A revised budget for the 2007-2008 school year that projects operating revenues of $50.3 million and expenditures of roughly $53.6 million was adopted last week by the Lindbergh Board of Education.

The Board of Education voted unanimously Dec. 11 to approve the revised 2007-2008 budget that estimates operating revenues of $50,329,924 and expenditures totaling $53,670,883 — a deficit of $3,340,959. Despite the anticipated deficit, the district will not go into the red, but will dip into its reserves. Based on an operating fund balance of roughly $24.8 million on July 1, 2007, a balance of more than $21.3 million is projected on June 30, 2008. But the majority of that fund balance already is committed.

Those commitments include pass-through club and activity funds, funds for legal obligations, funds for future land purchases, funds for emergencies, a reserve to maintain the district’s Aa2 bond rating and cash-flow funds to avoid borrowing, according to Pat Lanane, assistant superintendent for finance and the district’s chief financial officer.

The Board of Education voted in June to adopt the original budget for the 2007-2008 school year.

At that time, operating revenues of $49,062,797 were projected with anticipated expenditures of $51,442,338 — a deficit of $2,379,541. Based on a projected operating fund balance of $24.9 million on July 1, 2007, a balance of roughly $22.6 million was anticipated on June 30, 2008.

During the Board of Education meeting last week, Lanane said, “… As you will remember, annually in December we do a revised budget and that allows us to accomplish at least three goals by that. Probably the most important single change that you see in this (revised) budget from the June budget is really not in the ’07-’08 numbers, but now you have audited, actual numbers for ’06-’07. And so as you go through there, you’ll now have three years of comparative data that you can use …

“The second thing that happens is ’07-’08 projected revenues now have been revised. We make those revisions based upon what actually happened last year. Now that we know those numbers, we have really a better number to come away from.

“And then the other thing that we look at is monies or revenues we’ve actually received. Sometimes things are already running better than we thought they would, so we make some revisions in that,” he said. “The third thing that we look at then are the ’07-’08 expenditures and we have now put the actual employees in place that actually are with us as opposed to the ones we were thinking we would have in June. And then we also know things like our insurance. That has been decided now for the year. We have a half-year change on that. And then we have other adjustments that the board has been making as the year has gone along …

“As you look at the ’06-’07 numbers, you can see the revenues did get better. Normally, what happens in our budgets, we start out every year from a worst-case scenario — revenues being the least we think they could possibly be and expenditures being the most we think they could actually be and we actually predict 100-percent spending, which never has occurred, at least not in the 15 years I’ve been here,” Lanane continued. “But I think you have to do that worst-case scenario as a starting point to be very conservative in how you’re looking at and managing the money …”

The now-audited numbers for the past fiscal year show the district collected more property-tax revenue than anticipated, he said.

“That’s a good thing. You’re never exactly sure what that collection rate’s going to be. It does differ from year to year. In good times, you actually collect more than you think you’re going to collect. There’s been years where it’s actually dropped a percentage — even two percentage points, so you get less than you normally might expect. Good year, this last year, we collected more than when we might have expected to,” Lanane said.

“The other thing that really helped in revenue and, again, this goes back to our discussions on balances, is we were able to have higher interest rates — actually about double from the year before — which resulted in about another $800,000 in revenue beyond the $800,000 we’d already predicted. So again, that’s non-tax money in the sense that that is money that comes to us again because of the prudent policy of maintaining adequate balances. It’s one of those side benefits we don’t often talk about, but it showed up big in these actual numbers for ’06-’07.”

For the current school year, expenditures have increased over the original budget adopted in June, Lanane told the board.

“A reminder of things we’ve included in this in the way of expenditures, so I don’t want to surprise you. I want to be sure you know these were in there because they’re all items that have been talked about,” he said, noting such additional expenditures are projected in consulting costs for the district’s Demographic Task Force, unexpected overtime costs for data entry and additional costs for community engagement.

“The last item that I have in here is simply to remind you the year is not over and there are several active committees working in the district. And so I wish I could say with all certainty: ‘This is it. There’ll be no more expenditures, but I’m probably pretty certain there will be some recommendations from different committees that you’re going to want to consider as we go throughout the year. So there may be some additional changes to this …,” he said.

In a separate matter, the board voted unanimously to proceed with the refunding of general-obligation bonds issued in 1998 by the district. The refunding of the GO bonds is expected to save district taxpayers $250,000, Lanane said, adding the bond sale is scheduled Jan. 8.

“… That will be an open, competitive sale as we have always done with our issues here,” he said, noting that the district’s Aa2 bond rating had been reaffirmed earlier that day by Moody’s Investors Service. “… So we retained what is the highest rating that any school district has in the state of Missouri.”

Reading from a news release issued by Moody’s, Lanane said, “The Aa2 rating is based on the district’s sound and well-managed financial operations characterized by healthy reserves, substantial tax base favorably located in the St. Louis metropolitan area and minimal debt burden with slow principal retirement.”

Of retaining the Aa2 rating, he said, “… I think this is a very strong endorsement of what the board has been doing and they actually said there was discussion about an upgrade and so I will continue to push them … the next time we’re out in the market to do that.

“But they’ve not only rated your current — these current bonds that are being issued, it’s all our bonds they re-established the Aa2 rating. So I think that’s a tremendous compliment to the Board of Education and I’m really happy to be able to share that with you tonight …”