Budget-reduction process for ’10-’11 outlined by Lindbergh Schools CFO


Lindbergh Schools Chief Financial Officer Pat Lanane last week outlined a process by which roughly $2.5 million in budget reductions for the 2010-2011 school year will be developed for the Board of Education to consider.

The “Rational Budget Reduction Process” will involve the formation of a general task force and several subcommittees comprised of teachers, principals, support personnel, business leaders, administrators, parents, community members and municipal officials, Lanane told the Board of Education during its Oct. 13 meeting.

Cognizant of the financial difficulty residents and businesses currently are experiencing, district officials pledged last November not to seek a tax-rate increase for at least 24 months.

Though Lindbergh also faces financial challenges as a result of the current economic recession, the district’s reserves of roughly $24.6 million are the reason why the situation is not a crisis at this point.

The district’s long-range financial plan calls for a planned spend down of those reserves with a deficit-spending cap of $3 million per year. In June, the Board of Education adopted a 2009-2010 operating budget that projected a deficit of $3 million.

But a further decline in the assessed value of commercial real estate — including successful appeals by commercial property owners to the county Board of Equalization — increased the district’s projected budget deficit for the current school year to roughly $5.5 million. District officials plan to further utilize district reserves this year to cover the increased deficit, but will have to cut an additional $2.5 million from the 2010-2011 budget.

In formulating a process to deal with the upcoming reductions, Lanane told board members he relied on some mentors, including William Rebore, chair of the Department of Educational Leadership and Higher Education at St. Louis University.

“… He actually, with the work of some others, has put together a very nice process to make this a very community-based process as opposed to Pat Lanane going to the back of his office some night in a semi-dark room and slashing away. That’s not the way we want to do this …”

Utilizing the Rational Budget Reduction Process, Lanane said, “… Cost-cutting alternatives may be evaluated on a rational basis — logical. What makes sense?

“What’s best for the district? And not what’s best for every little department (or) category in the district, but what’s best for the district as a whole.”

The process also will involve stakeholders, he said.

“One of the reasons I believe heavily in this is I don’t know everything about every-thing in the school district. But if you get the people who are experts in that, they can help you do the surgery you need to do and save the very most vital parts …,” Lanane told board members. “So involving lots of people in this process is important. In fact, the goal of this whole process is at the end of the day you get a list — you know there’s going to be a list — but have them in the right order. You have the right things on the list and they’re in the right order of reduction.

“It doesn’t mean you don’t get down to some that really hurt, but you’ve done everything else first. That is what the real purpose of this process is all about.”

Lanane also emphasized that “a blame game” always comes into play when budget reductions must be made.

“… But the fact of the matter is it’s not the fault of the Board of Education, the superintendent or even the chief financial officer, although sometimes they like to serve him up as a sacrifice … I wish it were that simple because you could make those changes fairly easily and everything would be wonderful,” he said. “But we all know this has to do with a national economic crisis and the loss of assessed value in this school district that is absolutely unheard of. So we’ll try not to play the blame game.

“And it’s the responsibility of everybody to make this process work. It’s not just the responsibility of administration or the board,” Lanane added.

While a general task force will oversee the process, subcommittees will review such areas as new funding, elementary schools, middle school, high school, food service and transportation, central office, physical plant and extracurricular activities.

Regarding the committee structure, Lanane said, “… It’s a big structure. It’s a large group. We’ll have a task force and they will help us weight items in terms of their importance. They’ll recommend criteria for the groups to follow.

“They’ll kind of be the police so if a group comes up with a suggestion that violates criteria, it’s like: ‘Sorry, that’s not one we can accept.’ They’ll enforce the rules a little bit. So we’ll have that group …”

The chief financial officer also provided examples of areas the new funding committee could examine.

“… We could look at things there such as any new fees that we might want to institute to cover something that otherwise would get cut without that fee,” Lanane said. “You might look at things like the bond issues. The good news — the only good economic news that I’ve seen here lately is the fact that we think the bidding for our (Proposition R 2008) projects will be in the best possible climate for bidding.

“So we may have some room in our approved bond issues to move a few of our ordinarily operational items that legally meet the requirements into that. We’ll look at that as an option. Technology might be a good example.”

Superintendent Jim Simpson told the Call he believes all segments of the community will have the opportunity to be involved in the budget-reduction process.

“… Pat Lanane’s gone to great efforts to make sure we really have a collaborative way that involves all parts of our school district as we actually have to downsize given our response to reduced revenue, and that reduced revenue is simply and 100 percent at this point based upon the decline of housing and commercial properties in our district. That is unheard of really in our state, in a way …,” he said.

“… There’s really two numbers that you can concentrate and see exactly where we are in this situation and that’s really $62.5 million and $57 million. Those are wrong-direction numbers because $57 million is revenue and $62.5 million in round numbers are our expenditures. That $5.5 million difference is our financial illness and we have to do what we need to do to get that back in balance …,” Simpson said.

Citing the district’s long-term financial plan of capping reserve spending at $3 million per year, he said, “We do have reserves and we do want to use those reserves to lessen the pain of downsizing until we get better times out of this recession or we have somewhere down the road a tax-levy issue that passes — certainly not in the next 12 months. But we know that it’s going to take another $2.5 million out of the district to get our $3 million plan back in kilter …

“Pat’s plan is really wrapped around how do you downsize $2.5 million in a district and do that in a way that protects the core mission of the organization, which is classroom instruction …,” Simpson said.