APS’s 2024-2025 budget made headlines announcing unprecedented increases to its teacher salary scale. The historic budget reflects the administration’s clear priority to be in the top quartile of metro Atlanta district teacher salary scales. The move should rank Atlanta highest as of today, though the chess game of taking the top spot will continue to iterate.

Eclipsed by the salary news but also included in APS’s budget is a move to in-house its school cafeterias again, needing one-time dollars to convert facilities back from warming kitchens to full operations. Going forward, this means new work from hiring, onboarding, training, and supporting hundreds of new teammates to the procurement process for food and materials. Running nearly a hundred restaurants (albeit with limited menus) serving thousands of students and staff each day is a colossal undertaking, and it is good for students and our community. A budget is a reflection of our values, and we should be celebrating these two moves.

But… how?

Notably absent from APS’s 2024-2025 budget are the federal revenue dollars that states and districts received in the three years post-pandemic (commonly referred to as ESSER or CARES funding). To fill the gap these missing resources and the new expenses create, APS will draw $74.25MM from its fund balance (1) to achieve a balanced budget, even after reducing headcount in its central office. The use of these one-time funds will not be a lever in the district’s toolkit in future years to balance a budget. Board members and administrators  will need to find a new strategy, and it will not be easy. “Significant” doesn’t express the level of impact here: $74.25MM represents 5% of APS’s budget, and we can expect next year’s budget to have a gap at least that size.

The Yet: future financial planning 

The increase in salaries compounds into the future against a bleak backdrop of external financial pressures (2)  like nationwide enrollment declines, inflation, and competition for talent.  Additionally, the proposed cap on property tax increases would in turn cap APS’s revenue growth. (If revenue can only increase by 3%, expenses cannot increase by more than 3% in order to maintain a balanced budget. This would render significant salary changes next to impossible.) We should expect the APS board and administration to engage in conversation around creating a multi-year plan for the district that is financially sustainable.  In doing so, we as a community will need to speak loudly about what ought to be prioritized. 

Implicit to APS’s budget are two costly structures: APS runs lots of small schools compared to its peers with a low student-to-adult ratio across the district (note the distinction – this is not necessarily class size or student-to-teacher).  In an exceptional display of transparency, this year’s budget commission meetings included a comparison between APS and surrounding districts to show just how much APS would save if they were structured like their peers. According to APS’s CFO, if APS employed the staffing ratio of Fulton County Schools, APS would save $245.91MM; if its average school enrollment matched Fulton’s, there would be 29 fewer schools. These are expensive strategies. Bundled with high salaries and the expected financial headwinds of the coming years, they will be called into question – and none are politically popular to unwind.

“APS can do anything it wants, it can’t do everything it wants”

The district’s resources are sizable, and they are a fixed pie; tradeoffs will be necessary to find financial sustainability. ESSER funds enabled states and districts across the country to throw more resources at problems and fill holes temporarily instead of reckoning with root causes and making difficult tradeoffs. The time has come for the APS community to reckon. We cannot eat our cake (or in this case, revenue pie) and have it too. We must create a district that can look into the future with confidence and know its operations are built to last.

District administrators and our elected Board members often hear our ANDs. We want the highest paid teachers and small class sizes and 21st century facilities and lots of support and lower property taxes. We must acknowledge the season of ANDs is over. What are you willing to let go of or do differently? Tell your Board member. Attend their community meetings. Let’s align on principles and values that we’ll cling to for the change and operate with them at our center as we identify what is core to the APS community -and therefore its budget- and what is not. It is a tremendous, challenging, time-consuming, prudent, and necessary undertaking. AND our students deserve it and require it of us adults.

Footnotes:

(1) Fund Balance: while not exactly “cash reserves,” fund balance is the accumulation of resources that weren’t used in prior years of district operations. Think of it as an emergency fund.  APS’s Board requires fund balance to be no more than 15% and no less than 7.5% of expenses in order to ensure the district is neither hoarding resources nor being too risky. 

(2) Expected economic factors influencing APS’s future budgets: 

• Headwinds: 3% cap to property tax increases, enrollment declines (stemming from multiple factors including lower birth rates nationwide) inflation, competitive talent market.
• Tailwinds: reduction in pension expense.