Dealing With Budget Cuts

Below is the information provided by the Oconee School District and the Rock Hill School District.

From the Lucas Blog

We found out earlier this year that we would have a 4% cut, but we just received the dollar amounts this week.

The funds that were cut by the state were in the Education Finance Act (EFA) funding source. This source funds the “Base Student Cost,” and districts receive an amount per student based on a local/state match (the “wealth” of the district impacts the percentage received from the state). State EFA funds are primarily from personal and corporate income taxes.

SDOC’s revenue shortfall from the state EFA funds is $1.1 million, but we expect it to increase when other accounts are identified by the state.

Our School Board has developed an extremely conservative budget this year and set aside funds ($700,000) for this purpose. In addition, we anticipated a possible 20% reduction in Education Improvement Act (EIA) funds (sales tax generated) of $1.2 million. The good news is that there have been no cuts in EIA funds because sales tax revenues are not down significantly.

Here’s the bottom line: Our district can absorb this initial cut, and we have a small amount in our operating budget for future cuts made by the state. Therefore, the district administration has not recommended that the Board consider any furloughs or school level cuts.

We can absorb these cuts because we have entered this year with an ultraconservative budget that made big cuts in district-level accounts for FY10. We can also absorb this cut because of the austerity measures that were put into place last year (e.g., no personal refrigerators, cutting school travel, …). The decisions adopted by our School Board last year kept our fund balance stable.

I wanted to let you know that the federal Stimulus funds have made a big difference for our district this year. We received three pots of federal funds from the Stimulus (American Reinvestment and Recovery Act): (1) Title I Stimulus (supporting all schools but Keowee Elementary), (2) IDEA (additional funds for special education and training), and (3) Stabilization Funds (paying for middle/high honors and advanced classes). The additional federal funds are paying for approximately 60 staff positions in the district.

Two-Year Financial Plan

Submitted

by

Lynn P. Moody, Ed.D.

Superintendent

October 2009

Two-Year Financial Plan

October 2009

Under the direction of the board, the administration has worked diligently to provide a financial plan for reducing expenditures over two years beginning in 2010-2011. This plan has been developed with the assumption that our revenue will remain the same and we will lose all federal stimulus funding. Below is an estimate of the difference:

$5.1 + $ 3.8 M = $4.4 M avg. pr. yr.	Stabilization – Stimulus
$2.3 M	Budgeted Shortfall from 2009-2010
$1 M	Teachers’ Step Increase for 2010-2011
$1 M	IDEA Salaries - Stimulus
$.1 M	Title I Salaries - Stimulus
$8.8 million	TOTAL

Our focus is on reducing expenditures, which is in our control. It is important to note, however, that increasing revenue is the best solution. Therefore, the board and the superintendent need to continue working with our legislative delegation to get the revenue funding changed for public education. We need more stable and reliable resources from the State. We need to encourage voters to elect politicians who stand firm on the importance of public education.

	In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity—it is a pre-requisite. The countries that out-teach us today will out-compete us tomorrow. -President Barack Obama

The Board of Trustees does have the authority to increase our local revenue by raising 6 mills each year. This assumes the growth plus the CPI Index formula according to Act 388 will continue to allow at least 6 mills. A 6-mill increase would yield approximately $1.3 M each year for a total of $2.6 M over two years. Therefore, we would need to reduce expenditures by $6.2 M instead of $8.8 M if the Board votes to exercise the maximum tax increase.

The Board of Trustees can also choose to use the General Fund Balance. There was approximately $19M in the fund balance at the end of the 2009 school year. The 2010 school year budget anticipates using approximately $2.5M to cover expenditures. An additional $1M will be needed to offset recent cuts. This leaves approximately $15.5M. Ideally, the general fund balance should be 15% of the total budget ($19.5M) but no lower than 10% ($13M). Therefore, $2.5M could be used to offset some shortages over the next two years.

Below is list of actions we have already taken for 2009-2010 as a reminder:

· Reduced 54 school-level positions

· Reduced 13 district office staff positions

· Frozen salaries for all employees except step increases for teachers

· Delayed hiring for critical positions

· Agreed to furlough teachers 2 days and administrators 4 days

· Eliminated overtime

· Reduced mileage, professional development, and dues by 50%

· Implemented new guidelines on restricted travel for students and employees

· Cut school and department budgets by 5%

· Eliminated some student academic interventions

The ultimate goal of this plan is to cut expenditures in areas that have less effect on classroom instruction. In conversation and brainstorming sessions about this plan, we referred to the critical elements of our “Rock Hill Climb.”

· Shared Vision and Beliefs are stated in the professional code and the staff is guided by the code. The district has a strong community ownership.

· Future Focus with the 21^st Century needs of the learner and effective, ethical use of technology in mind

· Nurturing environment for emotional, physical, and intellectual safety

· Quality Work Design and Delivery through collaboration, analyzing data, and providing interventions to address student needs

	Vision without resources is a hallucination. -Thomas Friedman

Everything on the following list affects instruction and hampers our ability to achieve our “Rock Hill Climb." Throughout our conversations and brainstorming sessions we continued to ask how this would affect instruction. Teachers and administrators provided input to the superintendent both corporately and individually. This plan synthesizes and summarizes many of those suggestions. It also assumes the flexibility options currently in place will be extended past this school year. As superintendent, I evaluated the cuts based on what I believe to be practical, fair, and realistic. Many hours of research have been put into this plan, and we are all still hopeful that it will never have to be “fully” operational.

Below is list of actions we should implement over the next two years:

· Replace critical positions in support and Operations by superintendent’s approval only. Do not replace non-critical positions when they come open. Transfer employees as much as possible to cover critical positions.

· Carefully review the status of staff employed by a letter of agreement.

· Require letter-of-agreement employees to insure with the SC Retirement System (health and dental) in 2010-2011.

· Do not replace K-12 teaching assistants’ positions when they come open. Transfer assistants as much as possible to cover mandated positions in Kindergarten and Special Education.

· Reduce 46 additional teaching positions through attrition (if possible) during the next two summers (27 elementary, 10 middle school, and 9 high school).

· Review elective offerings carefully and close low enrollment programs.

· Freeze salaries and supplements for all employees next year.

· Do not allow overtime. Emergency overtime must have the superintendent’s approval.

· Eliminate 6^th and 9^th grade transition day for the 2010-2011 school year.

The intent in developing this two-year financial plan is to give us a guide for future planning. It is only a tool for a specific point in time and is subject to change. For example, we received another 4% cut in EFA in September. We do not know if this will be restored. If not, it could require us to cut our expenditures another $1.5 to $1.9 M.

There are too many variables to determine this now, but this does give us some direction for where we are headed with these cuts. It also gives us the ability to use attrition as much as possible. Lastly, it goes without saying, but at some point the State of South Carolina must address the lack of adequate funding for public education.

Too often we are content to live off the investments previous generations made, and…we are failing to live up to our obligation to make the investments needed to make sure the U.S. remains competitive in the future. -Bill Gates