By MIKE ANTHONY

Executive Editor

Lindbergh School District officials are beginning to formulate the district’s 2005-2006 budget with the assumption that Proposi-tion A, a 65-cent tax-rate increase, will be approved by voters next month.

Board of Education members and administrators discussed preliminary revenue and expenditure projections for the 2005-2006 school year during a recent budget work session.

“This is a meeting unlike any meeting we’ve ever had as a board and administration, but since we are in a position of a tax increase on the ballot and looking at the assumption that it will pass, we wanted to begin that budget development and we have some questions that we need some direction on from the board,” said Pat Lanane, assistant superintendent for finance and the district’s chief financial officer.

The Board of Education voted in January to place Proposition A on the ballot. As proposed, the tax-rate increase would allow the district to maintain core academic programs, attract and retain high-quality teachers, meet state and federal mandates in reading and math and maintain small class sizes.

If voters approve the tax-rate increase of 65 cents per $100 of assessed valuation, board members have pledged to phase in the increase over five years and not take the full amount the first year. Based on very preliminary revenue and expenditure projections — 2.5 percent growth in local revenue and 3.5 percent growth in expenditures — Lanane said that 30 to 32 cents of the tax-rate increase would be needed for the 2005-2006 school year.

In December, the board adopted a revised operational budget for the current school year that projects revenues of $42,300,499 and expenditures of $43,386,918.

Lindbergh voters last approved an operating tax-rate increase in 1993 — a 36-cent increase to $2.78 per $100 of assessed evaluation. The next year though, the board rolled back the rate to $2.42, a promise to voters, where it remained until 2001. Just this school year, the operational tax rate returned to the 1993 level.

During the Feb. 22 work session, Lanane reviewed the process that led to the board placing the tax-rate increase on the ballot.

“This process has included a complete review of district finances not only by the administration, but also by a separate committee of citizens that you authorized be formed and they took about a month to six weeks to go through the finances of the district and came back with certain recommendations,” he said. “That was kind of a big piece of input for us as to well here’s some things we have to be sure that we include in any budget. They talked about the need for a tax increase. They talked about the need to retain and recruit the very best teachers we can find. They talked about the need to address the No Child Left Behind Act provisions … and they talked about the need to retain small classroom size. And technology was really kind of a fourth area they talked about. So particularly those first three are things that we are very much looking at in terms of what we need to have in a budget for next year.

“That process then went forward and we had a public forum talking about the budget for next year and the overwhelming opinion at that forum seemed to be that people did think it was time for us to go out and ask the public for a tax increase. And so we had a lot of comments that night and transcribed those and read those a couple of times,” Lanane said. “And then actually the third piece was then a survey of the entire public, a sample that was representative of the public here in Lindbergh and that sample also said that there was at least a majority feeling that there was a need for a tax increase. In fact, there was support for one.”

The assistant superintendent also re-viewed the district’s recent financial history, noting that the 2002-2003 school year “was the first year that we had more expenditures than we did revenue. We did that in res-ponse to the feeling among the public that we needed to spend a little bit of reserves and that we wouldn’t be in a position to go ask for anything additional until the re-serves were spent. So we did that in ’02-’03. We avoided it in ’03-’04 because we went to step No. 2 and that was to take the amount of the rollback from 1994 that had been carried all that time and to take half of that amount approximately, put it on and we finished the year in the black, just barely. But we finished the year in the black because of that.

“And then for ’04-’05, we took the other half of that and so at this point, we deficit spent one year, used some of our reserves. We used half the rollback one year. We used the other half of the rollback the next year. We have no other backups except to go further into the reserves and you’ve been cautioned by Moody’s (Investor Service), you’ve been cautioned by our auditors and you’ve been cautioned by me … that maybe that’s not a good thing to do anymore be-cause of the fact that we’re aware the re-serves sit there as a safety net, literally.”

Using an overhead projector, Lanane showed board members projections that indicated the district’s reserve of roughly $22 million nearly would be depleted by the 2009-2010 school year if the district continued to dip into the reserve without obtaining additional revenue.

“The net’s gone if we continue to spend at the rate we are and not implement some sort of tax increase. So both figuratively the net is gone and quite literally the net is gone,” he said, later noting that the existing reserve “only represents less than really six months’ operating revenue also, so we don’t think that it’s some huge amount. And according to Moody’s, too, the fact that we have this makes them feel very good about our bond rating and that results in lower interest rates and lower debt service … That pays off directly to the taxpayers who get to pay a lower rate because of that bond rating.”

If Lindbergh had not rolled back the tax rate since 1994, it would have received an additional $32 million in revenue, he said.

Regarding the rollback, Lanane said, “Since 1994-1995, it’s been about $32 million. The philosophy has been and I believe continues to be to take only what is needed and what that would have had the effect of doing — it actually in some ways almost makes the problem worse if we just would have left that on because your reserves would be $32 million higher, but yet you still would have this gap (revenues vs. expenditures). The fact that you’re sitting on a pile of money wouldn’t change this at all and so going to the public would be very, very difficult if you had another $32 million on there. So it was exactly the right philosophy, but the time has come to bridge that gap and not further spend down the reserves.”

Lanane also noted nearly $2 million in cuts have been made over the past two years.

“… I can tell you if we have to do something dramatic this year, we are literally knocking on the classroom door right now and we will have to go in through that door if there are dramatic cuts for next year. I just don’t see anything else of any real consequence that’s going to make a true difference,” he said.