Lindbergh to consider final OK of 2004-2005 budget on June 8
Lindbergh Board of Education members recently gave tentative approval to district administrators to complete development of a "balanced'' budget for the 2004-2005 school year.
The preliminary budget projects expenditures of roughly $43.5 million with total revenues of nearly $43.5 million, including $2 million in district reserve funds. The Board of Education will consider final approval of the 2004-2005 budget at 7:30 p.m. Tuesday, June 8, in the boardroom of the Administration Building, 4900 S. Lindbergh Blvd.
During a roughly 3.5-hour workshop session last week, board members heard a budget presentation from Pat Lanane, assistant superintendent for finance and the district's chief financial officer, and reviewed budget reduction proposals totaling $655,711. The board accepted $626,274 of those proposed reductions for final consideration.
Among the budget reductions school board members agreed to consider were changing the textbook replacement cycle to six years from five years, reducing the technology budget by $44,000 and cutting the activities budget by $20,000.
Despite the budget reductions board members agreed to consider, Lanane told the Call Friday, "We still have more work to do.''
Administrators will develop a revised budget proposal for the board to consider in June that will include about $100,000 in additional reductions — bringing the total projected reductions to roughly $725,000.
For the current school year, the board had approved $1.9 million in budget reductions.
During the May 18 workshop session, Lanane told board members, "... I can tell you this budget required the most effort of any that I've done in the past 11 years — all kinds of reasons for that ... But it simply was a very intensive process this year beginning back in January. We completed a zero-based budget approach and we've not done that before truly in the sense that we did this year.
"We identified every major program that we had and then we established operating principles ...,'' he continued, noting that the budgets of every major program were reviewed during a budget workshop earlier this year. "We looked at areas for potential savings ... The board at that meeting gave us direction on each of those items. Some of those items really were not open to review at this point in time because of the status of the program. We wished to keep it where it was.
"Other items were put on the table for possible review ... Not all of them ended up in reductions, but I can assure you they were all looked at very carefully for potential reductions — and some are still out there. Looking ahead to next year, there may be another level we have to go to. Some of those will be brought back at that time. Others may actually unfold as the budget year unfolds itself. There may be opportunities for some of those items where there's really not an opportunity right now ...,'' he added.
All of the recommendations being submitted originated from that budget workshop, Lanane noted.
"There's two main principles also that we have put into place for tonight. We looked at all the non-required programs very carefully and we very much want to maintain a status for those programs of self-sustaining or breaking even,'' he continued. "So if it's a non-required program, to whatever extent, as much extent as we can, we tried to make those self-sustaining or break even so they're not really a drain on the budget.
"The other one (principle) is to maximize what revenues were out there — at least to bring forward ideas. We're going to bring forward a lot of ideas tonight. It now becomes the board's decision to go forward or not and sometimes we pushed it a little bit to try to get ideas, to try to live up to this principle of maximizing revenue before we present cuts. We felt like it's important to make sure we got all those dollars on the table before we start taking away dollars from programs,'' Lanane said. "And then the third principle that we've been following — and we will absolutely be able to do this for you — is in June when this final budget comes back, it will be a balanced budget and we will not exceed the board's parameter on reserve use ($2 million).''
Earlier this year, Lanane noted, administrators had asked the board to make a decision on the voluntary rollback, which currently totals 17.34 cents.
"And the decision and the assumption that we've used for tonight is to use all of that rollback in our plans for next year,'' he said. "And then the other decision that we asked you to give us had to do with the reserve use for this coming year and a maximum was set at $2 million, and we have included that in our planning process for tonight.''
"... If we do everything we're talking about in this budget book, if everything happened in there, all of the revenues, all of the expenditures, this is where we would end up,'' Lanane said, pointing to an overhead projection that showed a balanced budget.
