Eight subcommittees are set to begin work this month on the Mehlville School District’s contingency plan to address possible revenue shortfalls in the next few years.

Directed by the Board of Education last month to form such a plan, district officials established subcommittees to prioritize Mehlville’s funding needs in the areas of elementary schools; middle schools; high schools; special programs; facilities; transportation and food service; extra duty, overload and athletics; and central office.

The high school subcommittee was scheduled to meet for the first time Monday — after the Call went to press.

“They’ll prioritize those (needs) from most important to least important, knowing that all of it’s important,” Superintendent Terry Noble told the Call Friday.

Each subcommittee is comprised of two co-chairs, who select other members. However, all subcommittees must have at least three teachers, three community members and one support staff member, Noble said. The subcommittees have until May 1 to complete their work. They will report to the contingency plan’s steering committee, which Chief Financial Officer Noel Knobloch will chair.

The steering committee, comprised of the district’s Central Office team, then will create a “master list” of the subcommittees’ priorities from which the district would make cuts in the event of a budget crunch. That final list would be presented to the school board at its May meeting.

Noble stressed last week that a contingency plan doesn’t mean budget cuts are imminent.

“This plan is great to have in these kinds of times for any shortfall that could occur, but we’re not at that stage yet where we say that we’re going to recommend a list of cuts for the current year,” Noble said. “We’re just saying that this is the order of priorities we would use to make cuts should they be required if there are revenue shortfalls.”

However, a recent financial projection indicates the district will deplete its operating fund balance by 2013 without taking steps to increase revenues or cut expenses.

A three-year forecast of Mehlville’s finances presented to the board last month shows overall expenditures increasing to more than $109 million by 2012-2013 from current levels of roughly $101 million, while revenues re-main stagnant at roughly $101 million.

Besides projected flat local revenue, Knobloch told the school board last month that Mehlville could lose up to $3 million in state revenue beginning in 2011-2012 because of a possible billion-dollar deficit in the Missouri budget.

The resulting shortfalls would drain the district’s total fund balance to a projected $7,499,354 on June 30, 2013, from the $21,862,115 currently estimated for June 30, 2010.

The Missouri Department of Elementary and Secondary Education requires school districts to maintain an operating fund balance that’s at least 3 percent of total operating fund expenditures.

With no significant increases in revenue or cuts to expenditures, Mehlville’s operating fund balance is projected to drop to a negative balance of $285,036 by June 30, 2013, from its estimated balance of $13,880,970 on June 30, 2010. As a percentage of operating fund expenditures, that’s a decrease from 15.09 percent to -0.29 percent.

For now, the district has some breathing room, which can be attributed in part to Proposition T, a successful November 2008 ballot measure that transferred 31 cents per $100 of assessed valuation from the district’s debt-service fund to the operating fund. Prop T is expected to generate roughly $5.6 million a year for the operating fund.

Mehlville is projected to end 2009-2010 with roughly $101,661,057 in revenues and $101,738,296 in expenditures, according to adjusted figures from February.

The district is projected to lose more than $500,000 in property-tax revenue this year because it set its tax rates last year using preliminary — and overestimated — assessed valuation figures from St. Louis County. However, the district will be able to recoup the lost tax revenue in 2010-2011 using an interim tax rate.

Besides the drop in local property taxes, the district saw a roughly $360,000 drop in state sales-tax revenue and its earnings on certificates of deposits cut in half due to poor interest rates. In addition, the district is projected to end the 2009-2010 school year with roughly $210,000 less in state aid because of a mid-year funding cut to the Department of Elementary and Secondary Education.

Gov. Jay Nixon’s office announced earlier this year DESE would not receive a $43 million midyear appropriation that’s called for in the 2009-2010 school funding formula.

DESE tentatively has decided to apply that withholding through a 2-percent, across-the-board funding cut to Missouri school districts. For Mehlville, that means receiving $10,320,237 from DESE this school year — $210,617 less than the $10,530,854 expected.

But Mehlville won’t know if DESE’s decision is final until June, Noble and Knobloch said last week. Between now and then, the department could decide to apply the funding cut on a per-pupil basis, which would result in larger cuts for metropolitan districts like Mehlville — with close to 11,000 students — than smaller, rural districts, they said.