Panel told $2.6 million must be cut from Mehlville's '05 budget
At least $2.6 million of the Mehlville School District's operating budget for fiscal 2005 must be cut to keep end-of-the-year balances above dangerous levels, Randy Charles, the district's assistant superintendent of finance, recently told members of the Budget Development Committee.
Comprised of district administrators, staff and faculty members, parents and members of the public, the Budget Development Committee met for the first time last week, charged with preparing a budget for the 2004-2005 school year.
After reviewing an overview of the state's and district's current financial situation, much of the committee's discussion focused on potential staff reductions.
Facing reduced state aid, increases in insurance and retirement costs and an unknown state budget, Charles told the committee, "We've got a lot of work to do."
Mike Levine, a Proposition P Oversight Committee member who also is serving on the budget committee, wanted to know how administrators came up with $2.6 million as the amount of money that needs to be cut from fiscal 2005's budget.
Cutting that amount of money would enable the district's end-of-the-year balance to exceed 3 percent, the amount that would land the district on the state's financially distressed list, Charles said.
However, the budget committee's activities and discussions will not focus on the $2.6 million that needs to be cut, Charles explained during the committee's March 16 meeting.
"Our approach will be a little different," he said. "We won't focus on the $2.6 million. What we'll focus on is the entire budget. We'll first go over revenue and our revenue projections — how much we think we're going to get in terms of taxes from the state."
"... So we'll actually start building the budget (for) next year and as we build the revenue side and expenditure side ... and then we can see that this is our budget and here's what we predict our end-of-the-year balance will be, and the first time we go through it, it might be 1 (percent). And we'll go back, OK, and either have to justify revenue increases or we have to justify spending reductions until we get that end-of-the-year balance up to where we want it ...,'' Charles added.
District administrators already have found about $645,000 in reductions that can be made to the current fiscal year's budget that will keep end-of-the-year balances at 4 percent.
Because those cuts were not implemented until more than halfway into fiscal 2004, administrators believe those cuts, once carried over to fiscal 2005, will yield at least $1 million in savings for the district.
However, an additional $2.6 million still will need to be cut from next year's budget — bringing the total amount of cuts needed for both fiscal 2004 and fiscal 2005 to $4.2 million, according to Charles.
"People will ask us about these cuts, are they going to affect kids?" Charles said.
"And the answer is yes. The cuts will affect kids. Because it is ludicrous, I think, for anybody to think that these cuts wouldn't affect kids. To say that means that if we've cut something that wouldn't affect kids, then why were we doing it?"
Many of those cuts will have to come from the largest part of Mehlville's budget — salaries and benefits, Charles said, noting they comprise about 80 percent of the operating budget.
"When we start looking at significant reductions for next year's budget, we cannot avoid looking at staffing positions."
One committee member questioned how reductions to staffing would affect the numbers of students in the classroom.
"My worry is, will the student-teacher ratio increase?" Dennis Mall, a Mehlville parent and retired educator, asked A.D. McClain, the district's assistant superintendent of human resources.
McClain answered the district will continue to adhere to Missouri School Improvement Program standards and minimums, but the student-teacher ratio should not change.
That's a challenge building administrators currently are facing because they are the ones who directly monitor class sizes, McClain added,
"If we find places where we are right at the minimum, you won't want to look there and make cuts," Charles said. "But if you find some place that you are quite a bit above the minimum — that's something we have to talk about.
A staffing plan quickly is being formulated, according to administrators, and will be submitted to Board of Education members March 30 for approval to meet certain deadlines.
By April 15, all teacher contracts have to be finalized. Any non-renewal notices also must be given to teachers by April 15 or they automatically will be re-hired.
Mehlville has to plan for the "worst-case scenario" and plan accordingly, McClain said.
But Charles added that administrative cuts, ideally, would result through the natural loss of employees each year vs. cutting non-tenured personnel wishing to remain with the district.
"The intention is this year is that we have to lose some positions, (but) we can handle that through attrition," Charles told committee members, noting that a number of employees will be leaving the district voluntarily at the end of the year because of retirement, relocation and other factors.
The district last year issued 30 non-renewals to employees, McClain said.
Through attrition, however, McClain said he hired 65 to 75 teachers last spring and summer to make up for some of those non-renewals and retirements announced later in the year.
Employees also take positions elsewhere or move away from the district for a variety of reasons, he said.
The district has to be careful, Charles said, because it can always re-hire employees who have received non-renewal notices later in the year.
But if the district does not issue non-renewal notices, he said, too many employees would be hired back automatically.
"It's a very emotional issue for all the people involved," Charles said.
Another committee member said he realized the district's situation is "grueling" and wanted to know how far the district would take the cuts.
"With all the money that you've got to cut, are we looking at a freeze?" asked Brett Saunier, a math teacher at Mehlville Senior High School.
McClain responded, "That's not on the table at this point."
"I'm not looking to negotiate, I'm just asking," Saunier added. "That's what a lot of teachers are fearful of."
Mall suggested offering retirement incentives to help speed along the process of higher-paid employees leaving the system.
McClain said the district doesn't have enough money to offer incentives for retirement.
Charles added, "If you have an extremely short-term cash-flow problem, it's a viable option. But if you can get through that short-term problem any other way ... Because a retirement incentive program, in the long run, costs money.
"All these people are going to retire anyway. Eventually they're going to retire and all we'll be doing is giving them money as they walk out the door,'' the assistant superintendent added.
Budget Development Committee members agreed to meet again at 6 p.m. Monday, March 29, in the boardroom of the Administration Building, 3120 Lemay Ferry Road.
Charles estimated that the Budget Development Committee would need to meet four to seven times over the next two months to submit a budget recommendation to Board of Education members when they meet Tuesday, May 11.