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Balancing act

TIFFIN– “We don’t have all of the data we need to tell you concrete things yet,” said Clear Creek Amana (CCA) Superintendent Dr. Paula Vincent, speaking to the district’s school board at their meeting on Wednesday, Feb. 18.
The agenda items were to be staffing projections for 2009-2010 and presentation of the 2009-2010 proposed budget. Recent changes and a host of variables instead made the presentation a preliminary one, as Vincent sought guidance from the board in preparation for an upcoming budget work session.
The district must have its budget certified by Wednesday, April 15.
“In general, we’ve lost 1.5 percent of this year’s budget. That is going to be permanent, so we will lose 1.5 percent from next year’s budget,” Vincent said. The State of Iowa has now recommended additional cuts, she added, taking away a promised 4 percent funding level.
Vincent gave the board a deeper look at the budgetary situation stating the district had been “on a nice path” to reduce property taxes. “Then came the economic downturn,” said Vincent.
“If we take our budget as it is, I don’t believe we can run a similar budget next year absent cutting back in some areas, she said. “The money just isn’t in there, unless you want to raise property taxes.” Vincent noted she did not know the board’s “comfort level” for raising property taxes and asked them “is there a target range property tax ought to be in?” Vincent further explained it appears the State is moving in such a way, leaving property taxes as the sole option for raising additional funds.
“You have a healthy cash balance,” Vincent reminded the board. “We’re sitting on about 1.2 million. However, given the recession of this year and opening the new elementary, I expect to end the year with about a million dollars in the savings account.
“That could still fluctuate. If fuel prices would change, there are just things at this point we don’t know. To make payroll without having to borrow money, our comfort level would be about $800,000.” She reminded the board the State doesn’t pay the school until October, leaving the school on its own for September paychecks.
Vincent told the board they would have “about $200,000” to work with “without changing your property tax rate.”
Board president Dan Schaapveld reminded everybody of the new high school’s anticipated opening next year.
Vincent estimated energy costs for the new facility at around $300,000. “That’s got to be added into the budget,” she said. “We knew that, and we saved money and were prepared for it. Then the ‘perfect storm of economics’ hit, and revenues that we had been promised won’t be there, because the State doesn’t have it.”
Vincent added there is speculation in Des Moines that a 6.5 percent cut mentioned by Gov. Chet Culver could come to fruition if budget projections do not greatly improve.
Vincent expected to bring a budget back to the board in March and offered the possibility of a special meeting in April before the certification date, if necessary, to get the budget finalized.
Attention then turned to property taxes and the possibility of having to raise them to meet budgetary shortfalls.
Board member Kevin Kinney made his feelings known.
“They (the CCA community) supported us in building the schools, and then we go back to them immediately. I was hoping to be able at some point to do property tax relief. And now, we’re going to raise their taxes? I have a hard time with that.”
Vincent emphasized she only wanted to assess whether the board’s position on property taxes. Knowing what the board will or will not go for, she said, would enable her to know the parameters she had to work within related to budget projections. It also would allow her to adjust staffing levels if necessary.
“It’s just one of those times where that 4 percent that was promised, they can’t fund it,” Vincent said.
Board member Betsy Momany asked Vincent if she could provide potential staffing scenarios if they dipped into the cash reserve “so we can make an informed choice whether we think the tax burden is worth the staffing level.
“I’d rather not raise taxes if we aren’t with our backs against the wall,” Momany remarked.
Board member Tim Hennes agreed it should be “a last resort.”
Vincent made it clear there would be no easy choices.
“If you’re saying we should hold taxes, then I will come back to you and say I believe we need to trim a half-million dollars from our budget,” noting that 80 percent of the district’s budget is made up of salaries. “You can’t cut a half a million without affecting some staff.”
Though Vincent suggested there were ways to cut operational expenses, she added, “one major operational expense we can’t control is transportation.” Vincent said they felt they could reduce one bus route for some savings.
Hennes asked why SILO (now SAVE) money couldn’t be used for transportation costs. Vincent replied SILO money currently can purchase buses, but cannot be used to run them, though Vincent said the state legislature may consider allowing such use. She also reminded the board SILO money is only for infrastructure expenses, and also cannot be used for salaries.
The board discussed what a “comfortable” percentage of the budget the cash reserve could be, acknowledging it has been between 6 and 10 percent in the past. Kinney stated the board may have to accept lowering the percentage of cash reserve to 7 percent in an effort to use the reserve for salaries and avoid raising property taxes.
Hennes asked again about the possibility of legislation freeing up SILO money for salaries or utilities. Vincent responded by saying they meet monthly with the local legislators, who acknowledge the schools have no money, and suggest “flexibility,” or in other words, looking at property taxes.
“I would be surprised if they do that (amend SILO funds to cover other expenses) because we’ve had people vote on it, we’ve had the revenue purpose statement, I don’t think they’ll go there,” Vincent said.
Hennes asked if property taxes were raised could the district then provide tax relief through the SILO funds, as stated on the Revenue Purpose Statement.
“That would certainly be an option,” Vincent said, adding the district could dip into its cash reserves, taking it down to around $200,000 with a $300,000 reduction in expenditures.
“But if we raise property taxes to accommodate that $300,000, and then use our SILO money to provide property tax relief,” Hennes conjectured, “it would be a creative way.”
Vincent reiterated she still lacked information crucial to making budgetary decisions, including enrollment trends for students and the state’s decision on school funding.
“I don’t know when we will actually get our allowable growth for fiscal year 2010,” she said. “That was set a year ago, now they’re saying that’s not going to hold. Instead of the almost $500,000 of increased revenue, we’re probably looking at $100,000. That’s a pretty big swing.” Vincent offered to return to the board with a variety of budget scenarios, including different property tax options and options for trimming the budget so they could see the impact on programs.