$4.8 million shortfall projected
Superintendent prepping school system employees for what’s coming
By Kathryn Schiliro
With a projected $4.8 million shortfall, the upcoming fiscal year is going to be the tightest yet for the Morgan County School System.
Superintendent Dr. Ralph Bennett–in conjunction with the county school board's Budget Committee made up of Board of Education chairman Nelson Hale and board member Andy Ainslie, both bankers, by the way–reported to the county school board he's been traveling to all of the county's schools in an effort to inform and prepare personnel for next year. He gave the same presentation he's given to school staffs to the school board Monday.
"We've got to start thinking of financing education in a new paradigm," Bennett said. "The idea of holding out one more year [is no more]."
The current budget–FY2012–is more than $27.7 million. More than $12.3 million of that $27.7 million comes from the state; the state withheld $2 million for health benefits, making the state's total contribution closer to $10 million.
Compare the state's $10 million in FY12 to the last four years: FY11, $12.8 million; FY10, $12.87 million; FY09, $13.4 million; and FY08, $14.6 million. That's a more than $2.2 million difference from four years ago.
"For next [fiscal] year, we're expecting state funding to decline again," Bennett told the board.
Local contributions, on the other hand, for FY12 came to more than $13.4 million. Compare the FY12 local total to the last four years: FY11, $777,416 per mil at 17.846 mils; FY10, $903,479 per mil at 13.743 mils; FY09, more than $1.05 million per mil at 12.461 mils; and FY08, more than $1.01 million at 12.724 mils.
Of course, the county's been experiencing a decline in property values over previous years. Millage rates have to increase to adjust to a decline in property values, Bennett explained. For FY13, Bennett warned the board to expect another 13-15 percent decline in county property values.
By law, the millage rate that can be instituted by local school boards is capped at 20 mils. For the current fiscal year, FY12, without the Education Local Option Sales Tax (ELOST) more than $1.7 million that kicked in to allow the board to approve the rollback millage rate, the rate would've been more than 17 mils.
Needless to say, the school system's millage rate is dangerously close to its legal cap.
Accounting for an anticipated decrease in state and local funding, the lack of ELOST funds being deposited into the general fund, an increase in the cost of health benefits for both certified and classified staff and step increases for certified staff, Bennett and the Budget Committee are projecting a $4.8 million budget shortfall for FY13.
The school system's budgetary reserves have saved them from drastic measures in the past; this year, they may not be so lucky. The projected reserve balance for FY13, Bennett said, is $8 million. Payroll–which accounts for 90 percent of the school system's budget–equates to about $2 million per month, and the reserves are used to pay teachers, administrators and staff during the months of September, October and November, when state and local funds aren't rolling in, to the tune of $6 million. This leaves about $2 million in the reserve coffer.
In the past, $2 million in reserves has always been set aside for the construction of a new school in the Rutledge area. The school board, however, recommended last month that the construction of this new school wait as enrollment numbers have grown stagnant.
So, there's potentially $4 million–the $2 million reserve balance and the $2 million from construction of the new school–to potentially apply to the projected $4.8 million shortfall. This will drain reserves, though, leaving nothing in terms of a "rainy day fund."
"We're getting close, regardless, to not having any reserves," Bennett said. "Dr. Stokes was far-sighted when she started building reserves when she did."
Bennett and the Budget Committee have come up with some proposed reductions that may be able to save the school system some money. Staff attrition–not filling the positions of staff that retire; the school system has lost 32 teachers over the past three years this way–could save almost $385,000; a 10 percent reduction in the cost of instructional materials, $47,000; and a 10 percent reduction in the costs associated with technology, more than $28,000. Also proposed: modifying teachers' and administrators' work calendars by up to 10 days. This could save the school system more than $939,000 for the teachers' days and more than $68,000 for the administrators' days. Bennett was sure to point out that these were not furlough days, meaning the potential elimination of these days would not affect the number of student days. Instead, these days would come from planning, potentially six pre-planning days, one day after the Christmas break and three post-planning days. These proposed reductions together total almost $1.5 million.
"I'm still committed to cutting costs, not people," Bennett said. "It's not like we're fixing to go bankrupt... We've got some hard decisions to make."
The Budget Committee and school board echoed this sentiment.
"These are hard decisions and difficult times," Hale said. "These are certainly times we have to be serious...but these are people."
Printed in the April 19, 2012 edition.