COMMENTARY: Budget process different this time
The purpose of this article is to inform citizens about the process and a background to the operating expenses of the school district. Recent stories reported a shortfall of $1.5 million that would require a large mill increase for 2011-12. At the Feb. 3 board meeting we will have to vote on a preliminary budget that will reflect a worst case scenario. The administration and school board will use the months of February through May to eliminate the shortfall by considering many options.
This is a different budget process than last year. We were able to cut $1.5 million dollars from the 2010-11 “draft budget” before voting in April to approve the preliminary budget for public view. The plan also included using $900,000 from reserves to have a balanced budget. This year the administration needs to present recommendations and the board needs to do its due diligence after the preliminary budget has been approved in accordance with state guidelines to review our exceptions. You can keep informed of our adjustments to the preliminary budget through the media, or by attending board meetings. I can assure you no one on the board is entertaining a large mill increase that is reflected in the “worst case scenario preliminary budget.”
The revenue coming into the school district has virtually remained the same over the past three years. Like many of you, school income has also been static. Prior to the economic downturn, the district signed a five year contract with the teacher association which expires at the end of the 2012 school year. For 2011-12 the 5 percent increase represents $628,000. No one envisioned the economic downturn four years ago that we have experienced. The labor cost increase of this 5-year contract is $2,967,000. Obviously when our income is not increasing, this labor increase has placed a great deal of pressure on the financials the past two years and in the coming 2011-12 budget.
The economic downturn has also affected PSERS, which is the retirement program. Our state determines the percentage districts pay into the public retirement program. In 2007-08, the district paid $527,705. In 2011-12, we are projected to pay $762,000. According to existing state guidelines, our school will need to pay $1,500,000 in 2013-14. This type of an increase should alarm all citizens. All the school districts will be impacted under current law and if not addressed by the legislature and governor will be felt by all the taxpayers.
Over the last four years the tax mill increases were 3.5 mills in 2007-2008; 2.8 mills in 2008-09; 0 mills in 2009-10; 3.1 mills in 2010-11; and TBD (to be determined) in 2011-2012. While taxpayers were appreciative of no mill increase in 2009-10, it has magnified our financial difficulties today. This decision meant the district has had to find ways to do without $720,000 in potential revenue. We would be in a much better position to handle the remaining year of the contract and the renovation project with this income. It is important to also note we used to generate almost $500,000 in interest each year. We now are lucky to generate $50,000.
Greencastle-Antrim is not unique regarding financial difficulties. Unlike other segments of the economy the schools are only starting to be impacted by the economic downturn in ways that have not been seen for some time. We will have to do more with less. The pressure to keep operational costs in line will continue in the foreseeable future considering the situation I outlined in last week's article. People are near the top of their limit on property taxes.
The effectiveness of the education we provide to the children within our district and the cost of that education depends upon the administration, teacher association, staff, school directors and the residential and commercial taxpayers. If these groups work together, I am confident we will find a light at the end of what some say is a dark tunnel over the next three years. The light won't be found without some tax increases. I don't believe the answers lie in excessive spending and excessive mill increase at a time when we are in need of a school renovation project.
The administration and school board will look at all options. Currently, we have the lowest annual per resident student cost of all school districts in Franklin County. Statewide, we rank among the 25 school districts with the lowest annual per resident student cost out of the 500 school districts. To me, this is being efficient and effective with the dollars given by taxpayers.
At the heart of our options is this question. Is our district going to continue on the path of focusing on student achievement while being efficient and effective with its financial resources?
This is a question that must be answered by the teacher association, administration, staff and taxpayers. A “yes” answer means each group will need to make sacrifices for the good of our students and community in the foreseeable future. If the answer is “no,” then I anticipate before the 11-12 budget is approved the board of directors will get plenty of feedback. I wouldn't have it any other way. This is one of those times in the life of a community where a direction needs to be re-affirmed or cast aside and replaced with a different standard of expectations for its school district.