South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

Lindbergh board to consider revised ’08-’09 budget

Midyear cuts of $1.3 million proposed for school district
Jim Simpson
Jim Simpson

A revised budget for the current school year that reflects roughly $1.3 million in midyear cuts is scheduled to be considered next week by the Lindbergh Board of Education.

The Board of Education is scheduled to meet at 7:30 p.m. Tuesday, March 10, in the boardroom of the Administration Building, 4900 S. Lindbergh Blvd.

The board traditionally adopts a revised budget at its December meeting, but Chief Financial Officer Pat Lanane told board members Dec. 9 that he intended to propose some reductions before presenting a revised budget for the 2008-2009 school year. While the budget adopted by the board last June had projected a deficit of roughly $3.3 million, revised figures estimated that shortfall at $4.3 million.

Despite the projected deficit, the district will not go into the red, but will dip into its roughly $25 million in reserves. Though Lindbergh faces financial challenges as a result of the current economic recession, district officials said those reserves are the reason why the situation is not a crisis at this point.

In fact, those reserves have enabled district officials to pledge not to seek a tax-rate increase for the next 24 months. But district officials want to limit the draw down of reserves to no more than $3 million per year and have formulated a four-phase strategic financial plan.

“The rainy-day fund, or our reserves, are a godsend to us because they can keep us going for any kind of normal recessionary cycle — and normal meaning three years or less,” Superintendent Jim Simpson told the Call. “The average American recession is less than one year. However, we all know this is far from average and so we don’t know what exactly to make of it … We’ll just have to wait to see for those signs that things are improving, but we are conservatives financially and even though we’ve got reserves, we’re guarding those. We’re trying to keep them at a $3 million a year — at no more than a $3 million a year draw down … We need about $16 million (in reserves) if we’re not to borrow money to make payroll. So our reserves — in another way and I’m trying to get people to understand it — it’s not $25 million to zero (dollars). It’s $25 million to $16 million.

“So that’s really our excess money that we can use to get through the recession. Now we can go below $16 million if someone will loan us the money to make payroll. I have never done that in my career … I have always looked at that as a sign of — I have been taught in my grad courses to look at that as a troubling financial sign if you’re borrowing money,” he said.

Regarding the revised budget that the school board will consider next week, the superintendent said, “… We have done the midyear cuts. We’ve done the $1.3 million midyear cuts and we’re trying to keep our deficit at the targeted $3 million.”

Regarding those midyear cuts, Lanane told the Call, “… I asked two questions: What can we reduce that really will get the money we need to get our budget right down to that $3 million deficit that we said was the maximum we could run this year?

“The other question I asked: What are we doing that’s really not significant money, but sends the wrong message? We used to pay a little bit to go off site for an administrative retreat. We canceled the off-site retreat. We had it here. It sends the wrong message. Food at meetings has been cut way back. We’re just not doing that. Those are small, but we want to be sure that we give the appearance as well as actually do what we say we need to do.

“The other big one that we really used for this year was that we looked at all supply, equipment, furniture and even purchased services budgets for the rest of the year and we’ve reduced them by 35 percent. That’s big money. That’s about $860,000. I froze purchase orders …”

A planned driveway at Sperreng Middle School that could have cost roughly $266,000 also was eliminated from this year’s budget.

“… We had a drive planned to go all the way around the school at Sperreng,” Lanane said. “We’re not going to do that. I mean, it would have been nice to have that drive — not critical, not going to do it. So that went bye-bye.”

The first phase of the financial plan, which runs through the end of the current school year, involves belt-tightening in all areas except personnel, Simpson said.

“… In this strategic plan, the main philosophy is how do we get back to a balanced budget and how do we eliminate our budget deficit, which as we speak is at $4.3 million, although we have cuts in place and when the final accounting is done at the end of this (school) year, we think it will be at $3 million,” he said. “But when we started phase one, we’re at $4.3 million. And that’s what really triggered phase one is how do we get from $4.3 million to $3 million. Here’s the philosophy under phase one: Make all belt-tightening efforts toward all areas except personnel.

“No one gets laid off, no one gets furloughed in phase one. So we have gone after every nickel and penny we can other than people. And that’s because we understand so much that people have to pay their bills and raise their families and we care about our people very much and that greatly worries us,” Simpson added.

The second phase of the plan will encompass the 2009-2010 school year.

“… As one can imagine, once you’ve cut all the pennies and nickels you can out of non-personnel, what’s left? And you’ve still got a deficit. So you’re going to have to go into the personnel row in phase two,” he said. “In phase two, we’re going to try our very best to use attrition. I’m a big fan of attrition because it’s voluntary that people leave us. We don’t replace them, but it’s their decision. So with attrition you have less pain.

“Now there is a compromise in attrition. That person’s workload has to be distributed. The work still has to be done and it has to be distributed. And so we all have to do more work for the same money — that’s the compromise,” he said. “The good part is there’s no one going back to their home and saying: ‘I got laid off today. I don’t know how we’re going to pay our bills.’ So phase two and phase three will be based on attrition in every way possible.

“We’re also looking at all other costs. The more we can find other ways to save money, the less attrition we’ll have to do. So it’s quite a juggling act, but you look at the whole A to Z or 360-degree overlook to try to get all the savings you can.”

A tax-rate increase may be considered sometime during phase three or near the end of phase three, according to the superintendent.

“Now at the end of phase three or in phase three, there is possibly a tax-increase ballot issue … over 24 months from now … we would have downsized, belt-tightened and reduced to the point that we’re a skeleton. You won’t see an ounce of fat on us and so that will be the time to go to the tax increase.

“And also in that our reserves by then have shrunk to an alarming level. Still, we’re financially solid. We’re able to maintain all financial integrity, but we’re hurting by phase three,” Simpson said.

“Phase four we don’t even want to contemplate, but that is what-if-the-tax-levy-fails phase and we do not want to implement any form of phase four. But phase four would be a dire, a dire-reduction phase. We have to have that ready because you can get a ‘no’ … I’m always aware that a ‘no’ is possible. No matter how loved the district is or respected, a ‘no’ is possible …

“We don’t want to implement these phases, but the recessionary environment and the economy and the fact that our revenue sources have decreased and don’t show any type of near-term reversal of increasing, you say: What would it take not to do phase three or phase four? And that would be new revenue. That’s simply the answer.

“That’s the only medicine that works. The only medicine that works is new revenue. And you say: Well, maybe new revenue will come before phase two. No way. I mean that phase is just months away. There’s no way that new revenue is coming before then … So we almost know phase two has to be put in play,” the superintendent said.

For phase two, a district committee will be formed to help formulate recommended cuts, Simpson said.

“… This isn’t a Central Office kind of we decide all the cuts. We’re putting together a district committee in the typical Lindbergh fashion of a professional family, a collegial family, we’re putting together a committee for phase two cuts because we want everyone on that committee, which will be representing all major areas of our district, we want everyone to have their opinion heard … So that committee’s report to the board will be a milestone report,” he said, adding he expects the Board of Education will receive that report sometime before the end of April.

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