Financial outlook for Mehlville sobering, board members told

Deficit for 2015-2016 school year projected at about $8 million

By Gloria Lloyd

. Read the second article in the series


Days after last week’s unveiling of the Mehlville School District’s new strategic plan, administrators gave the Board of Education a sobering projection of the district’s financial outlook.

After most of the board

with a $5 million deficit last June, board members set any difficult financial decisions on the back burner during the strategic-planning process last fall.

With the strategic plan now in hand, they are beginning the conversation on next year’s budget in the context of what residents who responded to the plan’s surveys prioritized. The board could approve the plan when it next meets Thursday, Jan. 22.

Mehlville is now using its reserve fund to pay for such recurring expenses as salaries.

As a result, the sobering reality is that if the budget remains flat, with no new sources of revenue, budget cuts or expenses — including no salary increases for the 2015-2016 school year — the district will run an $8 million deficit next year.

No decisions on addressing that shortfall have been made yet, but during surveys for the strategic plan, residents said they want the school district to emphasize academics and student preparation.

To that end, Superintendent Norm Ridder had administrators compile a wish list, the $5.3 million “Community School Strategic Plan,” outlining how they would advance those aims, including $2 million for hiring more academic intervention coaches, $1.2 million to upgrade Internet infrastructure, $1 million for HVAC upgrades and $930,000 for teacher salary increases.

To break even under either the flat budget or the wish list, the district would require a 51-cent tax-rate-increase to make up the $8.2 million deficit, or an 86-cent tax-rate-increase to fund the deficit and the Community School Strategic Plan.

The chance of that cost being accepted by Mehlville voters appears unlikely given their history of repeatedly rejecting similarly large tax-rate increases. In the surveys from the strategic plan, 64 percent of residents said they do not believe the district needs any more money than it already receives.

necessary for such a large tax-rate increase in Mehlville could take the district five to 10 years of good stewardship, Ridder told the board.

“I really think this community, a conservative community, will respond if they can trust you, and that means they’re smart,” he said. “So when you have a smart, conservative community, it’s no fail.”

However, after finding through surveys that residents are happy with the academics in the district’s classrooms, the current budget situation means the district may have to make budget cuts that affect the classroom while at the same time asking district voters for more money, he noted.

“The message is very clear as far as what’s going on in the classroom – they’re very happy,” Ridder said. “We may have to go after it to cut it down, but to take away that support is going to give a difficult message to the community.

“So that’s why I think we’re kind of in a catch-22 environment right now.”

Armed with the stark realities of the current situation, board members gave a history lesson on the district’s budget.

is new and did not weigh in on past decisions.

“I understand the public hasn’t trusted the decisions in the past — I haven’t been real thrilled with decisions that were made either,” said board member Samantha Stormer, who joined the board last year. “But at some point you have to stop living in the past and start somewhere.”

The longest-serving members of the current board are Vice President Venki Palamand and Larry Felton, who

in 2007. Palamand

by board Secretary Lori Trakas in 2013, but regained his seat last year.

Palamand began the history lesson at the point he and Felton joined the board, on the heels of the

in February 2006 of a 97-cent tax-rate increase, Proposition A. The measure received 6,746 yes votes — 36.05 percent — and 11,968 no votes — 63.95 percent.

Former administrators insisted the district could afford

, which the board unanimously approved on a


. The next year, former Superintendent Terry Noble joined the district and learned the financial projections given to justify that raise were flawed. Without immediate budget cuts or more money, Mehlville was set to be listed by the state as a “distressed” district when it dipped below the state’s minimum 3-percent reserve fund.

In response, in 2008 voters approved

, which transferred $5.6 million annually from the debt-service fund to the operating fund. The measure did not increase the tax rate, but reduced debt service and extended the district’s bond debt through 2029.

Noble’s administration also built the district’s reserves back up by cutting millions of dollars from the budget.

“You can argue that there’s some spending that we may not have pursued, but I see a huge problem on our revenue side,” Palamand said, noting that typically the district’s assessments would have increased to cover the district’s increases in inflation, but the Great Recession hit as voters passed Proposition T.

Felton picked up where Palamand left off in 2010, when the board voted 6-0, with Palamand absent, to

, Proposition C, on the ballot.

At the time, Palamand wondered if the $106 million, 88-cent bond issue would pass and asked his fellow board members to cut it to 47 cents, but Frank

that even if the board asked for a $1.30 tax-rate increase, it “passes with flying colors.”

Publicly opposed by five former board members, in November 2010 Prop C

by more than 23,000 voters, or 62.6 percent.

Although the composition of the board has changed, Felton said the board has to own that mistake and its reliance at the time on


“I think unfortunately we got too aggressive and hired a firm (UNICOM-ARC) that not only cranked numbers but really went out and pressed for initiatives,” Felton said. “As a board, we own this — we’re the ones who got us here.”

Since 2011 when former Superintendent Eric Knost

, the board took advantage of a $6.5 million refinancing opportunity to build

at Mehlville High School and tackled long-delayed maintenance needs and pressing technology needs, but at the same time, the tax revenues to fund those needed five-year plans long-term just weren’t — and aren’t — there, Felton said.

“What we never really did is talk about what the community needed to hear,” he said. “We talked about what we wanted them to hear.”