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 to consider some reductions before adopting revised ’08-’09 budget

Revenues in desperate shape as result of recession, Lanane tells school board

The Lindbergh Board of Education traditionally adopts a revised budget at its December meeting, but Chief Financial Officer Pat Lanane told the board last week he intends to propose some reductions before presenting a revised budget for the 2008-2009 school year.

“… Normally, I would be presenting the revised budget. But on the way to the revised budget, I got hit by a recession,” Lanane told the board Dec. 9. “And we want to talk tonight about what does this recession mean for Lindbergh and really most hold-harmless school districts, and what does it mean for 2008-’09 and beyond …”

As first reported by the Call Nov. 20, a projected operating-fund deficit of roughly $4.1 million for the current school year is based on revised budget figures and is greater than the nearly $3.3 million deficit anticipated when the board adopted the 2008-2009 budget in June. Despite the projected deficit, the district will not go into the red, but will dip into its reserves that total roughly $26 million.

“… I don’t think we can say this often enough: Revenues are in desperate shape because of this recession and that’s where the real impact’s coming …,” Lanane said, outlining projected deficits over the next few years and noting the amount of a tax-rate increase to bridge that gap.

For example, it would take a 32-cent tax-rate increase to erase the projected operating-fund deficit of $4,177,405 for the current school year, he said. But if that projected deficit could be reduced to $3 million, only a 23-cent tax-rate increase would be required. Both of those tax-rate numbers assume voter approval of a Proposition C rollback waiver at some point in the future.

“What I’m proposing and that’s why I want to do it before we do a revised budget — I’m proposing that we do some reductions yet this year … The underlying good news on this is we can make this because of the balance situation, the savings you all have put aside, put into what I call a rainy-day fund,” Lanane said. “And it is absolutely raining out there financially. It’s raining cats and dogs and whatever’s worse than that. It’s a darn good thing we have that and this board and the previous boards have been very prudent to set that aside even though at times there’s been some criticism by some state legislators about districts having balances. (Without the current balance), I know what I would be telling you tonight and it would be absolutely catastrophic what we’d have to do had we not followed our own good judgments and retained a balance to see us through a time just like the one we’re in …”

He also said, “… We are only one of two school districts in St. Louis County that if we have a loss in assessed value, we cannot recoup it. And you’re going to see this on this next tax rate, you’re going to see districts rolling up their tax rates because there was a loss of assessed value in their school district and they’re going to be able to get back to at least zero. They can get to zero. We can’t get to zero. If we have a loss in assessed value, it’s a loss. And that’s because we’re at $2.75 per amendment to the state Constitution.”

The only solution, Lanane said, would be a tax-rate increase, but such a proposal would be “unpalatable.”

“… The only solution I see because the state had mandated that we’re in this position is property tax and so you start to look at what is the gap, what would it take … And right now I think it would be unpalatable. I think our public would feel they were being betrayed for us to ask them for a tax increase at this point in time. (At) some point in the future, things will get better.

“And that’s why I think because of our rainy-day fund we can make that future, make it to that point, but even then you must start to ask yourself: What is the amount when that time comes that you feel comfortable, that our public will feel comfortable in supporting? So in lieu of a nice tight, hot-off-the-press revised budget, you have this to-night and it is all bad news. There’s really no bright spots in this except for the past, good actions of our boards of education to give us a fund that will carry us through these tough times …”

After Lanane’s presentation, Superintendent Jim Simpson said, “… As we all know, the large majority of money in a school’s budget is in salaries. They go to the people’s pocketbooks. It pays for those benefits that our employees have and it’s somewhere for all school districts, somewhere between 70 and 80 percent.

“And so when we say we’re $4 million-plus deficit spending, what that means to me is we have near $4 million in more staff than we can pay for … So that’s another way to define that. That’s a scary thought to me because you can’t get ahold of that deficit unless you have a lot more revenue coming down in the near future because that deficit comes back to visit every year.”

Lanane interjected, “It’s reoccurring.”

Simpson said, “And so it is reoccurring … I can’t in my crystal ball or tea leaves, I can’t see new revenue. It’s the well’s going dry and it doesn’t prime very easily. It doesn’t go dry very easily, although I will say this recession came quicker than any I’ve ever seen or lived through. It is truly a once-in-a-century kind of an event. But as that well dries up, the revenue well, we have yet to hear the pain that individual states will have with budget revenue shortfalls, but it will be intense … There’s probably only four states out of 50 that are in the black at this time. All of them are going into the red deeply. We will see Missouri taking money from public schools this year and next year. They have to balance their budget. They really don’t have a reserve fund. So they weren’t as smart as prior Lindbergh boards that put some money away for a rainy-day fund. Missouri really doesn’t have a rainy-day fund. They already spent their tobacco money. That burned a hole in their pocket.

“And so it’s really one of those that as we get down into looking at the near-term future, 36 months out, that we’re seeing no salvation revenue — none. We’ve got reoccurring expenses in salaries and benefits of near $4 million. We have great compassion with our employees about they stay up with the cost of living. How do they feed their families? How do they pay their bills? And, as you say, the only bright spot in all of this is the fact that prior boards gave us a rainy-day fund and so we’re not in any kind of panic mode, but without a doubt that this thing has to have an answer in 36 months. Would that be your assessment?” Simpson asked Lanane.

“Exactly. Exactly … We need to shift gears and it’s a downshift,” Lanane said.

Simpson said, “Well, how I think about that is Lindbergh has a staff family and we need to come together somewhere in the future, put our collective wisdom together and guide this ship to the land of balance. Somewhere we’ve got to balance and when we balance, you can go for on and on and on. It’s when you’re unbalanced in the red ink that it can’t continue very much longer and so we need to do that journey to the land of balance. And we need to find out ways to do that …”

Belt-tightening measures will have to be considered to help reduce the projected deficit this year and in future years, he said.

“… We may have to use the tool of a tax increase. That’s problematic,” Simpson said. “People can’t get tax increases when everybody’s hurting and so when do people stop hurting economically? When do they feel safe about their jobs? When do they feel safe about their future? If we could look out in 36 months from now and know that people still don’t feel safe about their future, then the idea of a salvation tax increase would be remote. So we have to have a little of that reality that you can’t always get a tax increase even when a district is beloved and well-stewarded as Lindbergh …”

“… I wanted everyone to understand that that’s exactly where we are and that’s (what) we’ll deal with as we go forward and have that kind of everybody putting our collective wisdom together, trying to take that journey to the land of balance and how do we get there? So many answers to that question. Unfortunately, all of them are painful …” he said.

Lanane said, “And there’s not one program that we have, one service we have that isn’t good for kids — every single one of them …”

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