Newly named chief financial officer faces a shrinking pipeline of schools funding

Sometimes, it has been said, the challenge facing school budgets is more like an out-of-control rollercoaster ride than a paper-and-pencil exercise—at least that analogy can be applied to the upcoming budget cycle for the Kyrene district.

Chris Hermann became the new CFO for Kyrene schools June 15.

By Diana Whittle

Sometimes, it has been said, the challenge facing school budgets is more like an out-of-control rollercoaster ride than a paper-and-pencil exercise—at least that analogy can be applied to the upcoming budget cycle for the Kyrene district.

After surviving a dip in home values nearly a decade ago, which led to reductions in property taxes, recovery in real estate has led to steadier footing. Now, the financial culprit on the horizon is declining enrollment resulting from recent trends in demographics.

With fewer students entering kindergarten, more families with grown children who are aging in place and others who choose private or charter schools, Kyrene officials predict that for the 2017-18 year enrollment will be two percent behind the current year, which translates into a dip in revenue of $1.3 million.

If the pipeline of available students continues to shrink, the following fiscal year, 2018-19, is also projected to be down about one percent, which when combined with rate of inflation, represents about $1.9 million in reduced revenue.

As a result, the district used reserves to cover current expenses this fiscal year and likely will tap into them again in upcoming years.

“The reality is that we are overspending,” said John King, the current Governing Board president, “and if we continue to borrow from ourselves, our reserves will be depleted in several years.”

The good news is that Kyrene, along with the Chandler district, retains an AA bond rating, which is the highest in the state, according to standards set by agencies such as Moody’s and Standard & Poor.

“We also remain a very high-performing district,” added Dr. Jan Vesely, Kyrene superintendent, “because we still offer choices for families with more pre-kindergarten programs, art, music and dual-language options.”

Another positive that may contribute to boosting Kyrene’s enrollment is the fact that Arizona is an open enrollment state. 

“A premier district like Kyrene will always attract students from beyond its boundaries,” said Nancy Dudenhoefer, Kyrene marketing and communications manager.

“While the Kyrene district does not specifically market to parents outside the district’s boundaries, its reputation draws out-of-district parents to enroll,” said Dudenhoefer.

“It is our job, as a district, to help students grow intellectually, emotionally and socially while instilling in them the habits of mind and mastery of skills they’ll need to be successful in life,” said Dudenhoefer.

“Dr. Vesely and the members of the Governing Board are committed to fostering a rigorous teaching and learning environment in our classrooms that provides every one of our students with a sense of belonging.”

Former Governing Board President Bernadette Coggins noted that extra efforts to spread the word about the strengths of the Kyrene district must be working well in some neighborhoods, as the number of students appears to have grown in at least one school.

“I was at a recent promotion ceremony at Kyrene Middle School and there were more sixth graders than eighth graders in attendance.”

If enrollment numbers do remain stable and the state legislature allocates more funding to public education, the budget deficit might be minimal. The final budget must be adopted by June 30.

At the helm, to steer the budget process, will be a new Chief Financial Officer, following the Governing Board’s acceptance of a recommendation to hire Chris Hermann, effective June 15.

An Ahwatukee resident and parent of two Kyrene-schooled children, Hermann brings 22 years of professional experience to the position. He holds a Bachelor’s degree from Indiana University and earned an MBA from the University of Phoenix. 

In addition to new financial leadership internally, Superintendent Vesely recently spearheaded a budget committee whose volunteer members agreed that the district must request voter approval of a bond to finance several projects and on continuation of the existing M&O and Capital overrides.

The current voter-approved overrides for Maintenance and Operations (M&O) and for capital funding will expire soon; and, based on the recommendation from a citizens committee, the Governing Board approved three measures for the Nov. 7 election.

The measures support continuation of the current M&O budget override; call for continuation of the current Capital Outlay budget override; and extend the current bond authorization.

The public is invited to submit their arguments “for and against” each ballot measure. The deadline to submit statements is 5 p.m. Friday, Aug. Information on how to submit your statement, along with an explanation of the overrides and bond measures, can be found at www. kyrene.org