As the Omaha Public Schools’ May 15 bond referendum nears, the district’s budget woes are prompting pointed questions from would-be voters like Sue Walker.
The district is trying to find more than $26 million worth of reductions to balance its budget for the 2018-19 school year. At the same time, voters are weighing whether to support the $409.9 million bond issue.
So at informational meetings across the city, school board members are being confronted with variations on the same question: How will OPS be able to build, open and operate five planned new schools when the district is in the midst of cutting staff and programs?
Walker, who had kids go through the OPS system and attended an information session at Alice Buffett Magnet Middle School earlier this month, said those questions and concerns have her leaning toward a no vote.
“If the bond was just about maintenance, I’d be all over it,” Walker said. “But opening five new schools without an explanation of how that’s going to work?”
Officials said they’re confident that they can make the math work, even as opening new schools will increase the district’s annual costs. That’s still several years away, board member Lou Ann Goding pointed out — the high schools will take several years to build and could open by 2021 or 2022.
“This isn’t the first time we’ve opened up new schools,” board President Marque Snow said.
Chief Financial Officer Connie Knoche estimates that it could cost OPS an additional $39.2 million per year to operate the five new schools. That includes teachers, principals, utilities, contracted services and other expenses. There would also be an initial expense to buy textbooks for each school.
OPS officials concede that they haven’t accounted for all of the extra operations costs but said a number of factors could help:
» The state funding formula provides extra dollars for two years when districts open new schools. Knoche projects that the district could get roughly $12.1 million in extra aid over two years, although those numbers could change.
» As the new schools open, some existing teachers and other staff at OPS’s overcapacity schools will move with students to the new schools. The two new high schools, for example, will each accommodate 1,500 students. Schools like Burke, Central, South and Bryan are all overcapacity, and some use portable classrooms. Central and South enroll more than 2,500 students each.
“The majority of those costs are shifting,” Superintendent Mark Evans said at a bond meeting at Lewis and Clark Middle School last weekend.
» It’s unlikely that the new high schools and middle school will open with all grades on day one. The grades would most likely be staggered for the first year or two, which could lessen operational costs at first. The new high schools might open up with just freshmen and sophomores since it’s unlikely that older students would want to switch schools for their final year.
» Officials are banking on some families who have opted out of OPS sending their children to one of the new schools. More families might also decide to stay in OPS instead of leaving for suburban or private schools.
Current base state-aid funding per student is $8,200, Knoche said, and goes to the district where the student attends school. Extra money is allocated for kids who are poor or learning English. About 6,000 kids opt out of OPS each year.
“We know we have parents telling us if you build a school, we’ll stay,” Evans said.
District officials estimate that each of the district’s two new high schools could draw 750 kids who are new to the district. That would bring in about $12.3 million annually.
Officials think the new high school in far northwest Omaha, especially, could bring back some families with children in middle school or high school who have opted into Elkhorn or Millard.
But Knoche acknowledges that the district’s estimates of returning kids could be overly optimistic. The high school planned for South Omaha, for example, is largely designed to ease crowding at existing OPS schools.
Still, the district’s total enrollment typically grows each year. This year’s kindergarten class is the biggest since 1970. And the new schools could also spark more development and increase property values, which would help OPS’s tax base.
Nonetheless, the bond issue comes as OPS faces budget uncertainties due largely to its troubled pension system.
Board members said the district must continue to look for budget efficiencies and work with the Legislature to find a solution for its underfunded pension fund. The pension system is currently funded at only about 65 percent. To stabilize it, OPS will have to make escalating annual payments — including an estimated $21.3 million next year — that are squeezing its budget.
“I hesitate to build and spend and then find the money later,” board member Ben Perlman said. “But the district is telling the board that this is feasible, and we can find cuts to stay away from the classroom. I trust what they’re telling us.”
Board members say the bond measure and the budget troubles are separate and distinct issues.
By issuing long-term bonds, the district will be able to build the five new schools — in addition to the far northwest and South Omaha high schools, they include a South Omaha middle school, an elementary school south of downtown and a Bellevue elementary school — and renovate existing schools that need new roofs, modern HVAC systems or classroom additions. Having more energy-efficient schools and getting rid of drafty portables could also reduce utility costs.
If approved by voters, bond funds would have to be used for construction — the district can’t use those funds to hire teachers, buy textbooks or lessen the impact of the budget shortfall.
The $39.2 million cost estimate to operate the new schools is based on current costs for OPS schools of similar sizes. It breaks down to $12.7 million a year for each high school, $7.7 million for the middle school and $3.04 million each for the two elementary schools.
Snow, the OPS board president, said the district is playing catch-up on building needs.
Before OPS’s successful 2014 bond measure, the district went 15 years without issuing bonds, causing facility needs to pile up. As of August 2017, the district was carrying about $504 million worth of long-term debt, according to a district audit. That includes some 25-year bonds from the 1999 referendum that the district is still paying off. That debt would grow if the district issues more bonds.
But the need for school upgrades or new schools would not have gone away if the board had decided to push back the bond issue, Snow said. If the May bonds fail, the district still will need to find a way to pay for the work.
“If a boiler goes out in a school, we still have to pay for that,” Snow said.
Still, questions remain from residents who worry that OPS is only digging a deeper financial hole.
At the Lewis and Clark bond meeting, John Dockery said it’s hard to reconcile the district’s current budget problems and the district’s assurances that it can afford to open several new schools.
“Where’s that money coming from?” he asked.