Budget & Tax, Education
Online shift may save school funds, but numbers remain elusive
April 17, 2020
Now that all Oklahoma public schools have shifted to distance learning, potentially significant savings could be achieved for many previously routine expenses. But state officials do not have that data and existing law may indirectly encourage school officials to spend those savings before July.
Rep. Tom Gann, who worked as an accountant prior to serving in the Legislature, says there could be wide variation in potential savings throughout the school system and lawmakers are having to operate without information on those potential savings.
“It’s going to vary from district to district,” said Gann, R-Inola. “I know there’s fixed costs, there’s variable costs, so it’s probably going to be all over the place. We’ll just have to wait and see.”
Steffie Corcoran, executive director of communications at the Oklahoma State Department of Education (OSDE), indicated the agency does not currently have information reflecting financial changes in statewide costs of operating schools now that all have transitioned to distancing learning.
Ben Scafidi, a professor of economics and director of the Education Economics Center at Kennesaw State University, notes that schools will face some new expenses with the transition to distance learning, but also lower other expenses.
Scafidi said districts will save money by not refilling vacant support positions, through lower electricity and fuel costs, and delaying capital and maintenance projects.
He also noted some districts will save money through a reduction in contract services for special-needs students. In those cases, he said such students may simply go without services or underserved due to COVID-19 limitations.
“While this is especially heart-wrenching, there may be times when contract therapists cannot meet with special-needs students because of flare-ups in the virus and when virtual means are not appropriate,” Scafidi said.
Scafidi noted schools face some unexpected expenses due to the shift to distance learning.
“For the upcoming academic year, public schools will have higher costs due to having to purchase inexpensive computers for students who do not have access to computers at their home,” Scafidi said.
However, he noted a Google Chromebook can be bought online for less than $300 and that school districts should be able to obtain computers for even less through volume purchasing. Scafidi also noted that public school districts “typically already have site licenses for Microsoft Office—so this software will not be an added cost,” and that many communities have free mobile hotspots that will allow students without Wi-Fi at home to nonetheless send and receive work from their schools.
A study conducted by a state House committee last September indicates significant savings may be possible for traditional schools during the shutdown. In 2018, per-pupil revenue at all Oklahoma public schools was $8,176. But the state’s four virtual charter schools, which are also public schools, operated on per-pupil revenue of between $5,122 and $6,380 per student.
If the annualized cost of online instruction can run up to $3,000 per student less than the amount typically spent in a brick-and-mortar public school, that equates to millions in potential savings now that all schools have transitioned to distance learning during the final two calendar months of the school year. According to the OSDE, 703,650 students were enrolled in pre-K through 12th grade for the 2019-20 school year.
During the September legislative study, the Oklahoma State School Boards Association (OSSBA) noted that the operational costs that virtual schools do not have to fund, but traditional schools do, include utilities, maintenance, remodel/construction, insurance, and transportation.
Now that physical sites are no longer being used for instruction, transportation costs have been almost eliminated, while utility and maintenance expenses are expected to be far lower.
However, some expenses will continue, such as bond payments on many school buildings and school sports facilities. Corcoran also said school buildings “in most cases, aren’t shut down because essential personnel are still working.”
State law may also unintentionally incentivize schools to spend some or all money saved by the shift to online learning. School districts can carry over funds from the end of one state budget year to the next, and officials are expected to maintain a reasonable amount of carryover for unexpected expenses. However, state law caps the amount of money a district can carry over to prevent abuse. The caps range from 14 percent of a district’s general fund balance for the largest districts to 40 percent for the smallest districts.
Federal law also caps the amount of federal funding that schools can carry over from one budget year to the next. While the federal cap has been lifted, the state caps remain in place.
“The carryover limit has been waived only for federal funds,” Corcoran said. “State carryovers are in statute, and there are very limited exceptions for lifting. Unfortunately, we really can’t estimate the amount of federal carryover since claims can be submitted till Aug. 1. Your best bet would be to reach out to districts directly for their carryover estimates.”
As a result, if a district saves significant money through its shift to distance learning, and those savings leave the district with unspent funds exceeding the state carryover cap, districts will be legally required to spend down the money before July 1.
While legislators are working on drafting the state budget plan for the 2021 budget year, Gann said lawmakers have not discussed any potential budget implications from the shift to distance learning and any associated reduction in school spending.
It is just one of many unknowns that lawmakers are dealing with as they wait to see the full economic impact of the state’s COVID-19 shutdown.
“Everybody’s kind of holding their breath until the 30th (of April),” Gann said.