Cuts needed to balance 2012-’13 Lindbergh budget

Balancing 2012-2013 budget to be a challenge, CFO says

By Mike Anthony

The Lindbergh Board of Education agreed at a recent workshop it wants to adopt a balanced budget for the coming school year, but cuts ranging from $700,000 to $1 million will be needed to achieve that goal.

While Chief Financial Officer Pat Lanane projects the district will end the current school year in the black, uncertainty about state funding is clouding his revenue projections for the 2012-2013 school year. Lanane already is projecting a revenue loss of $330,000 for the coming school year based on the district phasing out its participation in the voluntary transfer program and an estimated federal funding cut of $100,000.

Using the district’s revised 2011-2012 budget as a starting point, Lanane is projecting operating revenue totaling more than $60.8 million with estimated expenditures totaling more than $61.9 million — a deficit of roughly $1.1 million.

The Board of Education last year voted to approve a two-year salary schedule for teachers that provides an annual average increase of 2.8 percent. The schedule provides teachers with a 3.87-percent salary increase for the current school year and a 1.78-percent pay raise for the 2012-2013 school year.

Under the approved agreement with the Lindbergh National Education Association, the increase in total compensation — salary, insurance and retirement benefits — is 4.54 percent for the current school year and will amount to a 2.27-percent increase next year.

The salary and benefit increase for the 2012-2013 school year is projected to cost $675,000. Other expenditure increases Lanane is projecting for next year are a 2-percent increase in supplies and purchased services totaling $259,000 and four additional full-time teaching positions to accommodate increased enrollment at a cost of $220,000.

The uncertainty about state funding is clouding Lanane’s financial projections for next year, he told the board at the Feb. 11 workshop.

The issue with state funding, Lanane said, is “there’s not enough money. The legislators passed a formula several years ago that was pretty optimistic because the economy was good. Well, there’s not nearly enough money to fund that formula. And so when there’s not enough money, they’ve got to figure out a way to dole out what they do have.

“There’s really two ways that happens. One, DESE (Department of Elementary and Secondary Education) does it. They make that decision and they’ve made that decision by prorating everybody in the past. Or the Legislature can take the reins and pass a piece of legislation to determine how funds will be distributed.”

Three options exist for funding of the state’s current foundation formula: prorating the funding formula and two pieces of legislation, Senate Bill 454 and House Bill 1043. The current foundation formula was adopted in 2006 and designed to be phased in over a seven-year period.

If DESE prorates the foundation formula, the impact will be “very detrimental” to Lindbergh, Lanane said, noting the district would lose more than $477,000 under that scenario.

“… So that’s a huge threat as far as I’m concerned. As tight as our budget is now, a half a million dollars, ‘wowie,’ that’s 10 teachers,” he said. “… I hate to use that, but we’ve got to think about what does that mean when you have rising enrollments and someone wants to take a half-million dollars away from you.”

Another option, Lanane said, involves reducing the State Adequacy Target, or SAT.

The SAT is an average amount of dollars determined to be the necessary amount school districts spend annually on one student to deliver an education.

“Under that method, we actually gain money. So it’s crazy. How could that be if they lower what they’re giving everybody else, the money that’s left over goes back to start paying back hold-harmless districts (including Lindbergh) for the amounts they’ve been prorated,” he said.

Under that scenario, Lindbergh would gain $162,500 in additional state funding.

Regarding SB 454, the district would lose more than $184,000, Lanane said.

“… We would lose money again because they keep the same SAT high. They keep it high so there’s less money to distribute the excess … And so we’re not real big on Senate Bill 454,” he said.

Under HB 1043, which has passed the House, Lindbergh would gain an additional $22,000.

Of that legislation, Lanane said, “… It has by far the least effect on all other school districts. The amount of swing one way or the other is by far the least with that method ….”

The problem with all of the scenarios, he said, “is the swings in money. Never in the history of formulas has one method or another amounted to millions … The shifts are just — they’re almost to the point where you think: How could you do that to anybody? And then some districts are going to, actually, in these bad times come away with additional millions they never had before …

“I’ve made a few assumptions about the Legislature. This is a very, very difficult problem here … I’m not sure when we’re going to know, but it could have a pretty significant impact on a budget that’s as tight as ours.”

Reduced state funding next year only will exacerbate the situation Lindbergh has been experiencing for some time now, Lanane said. He noted that from the 2007-2008 school year to the current school year, state transportation reimbursement has declined to $245,000 from more than $661,000 and state funding has decreased by 20.87 percent.

During that same time period, however, district enrollment has increased by 8.6 percent and the amount of revenue contributed by Lindbergh taxpayers has increased by 25.6 percent, Lanane said.

“How is it fair? I mean, no one’s lost 20 percent of their state revenues on the formula. There’s not one (district) in the state that’s had that kind of cut and so they want to use the fair word — and again, I’m always kind of cautious about that — this doesn’t seem right to me. It doesn’t seem fair,” he said. “And I know that for the most part our legislators I’ve talked to, they’re dead set against the reductions to us. But whether they can carry the day, whether they can stop something — usually that’s been our greatest success is to stop some action that was just going to be very detrimental, which I consider the DESE proration to be if that were to happen.”

Presenting a balanced budget to the board for the 2012-2013 school year will be a “challenge,” Lanane said.

“… Our work’s cut out for us. It’s not going to be as draconian as we went through several years ago, but we’re going to be looking at a range of $700,000 to $1 million (of cuts). How can we squeeze it that much tighter without doing things that would really jeopardize our academics? That’s going to be the challenge of this 2012-2013 budget,” he said.