Summary

To the extent that energy commodities are not predictable in their price volatility, school district budgets are vulnerable to rapid increases in energy commodity costs. School district budgets are often established and approved a full year in advance of actual expenditures, and any item that was budgeted based on a trend line of gradual increases will be underfunded if there is a sharp increase in cost between the time the budget is adopted and the costs are incurred. In the fall of 2001, in response to continuing increases in FY 00 prices for electricity, natural gas, and fuel, there were reports indicating that some school districts reduced or eliminated discretionary busing and extracurricular activities, while others transferred funds from other budget areas to cover energy costs (Moore 2001).

The National Center for Education Statistics undertook this study to examine the effects of energy needs on public schools and to better understand how increases in energy expenditures influence school district budgeting and actions. Although the survey focused primarily on FY 01, the questionnaire also gathered data on FY 00 energy expenditures and budgeted FY 02 energy expenditures to understand the financial resources available to districts.

Results from the survey provide information on the overall and per pupil energy budget and expenditures of public school districts nationwide. For example, in FY 00, school districts spent an average of $137 per pupil on energy expenditures (table 2). For FY 01, although districts increased their energy budgets over prior year expenditures by 11 percent, they still experienced a 9 percent shortfall between their budgeted and actual energy expenditures. Nationwide, public school districts spent nearly $8 billion for energy in FY 01 (table 1).

Sixty-one percent of public school districts experienced insufficient energy budgets in FY 01 (table 4). These districts spent an average of about $653,500 (not shown in tables in text) for energy needs, and they experienced an average shortfall of 15 percent (table 2). They budgeted $143 per pupil and actually spent $169 per pupil, i.e., $25 per pupil more than anticipated.

Most (83 percent) of the districts that had allocated insufficient funds to cover energy expenses in FY 01 attributed the shortfall primarily to increases in the cost per unit of energy; 8 percent attributed it to adverse weather conditions (table 6). Threequarters (75 percent) of the districts that had a shortfall reallocated funds from other programs, 53 percent tapped unappropriated surpluses, and 46 percent used a large proportion of the nonpersonnel budget to cover some energy costs (figure 3).

School districts with sufficient energy budgets for FY 01 had actual per pupil expenditures in FY 01 of $160 per pupil, 14 percent higher than they had been in FY 00 (table 2). These districts, which had increased their FY 01 energy budgets per pupil 24 percent beyond their FY 00 expenditures, experienced a 9 percent surplus between what they had budgeted for FY 01 and their actual expenditures. Their actual expenditures of $160 per pupil were $14 per pupil less than they had anticipated.

For FY 02, districts nationwide budgeted more than $8 billion for energy needs (table 1), that is, $176 per pupil (table 2). On average, there was a greater percentage increase in the mean energy budget per pupil from FY 01 to FY 02 among districts that had experienced a shortfall in FY 01 than among districts that had sufficient energy funds in FY 01 (20 percent versus 6 percent, respectively). The difference between the FY 01 mean energy expenditure per pupil and FY 02 mean energy budget per pupil also varied by FY 01 energy budget sufficiency status. Districts that had experienced an energy budget shortfall in FY 01 instituted FY 02 energy budgets per pupil that were, on average, 2 percent higher than the FY 01 mean energy expenditure per pupil. Districts that had sufficient funds allocated for FY 01 energy needs instituted FY 02 mean energy budgets per pupil that were, on average, 15 percent higher than the FY 01 expenditures per pupil.

School districts took various measures to reduce energy needs and expenditures in FY 02 (table 3). Forty-seven percent of districts nationwide renovated or retrofitted existing facilities, 44 percent locked in rates with one or more energy vendors, 33 percent participated in consortia that negotiated prices with third-party energy vendors, 15 percent instituted or increased fees to use facilities, and 6 percent closed schools or sent students home early on at least 1 day.

Survey respondents were asked to report their opinion on how successfully their districts had prepared for future energy expenditures.

• Forty-two percent of respondents nationwide agreed with the statement “Our district has successfully reduced energy usage” (table 7).

• When asked to react to the statement “Our district has successfully reduced cost per unit of energy,” 29 percent of respondents agreed (table 8).

• Nineteen percent of respondents agreed that their district had an immediate energy problem (table 9), and 37 percent agreed that their district had a long-term energy problem (table 10).

• Nearly three-quarters (72 percent) agreed with the statement “Future increases in energy costs pose a major threat to the allocation of district funds to essential areas such as student instruction” (table 11).

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