Montgomery Public Schools say they're in a good position if a recession hits

Chief School Financial Officer Arthur Watts told the school board Tuesday night that the school is well-positioned if a recession happens.

During this week's Board of Education meeting, Watts told the board members that the district has more money than the state requires in its reserves. His major concern related to inflation affecting the cost of building materials.

"We believe that we're well positioned to sustain any type of changes in the economic conditions of the school district," he said.

Related: Montgomery schools gird for possible recession, enrollment shifts

In September, Watts said that he was concerned about the percentage of Montgomery Public Schools' budget that relied on federal and state funding in lieu of local funding.

In response to a question after the board meeting, Watts repeated that the school district is well-situated for a recession and pointed to the ad valorum tax to supplement more local funds.

"It's a concern, but luckily, and fortunately, that the taxpayers of Montgomery approved a 12 mill increase of local revenues for our district," Watts said.

The ad valorum tax will begin collecting in the fall of 2023. When asked how the school district would be affected in a recession between now and fall 2023 should a recession happen, Watts repeated that they were well set up.

"I think we're well positioned before then," he said.

Watts's named concern was inflation before a recession impacted their building projects. He said they are already seeing costs rise in their building materials.

Montgomery Public Schools is currently working on several construction projects through a Capital Improvement Plan contracted with Volkert, Inc.

"The only thing that I'm really really concerned about right now is construction costs," Watts said in the meeting.

The posted plan for ESSER III, also known as the American Rescue Plan (ARP) ESSER, has around $44 million devoted to facility improvements.

Watts, when asked if they would need to readjust their plans if inflation pushed the cost of building outside of the ESSER plans, said they had already finalized many of the contracts used with ESSER funds.

"I think we're very, very well positioned as it relates to the potential costs as it relates to our ESSER dollars," Watts said. "We've already pretty much beat it out most of the items, goods, or services as it relates to ESSER. In fact, most of the things that we're purchasing from ESSR dollars on either on state contracts or things that we've already bidded out, so those prices are solid right now."

The ESSER I plans show that most (about 52%) of the money was allocated to the "instructional" section. The next largest section was "instructional support," which is at around 18%. The plans for ESSER II show that MPS has devoted around 42% of the funds to the "instructional" section again and around 27% was allocated for "Extended Day Learning."

MPS has not provided any invoices showing how the money was spent, despite repeated requests dating back to July to the MPS communications team. While the school system is no longer required to keep and provide all invoices to the state department, MPS has not provided any to the Advertiser.

MPS is on track to complete the spending of the ESSER funds before they run out, Watts told the Advertiser in May. MPS requested that the Advertiser send questions ahead of time for that interview. Contextually, this plan would put MPS in a better position than many other school districts.

Research by the Edunomics Lab, a Georgetown University Research Center, shows that many school districts all around the country are not spending their ESSER funds fast enough.

"But with a use-it-or-lose-it expiration date of September 2024 for these funds, the math speaks for itself: To spend the remaining funds, most districts need to up the pace at which money goes out the door each month," write Edunomics researchers Marguerite Roza, director, and Katherine Silberstein, fellow.

Jemma Stephenson is the children and education reporter for the Montgomery Advertiser. She can be reached at jstephenson@gannett.com or 334-261-1569.

This article originally appeared on Montgomery Advertiser: Montgomery Public Schools' CFO says system in good position