Preliminary Mehlville budget projects deficit of $5 million

Two superintendent-search companies to present proposals to board

By Gloria Lloyd

The Mehlville School District’s preliminary 2014-2015 budget, updated after the Board of Education approved more than $3 million in salary increases, could run a deficit of $5 million if approved this week.

The board is slated to consider the roughly $110 million budget and a salary increase for administrators when it meets at 7 p.m. Thursday, June 26 — before the July 1 state deadline — at the Administration Building, 3120 Lemay Ferry Road.

The meeting will be the last at Mehlville for Superintendent Eric Knost, who is leaving June 30 for the Rockwood School District. Current Springfield Public Schools Superintendent Norm Ridder takes the interim superintendent position at Mehlville July 1.

At the board’s last meeting June 12, it approved a memorandum of understanding, or MOU, with teachers 5-2, with Vice President Venki Palamand and Secretary Lori Trakas opposed over concern for the district’s growing budget deficits, which are funded by spending down the district’s reserves.

“Our district has ‘X’ amount of dollars to deal with, and the one common thing that I’ve seen the last couple months is, ‘Let’s spend first and then figure out how we’re going to pay for it,'” Trakas said at that meeting, where the board also approved raises for classified employees. “And it is very frustrating and concerning when I hear on a regular basis of money we don’t have, might need, but we need this.”

The administration’s recommended budget also factors in the $3.4 million in additional salary increases called for in the MOU, roughly $1 million more than accounted for in the May budget preview. Next year’s projection calculates an $8 million deficit if raises are given again.

The impending deficits led Chief Financial Officer Marshall Crutcher to recommend the district take action right after approving this year’s budget to figure out what to do for next year’s budget.

“We’ve got to circle the wagons and come up with some plans to make this go in a different direction,” he said. “I’m assuming that once we get past June, that there’s going to be a bunch of people sitting down and trying to figure out what it’s going to take to keep our cash reserves above $13 million at a minimum —and that’s if we do nothing. I can’t believe we’re going to do nothing.”

The district’s operating budget has increased by 10 percent in just two years, rising by $5 million each year. The 2012-2013 operating budget was $100.5 million, and last year’s budget was $105 million. For next year, Crutcher predicts revenues will go up 0.2 percent, while expenses go up 3.8 percent.

When Crutcher first previewed next year’s budget in May, he included $2.4 million for salary increases. The budget the board considers Thursday carries over a $1.1 million deficit from last year — up from a projected $660,000 deficit when the board approved last year’s budget.

That’s down from the $2.3 million deficit the district would have faced if it had not unexpectedly received $1.2 million in transfer student tuition from the Riverview Gardens School District.

In June 2013, board members voted to approve a 2013-2014 budget that projected total expenditures of $105,725,000 with anticipated revenue of $105,065,000.

Crutcher’s budget factors in a prediction that the board will roll up a 2-cent tax-rate increase that members rolled back last year, that the state will fund education at 95.5 percent of the foundation formula compared to the 93.3 percent current funding level and that a Proposition C sales tax hit will not be as bad as some predict.

If the Missouri Legislature passes the sales-tax break, the district could take a $1 million hit, but Crutcher budgeted for a $375,000 decrease in revenue from the tax.

The reserves, which were $22.1 million, or 23.25 percent, at this time last year are projected to end the 2013-2014 fiscal year June 30 at $19.1 million, or 21.6 percent, and Crutcher predicts after next year reserves will be down to $17.9 million, or 16.3 percent.

The board has a goal of reserves ranging from 13 percent to 18 percent, and Crutcher’s five-year projections show that if nothing is done to cut budgets or raise taxes, reserves will go into the red in 2017.

The board will also hear Thursday from representatives of two superintendent-search companies that could conduct a search for Knost’s permanent replacement next year.

Representatives of PROACT Search of Wilmette, Ill., and SCHOOL EXEC CONNECT of Highland Park, Ill., are set to present their superintendent-search proposals.

PROACT Search’s superintendent search fee would be $15,000. Additional expenses could include consultant and candidate travel ranging from $1,000 to $3,000 and advertising costs typically ranging from $1,000 to $3,000.

As proposed, SCHOOL EXEC CONNECT would charge $19,500 for the superintendent search. Other costs could include regular expenses not to exceed $4,200 and advertising costs of the district’s choice.