A recent financial projection that indicates 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 is not an immediate crisis, according to Superintendent Terry Noble.

In fact, Noble told roughly 40 people who attended a leadership summit Saturday morning, “… We have plenty of time to deal with the problem and correct it …”

Originally scheduled April 3, the summit was postponed after Noble was briefly hospitalized for an intestinal problem.

On Saturday, Noble said he was “taken aback” by the recent projection for the end of the 2009-2010 school year as it differed significantly from an earlier projection that the district would have an operating-fund balance of 5.75 percent on June 30, 2010.

Operating-fund projections for the current school year and for the 2008-2009 school year remain on target, but the recent projection indicates the balance could drop 0.02 percent — $14,162. 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.

“… Let me say right off the bat that I want to apologize to you, all of you that are here this morning, to our community, to our Board of Education, for the mistakes that I’ve made in dealing with this issue,” Noble said. “And I’m just going to tell you what I’ve done that I feel is a mistake. In ‘Leadership 101,’ one of the things you never do is you never have knee-jerk reactions because things are going to happen from time to time that may surprise you, catch you off-guard. But as a true leader, you should take some time to reflect on the information you’ve received, do your own research before you react.

“And, quite frankly, when I received the news back on, the date was March 7 — that day’s going to live in infamy for me — and I got a projection as I was working on our budget for next year and also working to put some numbers together, some figures together and plans together at the request of the Facilitating Team of our COMPASS community-engagement group, I had asked our business office for a budget projection — a more current one. And I was up in my office working on March 7, on a Friday evening, and about 8 o’clock I opened my e-mail — 8 o’clock in the evening — and I saw this budget projection and it did catch me off-guard. I was taken aback by it.

“But the mistake I made was that rather than take a little time to study the issue in more detail, I immediately forwarded that e-mail to the board and in my e-mail, I did put some critical comments in there about the previous administration and I even used the words ‘immediate crisis,’ which, in fact, it’s not an immediate crisis. We have plenty of time to deal with the problem and correct it. So I apologize to all of you for that.

“I’ve learned from that and I’ll assure you that you won’t see that kind of behavior out of me in the future. That does not mean we’re not going to be open and honest and forthright and transparent. We are …”

The superintendent later said some steps already have been taken and others are being proposed to address the projected shortfall that would increase the operating-fund balance to 2.25 percent at the end of the 2009-2010 school year instead of 0.02 percent. Additional budget reductions totaling roughly $300,000 still would be needed to increase the operating-fund balance to more than 3 percent.

“… The things we’ve selected so far I don’t think are painful. They’re things that we need and we would love to continue to have, but we can temporarily do without them,” Noble said. “Now I told you, I didn’t come here to maintain the status quo and so that would not be my long-range plan for you.

“But there’s another answer to this, too, I want to share with you. That is, we could do a transfer of funds by a simple majority of our voters of 31 cents and let me explain how that would happen.

“The transfer of 31 cents would come from the debt-service fund right here and be placed right in the operating fund with a simple-majority vote. The way we would accomplish that is we would refinance our bonds. We have about a $30 million debt in the GO (general obligation) side that is due to expire in the year 2013. We have a 34-cent debt-service levy that makes our annual payment reserved for that.

“Through a refinancing of those and extending that debt over time, we could reduce that 34-cent levy to three cents. And then what you would see here is our annual payment … would become about $868,000.

“So that would free up about $5.5 million or so — close to $6 million — in that 31 cents if the voters would allow us to transfer that. And that would correct the budget — it doesn’t increase anyone’s tax rate — and the amount of overall levy is the same ….”

The Facilitating Team of the district’s public-engagement program is considering recommending the Board of Education place the 31-cent transfer on the November ballot. As proposed, the refinancing would extend the district’s bond debt by 15 years.

The team also is considering recommending a separate 37-cent operating-fund tax-rate increase to fund the first of four phases of a new master plan.

Noble also outlined other measures being taken to address the district’s financial situation, including two requests for proposals that have been issued. The first RFP is to hire an expert in school finance to review the district’s budget projections while the second RFP is to hire an independent accounting firm to review the district’s budget procedures. In addition, Noble said a district budget committee will be established comprised of community members who are experts in finance and accounting.

During a period for questions, Noble was asked what is the district’s backup plan if the 31-cent transfer is placed on the ballot, but not approved by voters.

“… The only place you can actually get big numbers in our budget is through staffing,” he said. “So we would have to try to find a way to live with higher numbers in our classrooms and it would be harmful, very harmful … I’m going to throw this out there because this was actually in one of my e-mails. I mentioned to one of our board members — I’m not suggesting that this — I’m just talking openly and honestly with you from my own experience is that block scheduling is something that I think has a lot of merit and there’s a reason why we have it, but it’s also — it’s more costly than the typical traditional, say seven-period day, or whatever.

“There’s the only place I know that you can go and do the least amount of harm to our students and our programs — although I’m not suggesting that would be what would happen — but there’s a place where personnel-wise that you’d have to go and look — at least take a look at it.”

Cutting the budget would be difficult, Noble later said, adding, “… Our budget doesn’t have a lot of places to go. So I’m hoping — I’m going to be positive about it and say that our community will see the need and they’ll step up and help us in whatever we need to do …”