"Our revenues for this next coming year, fiscal year 2005, taking all of the voluntary rollback, using all the revenue requests — and again, I'm not assuming we'll do that as a final decision, but if we were to take all those, we're at $41,455,782. We then look at our expenditures and within those expenditures we have the adjustments that we had to make and we had the new requests and we end up at $43,501,018,'' the assistant superintendent said. "We then apply the $2 million that we talked about in reserves and right now — and it's actually going to change just a little bit as we get into this — but basically for where we are right now, we're within $45,000 of completely balancing our revenues and our expenditures.
"I would also add immediately, this is absolutely a worst-case scenario and, in fact, we're much better off than this because as you all know every year ... we always get a little more revenue than we usually predict and we always spend less than we're authorized to spend — and usually by several hundred thousand dollars. So when I look at $45,000 or this number becomes even more than that, I'm very confident that as we sit here right now, we are well within range of a balanced budget,'' he added.
The Board of Education last June approved a 2003-2004 budget that projected operating expenditures totaling $42,347,817 with anticipated revenue of $39,946,304 — a deficit of $2,401,513 to be funded through reserves and a reduction in the district's voluntary rollback, which then totaled 27.4 cents.
In February, the school board adopted a revised 2003-2004 budget that projected operating expenditures totaling $45,275,457 with anticipated revenue of $43,522,801 — a deficit of $1,752,656. At that time, a balance of $21,014,657 was projected to remain in reserve.
But Lanane told board members last week that an unrestricted reserve fund balance of $21,998,765 now is projected at the end of the current school year.
After using $2 million to help balance the 2004-2005 school year budget, a reserve fund balance of $19,998,765 is projected on June 30, 2005, according to Lanane.
Saying he wanted to point out "some very good news,'' Lanane said, "As you look at the '03-'04 number in terms of expenditures over revenues for that year, we are much better than we thought we might be originally, primarily because we had a one-time revenue from an insurance source of about a million dollars that helped us tremendously.
"That has the effect of kind of pushing our reserves out another year further than we might have otherwise been doing. So we're very pleased that that happened. The good news is it was a one-time revenue that helped a lot. The bad news is it's a one-time revenue. And so now this year, we have that whole million dollars to take out of the equation because we're not getting that revenue again ...,'' Lanane added.
The assistant superintendent also told the board that he is assuming the district's operating tax rate for the 2004-2005 school year will be $2.75.
"... The other main assumption that I want you to look at is the assumption is going out for next year is a $2.75 tax rate. And that assumes, as we came away with on Feb. 24, that assumes the voluntary rollback is utilized and it assumes we will have a minimum legal tax rate of $2.75. That is, by regulation, the minimum tax rate for school districts. The kind of negative news with the budget is, looking at exactly where we are now, we would need $2,045,000 of reserves to balance as we sit here tonight. Again, this is a worst-case scenario. I think it will be less than that because it assumes we're going to spend at 100 percent. (The) 11 years I've been here, we've never done that and I surely hope in a year where finances are tight that we wouldn't try to do that,'' Lanane said.
"I've also provided you with the information regarding in terms of what tax levy it would take now to bring that gap back to zero. It would be predicted to be for the end of '04-'05 20 cents ...,'' he added.
While the projected expenditures are very close to balancing with the anticipated revenues, Lanane said he is concerned about the amount of protested and delinquent taxes.
The amount of protested taxes this year is "... (a) huge amount, way more than we've ever had in protested taxes, primarily because of the shopping center (Westfield Shoppingtown Crestwood) protesting their taxes. And now we have the non-collected, I don't know if it's fair to call it delinquent yet — in my mind it's delinquent — when you look at that number, the protested added to the non-collected, it's twice what it was a year ago,'' Lanane said. "It went from about $1 million to $2 million. Now I'm pretty sure I'll get the protested. The question on the (protested taxes) is will you hang onto it? Someone will hear this protest, (it will) go to the state tax commission, probably, and we're willing to do whatever we can to hang onto that money ...''