School district faces budget shortfall

Estimates for 2006-07 approach $3 million

By Stephanie Abbajay

Jersey Community Unit 100 School District officials are working on ways to curb a projected 2006-2007 budget shortfall that worst-case scenario estimates put at nearly $3 million.

John Copley, vice president of the school board, said that there is a deficit of $1.5 million this fiscal year but that the district can cover it. Copley said that the finance committee began working on the issue several weeks ago.

“As part of the board’s overall strategic planning, the finance committee met a few weeks ago and again last week in executive session to begin work on the projected deficit so we’re not socked in the teeth in July,” he said.

The fiscal year runs from July 1 to June 30. The budget shortfall affects the Education Fund, which is the largest of the school district’s operating funds, encompassing nearly 90 percent of spending.

“We have to move funds to balance the budget this fiscal year,” he said. “It’s deficit spending because our budget is higher than our revenue stream. We are not actually going to be in the red for the school year but we are using money that we have set aside to cover this deficit.”

Copley said the shortfall can be covered easily this year; the sale of the Grafton Elementary School property netted over $700,000 for the district (and that amount was deposited in the Education Fund already) and there is also a healthy balance in the district’s Working Cash fund, $600,000 of which will be transferred to the Education Fund. In addition, the proceeds from the auction at JCHS ($83,000) and interest on Working Cash funds ($44,450) will be transferred as well.

Tammy Steckel, the district’s financial officer, said that the district will not be in the red for at least another year.

“We will be able to cover it one more year,” she sai

. “But we are being proactive right now and looking down the road.”

Steckel said that the district actually began fiscal tightening some years ago.

“We started major cuts four years ago,” she said. “Since 2001-2002 we have decreased our teaching staff by 7 percent, teachers aides by 14 percent and administrative staff by 18 percent. We’ve cut back on supplies and materials. Since 2001 every single retirement or absence is looked at to try to determine whether we can get by without replacing that position. We’ve made major reductions in staffing. We are trying the best we can to keep costs down in the Education Fund without compromising our standards.”

The district’s deficit projections are daunting. If current trends continue:

•In the 2006-07 fiscal year, expenditures are expected to exceed revenues by $2,817,385; •In the 2007-08 fiscal year, expenditures may exceed revenues by $3,717,251;

•In the 2008-09 fiscal year expenditures may exceed revenues by $4,662,160.

Much of the district’s impending financial woes are a direct result of a precipitous decline in state and federal funding, neither of which can be replaced easily with increased local funding or budget cuts. To a large extent, the district’s hands are tied.

“We are not a company where we can just charge more for our product,” Steckel said. “Our biggest problem is that our revenue stream is dictated by someone else, the state. They decide the foundation levels for state aid. They say we will fund every school at x amount per kid and they then take our average daily attendance and they tell us how much they think it should cost to run our schools.”

As of January 2006, the average daily attendance in the district was 2,850, up from 2,807 in 2005. In January 2004 it was 2,836; in January 2003 it was 2,928; and in January 2002 it was 2,934.

Steckel said that countywide, the Equalized Assessed Value of taxpayers’ property has increased, which means the district can capture more dollars locally. However, an increase in the local EAV has the opposite effect for state funding.

“Our EAV continues to increase so the state actually contributes less,” she said. “And there a lot of tax programs that offset the EAV, like Homestead Exemptions. In addition, our average daily attendance has decreased, so they give us even less money. Our costs continue to go up but our revenue has decreased.”

Fifty-eight percent of the district’s funding comes from state aid, so a cut there has a significant impact on the district’s finances. Steckel said that in 1999, JCUSD received $8.5 million in aid. That number dropped to $7.8 million in 2002, to $7.3 million in 2003 and has remained at $7.6 million for 2004 and 2005.

As state and federal aid continues to stagnate or decrease, local taxpayers have taken on more of the burden. And taxpayers should be aware that paying for the new schools has nothing to do with the deficit in the Education Fund.

“Those are two completely different funds,” Steckel said. “Funding for the new schools has nothing to do with the funding to operate the schools from year to year. This deficit is in the Education Fund. The new schools are being paid for out of Health Life Safety bonds, which get paid back with local tax dollars. They are completely separate. One has nothing to do with the other.”

The situation is serious, but Steckel said there may be hope.

“The reality is our revenue sources are largely dependent upon other people and we have no control over it,” she said. “But this is all projected. If the state turned around and said, ‘We are going to fund schools the way they need to be funded’ we would be fine. But will that happen? I don’t know.”

School board president Sherri Droste also said JCUSD 100 is not alone in its financial shortfall.

“It’s not limited to our district,” she said. “It’s definitely a statewide problem. Like all schools, we have federal and state mandates that we must follow, but with no additional, or very limited, funding.”

Droste said the board has worked for years to cut spending, but that at a certain point, you just can’t cut anymore.

“We’ve known it was there for several years and we’ve been cutting back every year,” she said “My personal opinion is that we’ve cut back to as bare bones as possible. Over the past four years, we’ve managed to not cut any programs, but we’re at the point where we have to look at everything.”

Copley concurred.

“With the size of this deficit, everything, and I mean everything has to be on the table.”

Droste said Steckel presented the board with several financial scenarios to curb the deficit. And while details of those scenarios are not available to the public yet, Droste said the board would look closely at those and other possibilities.

“We haven’t come to any conclusions yet,” she said. “The board will evaluate the proposals we have, brainstorm and see how we can tweak them. We may come up with other scenarios, too. We have our work cut out for us. People need to be aware of what’s going on but they also need to now that this district has been fiscally responsible. We have not been financially frivolous.”

Droste said that she has been a member of the school board for 14 years and while she is not critical of past board actions, she does think, in hindsight, that a more aggressive tax policy may have helped the current situation.

“If we done some things earlier, like 10 years ago, to bring the tax rate up a little higher all along we wouldn’t be having quite as much difficulty now,” she said. “That’s absolutely the case.”