In a story on Monday night's school board study session, the Times-Gazette stated that money being repaid from the school budget was for a budget overage on construction of Community High School. School Board Chairman Barry Cooper said that this money was to cover the difference between what the county's traditional debt service was able to fund and the actual cost of the project, not an unplanned overage. The Times-Gazette apologizes for the error and is happy to set the record straight.
There's a gap of nearly $800,000 between where next year's school budget is and where it needs to be.
That's what Bedford County Board of Education learned at a budget study session Monday night.
For the past two fiscal years, 2010-11 and 2011-12, the school system has been spending more than it has taken in. The difference came out of the school system's fund balance.
But now, that money is nearly gone, and the budget document which school board members started with Monday night used up all of the available fund balance (not counting the 3 percent which the state requires school systems to keep in reserve) and would put the school system $347,093 in the hole.
"This is a bare-bones budget, as far as I'm concerned," said School Superintendent Ray Butrum.
The good news is that, after several years of stagnant sales and property tax revenues, both are beginning to increase again. But it may take several years for them to return to pre-recession levels. And in the meantime, operating expenses are going up as well.
"The costs are going up as fast as the revenues," said Bedford County Finance Director Robert Daniel.
The state has what is called a "maintenance of effort" policy for local school systems. In its broadest terms, it means that school budgets can never go down (at least as long as state funding is maintained). Local governments can't use increases in state funding as cover to decrease local funding.
When a local government passes a school budget, that budget must go to the state for approval. The state uses a complex formula to determine whether the budget meets the maintenance of effort test, and sometimes requires changes to be made.
The news quickly got worse. This year, the school system was hit by an unexpected increase in insurance costs, largely the result of newly-hired employees taking more coverage than the people they were replacing. There was nothing in the original budget document to cover the same type of increase if it should happen again this fall, and so the school board wanted to add $200,000 to the insurance line item.
There's also the possibility that the school system's insurance rates will be raised, but if that happens it will take effect halfway through the fiscal year.
There's also a long list of capital outlay needs at the schools that wasn't covered in the working budget document. At a bare minimum, the school system will need to spend $60,000 to move four portable classrooms from one school to another.
New bleachers are needed at Eakin Elementary and Thomas Magnet schools, which would cost $107,000; the old ones are being removed due to input from the fire marshal. Cascade High School needs a new parking lot, for $55,000.
The maintenance department says it's badly in need of an additional employee, because it has had to devote an increasing number of man-hours to technology-related maintenance tasks.
The budget includes a 2.5 percent raise, determined by the state, for teachers and other certified employees. The state will pay for that raise -- but only for the official number of teachers the state funds for Bedford County. In practice, say school system officials, the county always needs to employ a few more teachers than are covered by the state's funding formula. The county has no choice but to cover the 2.5 percent raise for those employees.
And Butrum said that if teachers are getting a raise, classified employees (non-teacher employees such as cafeteria workers, bus drivers and maintenance workers) deserve some sort of increase as well. Butrum said the classified employees have had to do without several times in recent years, and the salary gap between certified and classified employees is getting larger.
"They're getting further and further behind," said Butrum. Some employees who work as a way of getting family insurance coverage are actually paying the county for the privilege, since their insurance premiums are larger than their income.
Butrum favored giving classified employees a 3 percent raise, but the school board instead wants to take the step of extending the schedule of longevity, or "step" raises, from 20 years to 21. This would cost much less, since it would really only affect employees with 20 years or more of employment.
There was no immediate figure for how much the step raise extension would cost. But adding $200,000 to the insurance line item, spending $60,000 on portables and $25,000 for a new maintenance employee, plus the $347,000 the working budget was already in the hole, leaves a $632,000 deficit that must be accounted for if the budget is to balance. If you add the bleachers and the parking lot, you've got a gap of nearly $800,000 that needs to be closed just to get the budget to zero out. School board members said that, to be fiscally responsible, the budget needs to have a little bit of cushion on top of that.
The budget must balance in order to be approved by the state.
Officials said that 85 percent of the school system budget is made up of salaries. Because of state funding formulas, labor agreements and required pupil-teacher ratios, there's not a whole lot the county can do to adjust personnel expenses. Butrum claimed the county is already the lowest-paying school system in the midstate, for classified or certified employees.
That leaves 15 percent of the school system's $53 million budget from which to make cuts. Butrum said he will scrutinize that $15 million before the school board's regular monthly meeting on Thursday night to see what can be cut.
If the gap can't be made up from cuts, the school system may need to ask the county government for an increase in the tax rate given to schools. Daniel said county commissioners are working to avoid tax increases for the budgets they manage, and the consensus Thursday was that the commission wouldn't be enthusiastic about a tax increase for the school budget either.
The school board directed Butrum to look for cuts, and also to prioritize what needs to be done from among the various capital outlay requests. The school board's monthly meeting will be held 7 p.m. Thursday in the library at Shelbyville Central High School.
There is a little bit of good news for the 2013-14 fiscal year. The 2012-13 budget will include the last $1 million in payments on money borrowed by the school system to finish completion of Community High School. That will free up that money for use elsewhere in the budget in the following year.
The bulk of the money borrowed for school building projects is handled through the county's debt service fund, not in the school budget. But costs for the Community High School project ran over projections, and so the school board had to borrow $4 million through its own budget to finish the project. The school system has been paying that money off for several years.