Mehlville School District schedules leadership summit to discuss finances

Projected fund balances for this year, 2008-2009 remain on target

By MIKE ANTHONY

Superintendent Terry Noble is calling a leadership summit to discuss the Mehlville School District’s financial situation.

The summit for community leaders tentatively is scheduled for 5:30 p.m. Thursday, April 3, in the Mehlville Senior High School library, 3200 Lemay Ferry Road.

At the summit, the district’s financial situation will be reviewed and administrators will respond to questions.

As reported last week, financial projections indicate the school district’s operating-fund balance will dip below the state-required 3-percent minimum by the end of the 2009-2010 school year. Noble previously told the Call that he was taken aback by the new projection for the 2009-2010 school year as it differed significantly from a previous projection that the district would have an operating-fund balance of 5.75 percent on June 30, 2010.

Of the leadership summit, Noble said, “… We thought it would be helpful because right now I’m anticipating there are people who don’t know what to believe and it helps to sit down face to face … We’ll try to share some of the information … the spreadsheets, even some things like some of the steps the district has taken in the past year or two to try to maintain a more conservative budget … There were some steps taken to try to reel in (spending) and maximize the resources of the district …

“Probably the real focus will be to try to respond to any questions anybody has about what they read and give them an opportunity just to confront us with any concerns they have and we’ll do our best to answer their concerns,” he added.

Projections for the current school year and for the 2008-2009 school year remain on target. For the current school year, an operating-fund balance of 9.58 percent is projected — greater than the 7.86-percent operating-fund balance anticipated when the 2007-2008 budget was unanimously adopted last June by the Board of Education.

The projections indicate the operating-fund balance will be 4.95 percent at the end of the 2008-2009 school year.

However, one scenario for 2009-2010 indicates the balance could drop to 0.92 percent and a more recent scenario indicates a 0.02-percent balance. 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.

Noble attributed the change in fund-balance projections to a variety of factors, including a downward trend in the economy, increased health-insurance costs, a decline in housing values resulting in reduced revenue to the district and a mandated hike in retirement rates to be funded by the district.

Under the 2007-2008 budget recommended by interim Superintendent Jerry Chambers and adopted by the board, employees received 6-percent salary increases, and Noble believes that the amount of those raises and the way the increases were funded exacerbated the district’s financial situation.

In a March 7 e-mail sent to board members, Noble wrote, “… The board obviously received some poor advice last June when the administration recommended raises with one-time funds. When the district decided to use one-time funds — fund balances — to pay for recurring expenses — salary increases for this year — I expected there would be trouble ahead …”

When the board voted unanimously in April 2007 to approve 6-percent raises for the district’s teachers, Chief Financial Officer Brent Bell provided spreadsheets depicting summaries of the 2007-2008, 2008-2009 and 2009-2010 budgets and their projected operating-fund balances.

“He (Bell) projected in his minimum balance analyses, which combined general and special funds but excluded food service, activities and athletics, 7.71 percent for 2007-2008 with an anticipated balance over the 3-percent minimum of $3,899,626; 5.16 percent for 2008-2009 with an anticipated balance over the 3-percent minimum of $1,786,577; and 5.84 percent for 2009-2010 with an anticipated balance over the 3-percent minimum of $2,347,422,” according to the approved minutes of the board’s April 19, 2007, meeting.

Administrators for weeks have been fine-tuning financial projections as part of the 2008-2009 budget process and as part of the COMPASS — Charting the Oakville-Mehlville Path to Advance Successful Schools — community-engagement program.

Those revised projections for the 2007-2008 school year anticipate operating expenditures totaling $89,272,876 with revenue totaling $90,024,305. Based on an actual balance of $12,057,232 — 14.94 percent — on June 30, 2008, an operating-fund balance of $8,548,589 — 9.58 percent — is projected on June 30, 2008 after a required transfer of $4,260,072 is made to the capital fund.

For the 2008-2009 school year, operating expenditures of $90,628,785 are projected with anticipated revenue of $91,007,240.

Based on the projected balance of $8,548,589, an operating-fund balance of $4,483,811 — 4.95 percent — is projected on June 30, 2009, after a required transfer of $4,443,233 is made to the capital fund.

For the 2009-2010 school year, operating expenditures of $91,444,417 are projected with anticipated revenue of $92,881,355.

Based on the projected balance of $4,483,811, an operating-fund balance of $14,162 — 0.02 percent — is projected on June 30, 2010, after a required transfer of $5,906,587 is made to the capital fund.

In a March 8 e-mail to Board of Education member Larry Felton, Noble wrote, “… I agree we don’t need to wait until COMPASS is completed to begin to search for ways to balance our budget. While we may not accomplish this completely for 2008-’09, we can at least look at some temporary cuts pending the COMPASS result. Example, we may have to freeze travel, spending for textbooks, et cetera. In the long term, if COMPASS fails, I think we will have to consider eliminating the block schedule at high school.

“Keep in mind some of this could change if we receive several resignations — retirements. Replacing $70,000 teachers with $33,000 teachers can mount up pretty quickly if there are enough of them.”

Besides a 6-percent salary increase for employees, the 2007-2008 budget in-creased the certified staff by 20 positions, plus additional maintenance and security positions. Other provisions included:

• Re-establishing the three-tier bus system.

• Increasing the maintenance budget to enhance staffing and equipment.

• Reducing the cost of insurance premiums to staff members and their dependents. District coverage will include orthodics for employees and an increase in the durable medical equipment benefit.