Deficit spending during the 2009-2010 school year totaled roughly $1.15 million less than projected two months ago, Chief Financial Officer Pat Lanane recently told the Lindbergh Board of Education.

While he had projected in May the district would finish the 2009-2010 school year with deficit spending totaling more than $6 million, Lanane said that as a result of curtailing expenditures, the year-end operating deficit totaled roughly $4.85 million.

During a budget workshop in May, Lanane had projected operating revenues for the 2009-2010 school year would total $53,371,780 with anticipated expenditures of $59,377,022 — a deficit of $6,005,242.

But the district’s year-end numbers show operating revenues for the past school year totaled $52,976,807 with expenditures of $57,830,266 — a deficit of $4,853,459.

“… The end of the year actually finished a little better than we had predicted maybe (in) early May. You look at it. You try to get as close as you can. The revenue continues to just — it’s like that quicksand. You think you’ve got to the lowest level, yet it doesn’t still quite — it’s still anemic. It doesn’t want to come back in a meaningful way, and so from our last prediction we were within 1 percent — less than 1 percent …,” Lanane told the board July 13.

The district’s long-range financial plan calls for a spend down of its reserves with a deficit-spending cap of $3 million per year. In June 2009, the school board adopted a 2009-2010 operating budget that projected a deficit of $3 million. That $3 million deficit was reached by making more than $2 million in reductions.

However, a further decline in the assessed value of commercial real estate — including successful appeals by commercial property owners to the county Board of Equalization — coupled with cuts in state funding increased the projected budget deficit for the 2009-2010 school year to roughly $6 million.

But the chief financial officer noted that operating expenditures for the past school year were not as great as originally projected.

“… We were able to kind of put the brakes on them a little bit … and so we had originally predicted that we’d have a deficit close to $6 million. We’re going to be right at $4.8 million …,” Lanane said.

As a result, the district’s reserves now total $20,099,271, instead of the $18,947,488 originally projected, but expenditures will continue to exceed revenues, he noted.

For the 2010-2011 school year, the board adopted an operating budget that projects revenues of $53,892,275 with anticipated expenditures of $57,828,411 — a deficit of $3,936,136. That nearly $4 million deficit was reached after the board voted to give final approval to more than $4.7 million in reductions. The board’s action eliminated 60 positions, including 45 teaching positions.

“The good news is we didn’t hit $6 million (in deficit spending), but we’re still in a deficit situation on an annual basis that we have never seen before and really quite frankly because we’re so locally funded — again not by our choosing, but by the way the state foundation formula, the state law, forces us to be funded — until local property values come back in some meaningful way and/or we get a tax increase, those revenues are not going to come back,” Lanane said.

“So I mean we’re looking at revenues now that are almost 10 percent below where we were two years ago — three years out from where we are now. That’s just unheard of in this school district where we’ve always had that nice, steady increase in property values (that) allows us to keep a fairly stable tax rate because the inflation is kind of met by the increase in property values — in fact, sometimes even surpasses. It’s been a great situation but now we see that opposite … So sometime we hope to see it start the other way, but (it’s) a very tough situation and of course (at) the worst possible time you get more bad news. We were told this last month that transportation from the state — what little state aid we get — now is going to have a pretty major hit of $240,000 …”

While the majority of local taxing districts have rolled up their tax rates through the Hancock Amendment to regain lost property-tax revenue, Lindbergh was unable to roll up its operating tax rate, which currently remains at the state minimum of $2.75 per $100 of assessed valuation.

In June, the Board of Education voted to place a 65-cent tax-rate increase on the Nov. 2 ballot.

If approved by voters, Lindbergh’s total tax rate would increase to $3.81 per $100 of assessed valuation from the current rate of $3.16.

But Lindbergh officials noted that even with the increase, the school district’s tax rate still would remain among the lowest in St. Louis County.

A 65-cent tax-rate increase would cost the owner of a $200,000 home an additional $247 per year and the owner of a $100,000 home an additional $124 per year, according to information presented to the board June 8. If approved, the tax-rate increase would generate more than $8.3 million beginning with the 2011-2012 school year.

The only “upside” to the current financial situation, Lanane told the board, is that bids for the district’s Prop R projects came in lower than expected.

District voters approved Proposition R 2008, a $31 million bond issue, in November 2008. The board had placed Proposition R 2008 on the ballot with the goal of providing a long-term solution to space concerns at Sperreng Middle School.

While Sperreng will remain a sixth- through eighth-grade middle school, funds from Prop R 2008 will be used to convert Truman Elementary School to a sixth- through eighth-grade middle school, add onto Crestwood and Long elementary schools, convert Concord School to an elementary school and construct a new Early Childhood Education building next to the Administration Building at 4900 S. Lindbergh Blvd.

Funds from the bond issue only can be used for building projects and not operational expenses such as salaries.

“… This is a perfect time to be doing the building we’re doing because our bidding process has yielded us results far above the expectations we had for good bids,” Lanane said. “They’ve been great bids. So that piece has been very positive, but the operating revenue side continues to just sink a little bit below where we even thought we would fall and we just don’t know when or if that’s going to turn around any time in the near future.

“In fact, I would say to you everything I see says not next year and who knows even about the year after that? I just don’t see that kind of a bounce back … I read lots of different opinions and I can’t find anybody that thinks that’s going to happen in the next 24 months and some of them are much more pessimistic than that. So I wish I had a better year-end financial report to give you, but it’s still very much the situation that we looked at our budget workshops and when you all adopted the budget for next year …”