The Lindbergh Board of Education will dip into the district’s reserves to balance the operating budget for the 2006-2007 school year, according to tentative decisions made last week during a roughly three-hour budget workshop.
Final approval of the 2006-2007 budget will be considered when the Board of Education meets at 7:30 p.m. Tuesday, June 13, in the boardroom of the Administration Building, 4900 S. Lindbergh Blvd.
Projected operating revenue for the coming school year totals $47,789,600, according to Pat Lanane, assistant superintendent for finance and the district’s chief financial officer. Projected operating expenditures going into the budget workshop totaled $49,650,689, Lanane said, for an anticipated deficit of $1,861,089.
At the workshop, however, board members gave tentative approval to an additional $1,429,888 in operating expenditures — primarily to meet federal No Child Left Behind Act mandates and increased utility costs. Additional operational items totaling $373,500 were placed on hold and not included in the preliminary budget.
With the additional items the board gave tentative approval to May 16, projected operating expenditures for 2006-2007 total $51,080,577.
With anticipated operating revenue of $47,789,600, a deficit of $3,290,977 is projected for the coming school year.
But that projected deficit will be offset with carry-over revenue from the current school year and reserves, Lanane said.
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. But Lanane said that anticipated surplus actually may be more — perhaps as much as $800,000 to $1 million.
“… There already was a commitment that we’d spend the surplus from this current year next year,” he said. “So when you look at that deficit, it looks kind of bad, except, hey, we got some money we’re bringing over to this and there’s still some possibilities that things might get a little better as the year goes on.”
For example, Lanane said 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.
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.
“There are some possibilities that it may get a little better than that, but we’re saying we’re not going to bank those yet,” he said of the potential for additional revenue. “If they come true, and we’ll know most of those by September, then some of those items that we put on hold, we’d release.”
Based on the revised operating budget, a fund balance of $25,331,909 is projected at the end of the current school year on June 30, Lanane said. But not all that reserve money is available, he said, noting nearly $15 million of that fund balance is already committed.
“The cash balance is just like your checkbook. When you look at it and it says how much is left, well you also know you can’t spend all that money because you’ve got a whole bunch or part of that money spoken for … When you talk about reserves, the way I define those would be money that is not committed otherwise,” he said.
Those commitments include more than $1 million in club and activity funds, about $2.3 million for legal obligations, $8.5 million for cash-flow purposes and about $3.1 million for emergencies — leaving roughly $10.4 million in uncommitted reserves.
“We’re planning on spending some of those reserves,” he said, referring to the anticipated operating deficit for the 2006-2007 school year.
The new state funding formula also has a negative impact on district revenue, Lanane said.
“The impact is we would be getting more money had they not messed with it. Are we getting more money at the end of this year than we got the previous year? Yes, we’re going to get a little more money and we’re talking $30,000, $40,000. Not enough to probably even hire one school teacher. Had they left it alone, we still weren’t getting very much money, but our Prop C (sales-tax) money would have been much better, and so instead of $30,000 or $40,000, we might have been able to look at $60,000, $70,000, $80,000 … The old formula would have been better for us, and so we’re pretty despondent,” he said.
Under the new formula, the only place Lindbergh can seek additional funds is from local taxpayers, he said.
“That is it. The final chapter has now been written in terms of where will Lind-bergh now and in the future look for funding and it’s the local community, and it’s not our choice. It’s simply what the Legislature has provided us as really the only alternative,” he said.
But the last time the district went to the voters in April 2005, voters rejected Proposition A, a 65-cent tax-rate increase that would have been phased in over five years.
Asked about the long-term financial outlook for the district, Lanane said, “Thank goodness that our boards have been judicious. Thank goodness we have built up some reserves. We’ve been criticized for that some times, but without them (this) budget would not have been possible. We would not have been able to take the next step forward in academic progress. We would not even been able to meet the academic mandates, let alone anything else …”
Noting that Lindbergh is recognized throughout the state as a “top-status” school district, he said, “That’s what we feel we have to try to maintain and we think the public really wants us to do that … So I think long term we have to try to maintain that and long term there is no doubt that some day there looms out there another Prop A question for people. It won’t be the same kind of plan. It will be more of a well, we’re really at the point where if this doesn’t happen, we won’t be able to provide that very top-level education … It is inevitable. It’s not a matter of if, it’s a matter of when we’ll have to go back and ask for additional help.”