Financial projections indicate the Mehlville School District’s operating-fund balance will dip below the state-required 3-percent minimum by the end of the 2009-2010 school year, according to Superintendent Terry Noble.

Noble told the Call Friday 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.

Projections for the current school year and for the 2008-2009 school year remain on target, he said. 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.

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, Noble said.

Working late on a Friday night, Noble said he first learned of the 0.92-percent projection in an e-mail from Chief Financial Officer Brent Bell. The March 7 e-mail, in part, stated, “… I went through all revenue and expenditures for the next two years. The situation is pretty much what we discussed before — which is dismal.”

Noble didn’t waste any time informing board members, forwarding them Bell’s e-mail.

“… When I saw that figure, I’m just going to tell you, I had what I call a knee-jerk reaction and in ‘Leadership 101,’ you’re not supposed to have knee-jerk reactions. But I did … This was on a Friday evening. I’m one of these people — I can’t go home knowing something like that that I think other people need to know. So what I did was I forward an e-mail to the board to share that information with them …,” he said, noting a variety of factors are responsible for the change, 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.

“And, quite frankly, I also think that our previous superintendent, who really wanted to help teachers, I think he was probably trying to look at the bright side of things through rose-colored glasses, and so we did give a pretty nice increase to the teachers last year, but what came as a surprise to me was just that year there that showed the .9 (percent). I knew that we were spending down, but then when I saw that, that came as a surprise.

“So like I said, I really overreacted to it. In my e-mail to the board, I was somewhat critical of the previous administration for recommending that …,” he said.

Noble also wrote in his e-mail, “… Brent has projected decreasing fund balances to the point of an alarming level. I’ve been silent about this … for the most part. 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 …”

Under the 2007-2008 budget recommended by interim Superintendent Jerry Chambers and adopted by the board, employees received 6-percent salary increases. Operating expenditures increased from $80,682,823 last year to a projected $89,272,876 at the end of the current school year.

Noble was even more critical of Chambers when he responded to an e-mail from board member Larry Felton.

In a March 8 e-mail to Felton, Noble wrote, “… I have to tell you that although I knew this was coming, and Brent and I have been discussing this for the past few weeks, I am infuriated at Jerry Chambers for playing Santa Clause (sic) and then hopping on his sleigh and riding away. While it is no surprise — I knew this would be the case when the raises were granted — it is a crisis unless COMPASS passes …”

On Friday, Noble said, “I think Jerry Chambers had good intentions and he wanted to leave the district in good shape and he knew we had hard-working teachers who really hadn’t had a significant increase in salary. He really searched hard to try to find a way to make that happen.

“I think the comments in my e-mail were, again, my knee-jerk reaction to that. That’s that human side of me. How-ever, you have to be careful whenever you devote one-time funds to a recurring expense.”

In the same e-mail to Felton, the superintendent also wrote, “… My initial thought is to let COMPASS complete its work before going into a drastic budget-cutting mode. Also, I think it would be wise not to be too open with the current budget situation in our public discussions …”

Noble wrote that budget-balancing steps could be taken before the COMPASS process is completed.

He further wrote, “I am hoping the board will leave this in my hands for now — until we see what happens with COMPASS — so as not to draw too much attention to it …”

Of that statement, Noble said, “I want to explain that because if someone reads that, they could say you’re trying to keep something from the public and that’s not what I meant. Here’s what my actual thought was: I would not want us to be accused of trying to create a crisis just so we can get a tax levy passed. I want the numbers to speak for themselves … I did not want the public to think that we were going to hold cuts over their head as a threat and I would have rather let the (COMPASS) election play out and then if we were not successful, we’ve got to deal with it. It’s going to be sooner than later. That’s why in my mind, I used the word ‘crisis’ … We’ve got next year. We’ve got a whole year that we’re OK …”

The district’s budget situation makes the COMPASS process even more important, Noble said.

“… Right now, I’m hoping that the community sees with this information, by us getting it to them now, they’ll see the urgency of our situation even though it’s not immediate. I mean we’ve got next year and we’ll do what we have to to protect this district — whatever it takes and keep it fiscally viable … It makes COMPASS even more important and I hope what the result of all this will be is this community will come out in these next few meetings and really show their support for the COMPASS process and interject their input, give us their voice while they have the opportunity.”