Chief Financial Officer Pat Lanane terms a tentative 2008-2009 operating budget for the Lindbergh School District that projects more than $3.2 million in deficit spending “a worst-case scenario.”

At a roughly three-hour workshop last week, Board of Education members discussed a tentative operating budget for the 2008-2009 school year that projects expenditures of $62,533,514 with anticipated revenue of $59,246,460 — a deficit of $3,287,054. Despite the anticipated deficit, the district will not go into the red, but will dip into its reserves.

“… This is a worst-case expenditure number. We’ve never spent 100 percent of our budget and we’ve almost always exceeded our (projected) revenue …,” Lanane told the Call.

Final approval of the school district’s proposed 2008-2009 budget will be considered when the Board of Education meets at 7:30 p.m. Tuesday, June 10, in the boardroom of the Administration Building, 4900 S. Lindbergh Blvd.

At the May 27 workshop, Lanane told board members the proposed budget for the coming school year actually projects less revenue than the current school year.

For the 2007-2008 school year, the district’s most recent numbers place operating expenditures at $59,675,095 with anticipated revenue of $60,179,612 — a surplus of $504,517. A deficit of nearly $2.28 million was projected in June 2007 when the 2007-2008 budget originally was adopted.

Regarding the projected revenue for 2008-2009 Lanane told the board, “So basically as you look at that, we are actually predicting less revenue next year than we had this year. And (Superintendent) Dr. (Jim) Sandfort rightfully pressed me on that issue and we went back and spent several more hours saying: Is there any way we can look at and justify and feel comfortable recommending an increase in revenue? And the answer is no. It’s simply not there. And do I think there will be any relief from the state government? Absolutely not …”

The chief financial officer also said, “One of the themes that you’re going to hear from me tonight — and this is an important theme — our financial picture is not really primarily starting to become somewhat gray because of expenditures. We truly have a revenue shortage as we go into the future and we’ve talked about it many, many times, but I think it’s worth stating again: As you look at these revenue sources … almost every one of these I could go down and say it’s either frozen or declining … A large part of that has to do with a system that I’ve said over and over again — a state system that is very unfair to districts like Lindbergh.

“We are not a hold-harmless school district. We are a frozen school district. That is the term I would substitute for that and we’ve been frozen since 1992-’93. I dare say that anyone in this room had not received any kind of an increase in their revenue since 1992 or ’93, they would be in dire straits. But that is exactly what the state of Missouri has done to this school district and to the taxpayers. It’s particularly unfair to our taxpayers who continue to pay their income tax, continue to pay their sales tax, but none of that money is then coming back to the local school district,” Lanane said.

“I think they believe it is and I’ll probably keep saying it long enough that maybe most of them will finally start to believe you really aren’t getting your money back from your income tax and your sales taxes. Those are going somewhere else in Missouri and that’s very much a part of what’s causing the revenue constriction in this school district now and in the future …,” he added.

Another area in which Lanane is predicting less revenue next year than this year is interest income.

“… Interest income, which has been a bright spot for us, but that’s certainly no credit to the state of Missouri. That’s simply because within the school district, the board has adopted policies to invest our surpluses and our available resources wisely,” he said. “But what is happening recently are cuts in interest rates. As I mentioned, I predict that we’ll have almost a full point less earnings on our revenue next year than we did this year. That’s $650,000. And I really hate to see that because that interest money is money the taxpayers are not directly sending to the school district. It’s not coming out of their pockets. And so from their point of view, it’s an excellent revenue, but we’re victim at this point to the economy.”

When the board adopted a revised 2007-2008 budget last December, an operating-fund balance of roughly $21.3 million was anticipated at the end of the fiscal year on June 30. But the majority of that fund balance already is committed as pass-through club and activity funds, funds for legal ob-ligations, funds for future land purchases, funds for emergencies and cash-flow funds to avoid borrowing. Funds remaining after those commitments are called “board-avail-able resources,” Lanane told the Call.

“We’re looking this year at about $8.5 million in board-available resources,” he said, but noted that amount is expected to drop dramatically on June 30, 2009.

“… The worst-case scenario, it could be $3.6 million. It could go from $8.5 million to $3.6 million,” he said. “But part of that isn’t from the spending. Part of that is the amount to meet your cash flow. That number increases by $600,000. It doesn’t necessarily mean we’re spending all that money. It is primarily a result of the cash flow that clouds that a little bit because it does take a little bit more.

“But again, I have never had one resident tell me in 15 years that they thought it was a good idea for us to borrow money and pay interest. Not one — not ever.”

At the workshop, board members discussed the necessity of possibly seeking an operating tax-rate increase at some point in the future. Asked about that possibility, Lanane cited the deficit projected in the proposed 2008-2009 budget and the anticipated decline in board-available resources.

He also said, “… You look at ’09-’10, which is the next reassessment year, and I really don’t know how much help will be there. I really think that this last reassessment because it was kind of a catch-up type situation that St. Louis County had been under assessed and then the state Tax Commission told them to raise assessments and they did. And they did catch up.

“I don’t see even a lot of new revenue in ’09-’10 in terms of property tax and I don’t see anything in those other revenues that say they’re going to dramatically turn around and go back up. Maybe interest rates could help us. That would be probably the only exception. So you look at that and by the time you get into ’09-’10, worst-case scenario you actually have no board-available resources.

“So that’s probably the time to say: Time to do something. So yeah, sometime in the next couple of years I think you’re looking at the need for either more revenue or you’re going to be facing some pretty dramatic reductions,” he said.