By MIKE ANTHONY

Executive Editor

A first draft of a proposed budget for the 2003-2004 school year that projects total expenditures of $94.8 million with projected revenue of $91.2 million was scheduled to be discussed earlier this week by the Mehlville Board of Education.

The Board of Education was scheduled to meet Monday night — after the Call went to press.

Based on preliminary revenue and expenditure projections, total expenditures of $94,866,584 are anticipated for the 2003-2004 school year with expected revenue of $91,223,947 for a deficit of $3,642,637.

Based on a projected fund balance of $11,453,714 at the end of the current school year, a fund balance of $7,811,077 is anticipated at the end of the 2003-2004 school year.

For the coming school year, operating expenditures of $79,711,343 are projected in the draft budget with anticipated revenue of $77,899,685 for a shortfall of $1,811,658.

Despite the deficit, the operating fund — a combination of the general fund and the teachers’ fund — the school district will not go into the red, but will dip into its operating fund balance that is projected at $4,863,709.

After transferring $350,000 to the capital fund, an operating fund balance of $2,702,051 — 3.39 percent — is projected at the end of the 2003-2004 school year, according to the draft budget.

Under state law, a school district is required to maintain a 3 percent balance in its operating fund or be considered a “distressed” district.

In the capital fund, the draft 2003-2004 budget projects expenditures of $10,715,753 with projected revenue of $8,576,353, plus a $350,000 transfer from the operating fund. With a projected fund balance of $5,180,957 on June 30, a fund balance of $3,391,557 is estimated at the end of the 2003-2004 school year.

In the debt service fund, the draft 2003-2004 budget projects expenditures of $4,439,488 with estimated revenue of $4,747,909. With an estimated fund balance of $1,409,048 on June 30, a fund balance of $1,717,469 is projected at the end of the coming school year.

For the current fiscal year, which ends June 30, revised expenditures are estimated at $98,101,260 with updated revenue of $95,482,496 for a shortfall of $2,618,764.

Despite the shortfall, the district will not go into the red, but will dip into its actual fiscal 2001-2002 fund balance of $14,072,478, leaving an estimated fund balance of $11,453,714 on June 30.

The original 2001-2002 budget adopted last June called for total expenditures of $90,871,602 with estimated revenue of $88,313,118. That budget had been based on a projected fund balance of $11,938,180 on June 30, 2001, and anticipated the district would have a fund balance of $9,379,696 at the end of the current school year.

The current fiscal year budget has been revised twice since it was adopted — in December and in March.

In December, total expenditures climbed to $92,077,053, while projected revenue increased to $89,518,569.

In March, the budget again was revised with expenditures climbing to $98,101,260, while projected revenue increased to $95,264,139.

The increases in both expenditures and revenue in March primarily resulted from the refinancing of nearly $5.7 million worth of bonds issued in 1993.

The refinancing will save the Mehlville School District about $123,000 through February 2006.

For the current fiscal year, the draft budget estimates operating expenditures at $77,124,746 with projected revenue of $76,204,238 for a shortfall of $920,508.

Once again, the district will not go into the red, but will dip into its operating fund balance of $6,134,217. After transferring $350,000 to the capital fund, an operating fund balance of $4,863,709 — 6.31 percent — is projected on June 30, according to the draft budget.

In information provided to the Board of Education, Randy Charles, assistant su-perintendent for finance and the district’s chief financial officer, noted that the draft 2003-2004 budget “is based upon several assumptions,” including the use of the Consumer Price Index tax-rate adjustment.

The CPI tax-rate adjustment, available every two years, allows a board of education to compensate for the loss of buying power because of inflation.

The CPI tax-rate adjustment serves as a cap, limiting the amount of revenue a school district can receive from increases in real estate values due to reassessment to the lesser of 5 percent or the CPI. A school board can raise the tax rate by voting to take the CPI adjustment or it can roll back its tax rate.

Among the budget assumptions cited by Charles in his information to the school board are:

• “Additional revenue will come primarily from two sources. Those two sources are the CPI increase provided by law and increases in assessed valuation due to new construction.”

• “The CPI value used each year is based upon the April CPI. The current draft of the budget used 2.0 percent as the CPI. This figure may be revised upward slightly when new information becomes available.”

• “An increase in assessed valuation due to new construction is based upon past history and the knowledge of significant construction in the Costco development (off Lindbergh Boulevard).”

• “Revenue received through the Voluntary Transfer Student program was held constant, assuming a level of enrollment equal to the current VTS enrollment.”

• “Increases and/or decreases to state revenue were based upon conservative estimates and the most recent information received from (the) Missouri Association of School Business Officials, (the) Mis-souri Association of School Administra-tors and Cooperating School Districts.”

• “Expenditure increases were included to cover the costs of supplies and materials to open the new Bernard Middle School and to convert all middle schools to the grade six-through-eight configuration.”

• “An additional $800,000 was included to cover the increased cost of employees’ medical insurance premiums.”

• The current draft of the budget includes an increase in funds available for certified and non-certified employees’ salaries. It is estimated that this will allow for an average salary increase of 3 percent to 4 percent. This figure will be determined as more revenue information becomes available. Making employees’ salaries more competitive within St. Louis County is a high priority within the fiscal year ’04 budget.”