Updated financial projections presented to the Mehlville Board of Education last week caused member Karl Frank Jr. to remark that Superintendent Terry Noble was correct in his recent assertion that the district’s fiscal situation was not an immediate crisis.

Noble was “taken aback” by a March projection that indicated Mehlville’s operating-fund balance would dip below the state-required 3-percent minimum by the end of the 2009-2010 school year. That projection indicated the district’s operating-fund balance could drop to 0.02 percent — $14,162 — on June 30, 2010.

However, figures presented by Noble and Director of Finance Brent Bell during a May 22 budget workshop now project a 4.82 percent operating-fund balance — $4,327,750 — at the end of the 2009-2010 school year.

During a leadership summit called in mid-April to discuss Mehlville’s financial situation, Noble told the roughly 40 people present, “… We have plenty of time to deal with the problem and correct it …”

At the budget workshop, Frank said, “Just to be clear, on March 12th we were looking at 0.02 percent and now we’re looking at 4.82 percent.”

He later said to Noble, “… Your point then was accurate that there were things that could be done for that particular year (2009-2010) and we shouldn’t be slitting our wrists and jumping off a cliff.”

Noble said, “Right.”

Deputy Superintendent Eric Knost said, “It wasn’t a crisis.”

But Noble cautioned that additional revenue is needed as evidenced by the proposed budget for the 2008-2009 school year that projects more than $1.5 million in deficit spending.

As proposed, the 2008-2009 budget projects total expenditures of $103,852,821 with anticipated revenue of $102,322,356 — a deficit of $1,530,465. Despite the projected deficit, the district will not go into the red, but will dip into its reserves.

Based on an anticipated fiscal 2007-2008 fund balance of $19,803,931, an overall fund balance of $18,273,466 is projected on June 30, 2009.

The proposed 2008-2009 budget projects operating expenditures of $88,758,652 with anticipated revenue of $90,969,339.

Based on a projected balance of $9,108,689, an operating-fund balance of $6,876,144 — 7.75 percent — is projected after a required transfer of $4,443,232 is made to the capital fund. That balance includes food service, activities and athletics.

Under state law, a school district is required to maintain a 3-percent balance in its operating fund — a combination of the general fund and the teachers’ fund — or be considered a “distressed” district.

For the current school year, an operating-fund balance of 10.2 percent is projected — greater than the 7.86-percent operating-fund balance anticipated when the 2007-2008 budget was approved in June 2007.

During the workshop, Bell outlined revenue and expenditure changes projected for the proposed 2008-2009 budget.

On the revenue side, a decrease of $638,055 is projected from declining voluntary transfer student enrollment while an increase of $350,511 is estimated from the new state funding formula.

Among expenditure changes proposed for the 2008-2009 budget are:

• A total of $334,00 for salary channel changes. In the certified salary schedule, channels denote a teacher’s level of education. Each channel also includes steps that represent each year a teacher has worked.

Only channel changes are proposed to be funded as teachers have agreed to a pay freeze for the coming school year.

• Eliminating $112,350 in tutoring funds.

• Adding two teaching positions at a cost of $68,000.

• Extending nurse contracts at a cost of $5,000.

• Restructuring the administration for a savings of $78,000.

• Adding classified positions at a cost of $60,000.

• A $75,000 increase for sewer/trash services.

• Eliminating $300,000 in teaching supplies.

• Eliminating $300,000 for textbooks.

• A $150,943 increase for food supplies.

• A $102,454 increase for energy supplies.

• The district’s 2007-2008 capital budget was given a one-time increase of $550,270 for maintenance. That amount is not included in the proposed 2008-2009 budget.

Board Vice President Micheal Ocello asked if the expenditure projections for the 2009-2010 school year kept “salaries flat.”

Bell said, “It allows for $350,000 in channel changes, too. That’s all it allows for.”

At the leadership summit in mid-April, a 2.52-percent operating-fund balance was projected at the end of the 2009-2010 school year. Bell said that projection has been revised to 4.82 percent because of “these cuts, updates in revenue, adjusting contracts that we know about — all expenditure categories, all revenue categories, either increasing them or decreasing them.”

Earlier in the workshop, Bell had noted that required expenditures — salaries and benefits, services, supplies, debt-service costs and staff development — total roughly 89 percent of available revenue.

That leaves roughly 11 percent available in discretionary spending for such items as textbooks, instructional manuals, repairs and capital improvements.

Given that, board Secretary Larry Felton asked, “How do you affect the cash flow with the way the budget’s constructed to give yourself more discretionary money whether to put in the technology or whether it’s to put in the …”

Board President Tom Diehl interjected, “You need more revenue.”

Felton continued, “… That’s the part I struggle with the most is how do you radically change that dynamic?”

Diehl said, “Well, not only that — looking at ’09-’10 and the following year, 2010-2011, we’re going to be in the boat that we were expecting to be in for 2009-2010 …”

The board is contemplating placing on the November ballot a proposal to transfer 31 cents from the district’s debt-service fund to the operating fund. The transfer would generate roughly $5.7 million annually. Mehlville’s overall tax rate would not increase, but the transfer would extend the district’s bonded indebtedness by 15 years.

Diehl asked, “Does the transfer just gain us one or two years?”

Noble replied, “… The transfer just — it balances the budget predicated on no raises in the future on salaries and no real increases in expenses in other areas. It balances that year’s budget.”

Ocello said, “It just buys us a little time, really.”

Noble said, “Yeah, it buys you time.”

Diehl said, “Yeah, but it only buys us an extra year …”