knott, Leslie, Martin and Pike County Schools are expected to lose, on average, 82 percent of their unmined minerals tax revenue when compared to fiscal year 2012, he said.

Eastern Kentucky school districts are losing students — and therefore money under the state’s school funding formula — as families in areas with fewer or no coal jobs leave in search of other kinds of work. King said her teachers are moving away as their spouses look for jobs outside the coal industry.

Ratliff said Pike County, with just under 8,500 students, has lost 1,250 students in the last five years. Knott County Public Schools, which has just over 2,200 students, has lost about 100 kids over the last four years. Leslie County’s student enrollment, 1,679 as of the first day of school, is also steadily declining, Rains said.

Pruitt said Kentucky Department of Education staff are traveling to several districts to “be an over-the-shoulder set of eyes” looking for budget cuts.

To save dollars, Martin County Public Schools, where “kids are moving out of the area,” are consolidating bus routes, said Superintendent Larry James. That district lost about $300,000 in a year, James said.

“We are in a little better shape than surrounding districts. We were planning for the worst all along and that’s kind of what happened,” he said.

Rains said it’s difficult to consolidate bus routes in her district since “our schools are so isolated, with one way in and one way out.”

But Leslie school district Finance Officer Vickie Buckle said as staffers retire, they are not filling positions. Rains said she has “bare minimum” staffing. “There is no fluff in this staff whatsoever.” But she said “any cuts that are made, we are going to keep that as far away from students as possible.”

Wayne Lewis, a new advisory member on the Kentucky Board of Education, asked Pruitt at the state board meeting what Kentucky was going to do to make changes to help fund the school districts in the long term. Pruitt said state education officials were talking to legislators about new ways to fund the school districts.

The chairmen of the Appropriations and Revenue committees in the Kentucky General Assembly told the Herald-Leader that they are aware of the situation with the school districts and have had some preliminary conversations.

“We are monitoring it and considering a lot of possible avenues, but we really don’t have a solution at this point that’s been offered, “ said State Rep. Steven Rudy, R-Paducah.

State Sen. Chris McDaniel, R-Taylor Mill, said pension reform will have to occur before lawmakers can help the school districts. Kentucky has one of the worst-funded pensions in the country and Gov. Matt Bevin has said he will call a special legislative session to reform the system.

“Regardless of funding solutions, if it involves any new revenue, if we don’t get pension reform there’s just no way to help them,” McDaniel said.

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