An operating budget for the 2006-2007 school year that projects a deficit of more than $3.3 million recently was adopted by the Lindbergh Board of Education.

The 2006-2007 operating budget projects expenditures of $51,119,327 with anticipated revenue of $47,789,600 — a deficit of $3,329,727. But the projected deficit will be offset with carry-over revenue from the 2005-2006 school year and reserves, according to Pat Lanane, assistant superintendent for finance and the district’s chief financial officer.

A revised 2005-2006 operating budget adopted by the school board in December projected revenue of $47,810,629 and expenditures of $47,310,146 — a surplus of $500,483. An operating fund balance of $25,331,909 is projected on June 30, 2006, and $22,002,182 on June 30, 2007.

In June 2005, the Board of Education voted to adopt an operating budget for the 2005-2006 school year that projected expenditures of $46,956,157 with anticipated revenue of $45,995,097 — a deficit of $961,060. At that time, an operating fund balance of $21,209,698 was projected on June 30, 2006.

In his budget message to the board, Lanane wrote, “Revenues for 2006-2007 are not expected to increase substantially from the previous year because 2006 is not a local property tax reassessment year and because (Senate Bill) 287 will freeze most state revenues previously received through the foundation and categorical-aid programs. Sales-tax revenue projections have been increased, but will be dependent on the viability of the state’s economy.”

While the revenue outlook for the 2006-2007 school year may look bleak now, the potential exists for some improvement, according to Lanane.

The district is anticipating an operational tax rate of $2.75 per $100 of assessed valuation and may receive more revenue for the 2006-2007 school year than currently projected due to new construction, including the addition of Sunset Plaza in Sunset Hills to the tax rolls, he said.

The city of Sunset Hills announced earlier this year that the $9.1 million in tax-increment financing, or TIF, bonds issued by the city were retired — roughly 11 years earlier than planned. In a TIF district, tax receipts for school districts, fire districts and other taxing entities are frozen at existing levels for the length of the TIF — up to 23 years. As land within the TIF district increases in value, the incremental tax revenue — 100 percent of property taxes and 50 percent of sales and utility taxes — is used to retire the TIF obligation.

Lanane also said the district may receive additional revenue for the coming school year in the form of an insurance tax payment.

In his budget message, Lanane wrote, “Expenditures for 2006-’07 will increase primarily due to two factors. The first is a result of the employee salary increases approved for 2006-’07 at 4.25 percent, the projected increases in retirement and in the cost for insurance benefits.”

Those costs total roughly $15.5 million.

“The other significant increase is directly related to efforts to continue to meet state and federal mandates related to the No Child Left Behind legislation and the state’s Annual Performance Review …,” he wrote.

During a budget workshop in May, board members gave tentative approval to roughly $1.4 million in operating expenditures — primarily to meet the federal No Child Left Behind mandates and increased utility costs.

In his budget message, Lanane also noted, “… The student enrollment increases at the middle school and particularly the high school as well as the additional personnel hired to address the mandated in-creases in student-achievement levels will result in an increase of about nine (full-time positions). These costs also are in-cluded in the proposed budget.”

Lanane told the Call, “We said we had two main goals. One was to recruit and retain and be competitive with our compensation and we did that. The second one was to meet the No Child Left Behind (mandates).”

While the district’s tax rate for the 2006-2007 won’t be established until August, an operational tax rate of $2.75 per $100 of assessed valuation is projected.

Lanane said he anticipates the district’s debt-service tax rate, currently 38 cents per $100, will remain unchanged, though the possibility exists it could decrease by a few pennies.