By TARA HETTINGER, New Albany Tribune
Tara.Hettinger@newsandtribune.com
In the superintendent's office, New Albany-Floyd County Consolidated School Corp. administrators gathered to discuss what Deputy Superintendent Brad Snyder says is his worst nightmare that has come true.
The state's financial predictions involving how much income would be attained through increased sales tax were high and now NA-FC has to cut $6.6 million in the general fund, which pays mostly for salaries, this year to balance revenues with expenditures.
That's not it.
Snyder says that new funding level is the new norm, meaning that schools will receive the same amount next year, so permanent changes need to occur to balance the budget.
"Our understanding, the way it was formed, we would be having a cut for 2010 and then it kind of grew into that cut is for 2010 and 2011. Then it kind of grew into this is not a temporary cut, this is a permanent cut. We are reducing the funding level, going back to 2006-2007 funding levels," Snyder said of the state's changes.
Snyder said NA-FC averages a 2.5 percent annual funding increase from the state, which going to zero percent means a loss of $1.8 million for each of the next two years. He said a 4.557 percent decrease in addition to that means another $3.2 million for each of the next two years.
That's not all the cuts.
Hundreds of thousands will also be cut for adult education, professional development and summer school at NA-FC, he added.
Just before New Year's Day the Indiana Department of Education announced that the cuts to schools would be 3 percent.
"Any district can find 2 or 3 percent savings without reducing teaching staff," Indiana Superintendent of Public Instruction Tony Bennett said in the earlier press release. "If everyone, including teachers themselves, will pitch in, we'll get through this recession just fine." However, the Indiana Association of Public Schools Superintendents as well as NA-FC administrators disagree.
"The issue here is that school corporations built their 2010 general fund budgets based on the actions of the 2009 General Assembly," said John Ellis, executive director of IAPSS via e-mail sent to various superintendents. "These budgets were approved last fall with the assumption that state monies approved last June would flow to school corporations. The state's fiscal crisis has changed the environment, but not the assumptions that were used last year to develop the 2010 expenditure plan including staffing decisions. In reality, the school corporation general fund budgets for 2010 will need to be reduced by the $298-plus million or 4.557 percent."
WHY THIS HAPPENED
Director of Business Fred McWhorter said in 2008, a third of the general fund was paid for via property taxes and the rest came from the state. Then, the state took over property taxes, funding the entire general fund. Now, funding is based on sales tax, income tax and gambling revenues, which are unreliable sources, he added.
"We are living proof that it didn't come out in the wash," Snyder said, saying that people claimed both ways would mean the same amount of money for schools.
"If you ask people about their property taxes, they went down a little bit, but not a lot, but a lot was taken away from the funding formula for schools," McWhorter said.
"It's just not working like they said it was going to work," Snyder added.
WHAT THIS MEANS
All the changes mean cutting $6.6 million by the end of this school year, McWhorter said.
Snyder said that means $442 less per student in the district of 11,305, when considering the initial zero percent reduction combined with the additional 4.5 percent cut.
"We won't re-coup this money. We have no local control to raise taxes, except through local referendum," Snyder said, adding that it's unlikely voters will pass a tax increase in a down economy.
FINDING THE MONEY
That means cuts will have to be made. The Indiana Department of Education had released a "Citizens' Checklist," for people to make sure school districts are doing everything, before cutting teachers. The list includes freezing salaries, reducing administration pay, suspending matching retirement contributions, closing underutilized buildings and more.
McWhorter said the list had yet to be provided to him, but said that every option is on the table. When asked if closing a school was an option, he reiterated that every option will be reviewed.
However, the final decisions won't be made soon. Superintendent Bruce Hibbard said it will take some time to fully look into all the possibilities.
"We're positioned better than some," Snyder said. "We do have a $4 million cash balance that will help this thunderstorm, this monsoon, that we're in. But, you need $6.6 million and we only have $4 [million]."
"If we don't get at least $2.6 million in cuts, that will clear out the whole $4 million," McWhorter said, adding that permanent cuts will have to be made to match expenditures with the lower revenues in the future. "At some point in time, we need to reach the $6.6 million, because otherwise you'll eat up your cash balance until it's zero."
Snyder said he thinks it will take two to three years to get the budget balanced to that new level.
"To cut $6.6 million in a very short period of time is chaotic," he said.
"If we do nothing, we'll be in the hole $2.6 million, which is not an option. We have to do something," McWhorter said.
Snyder said where those cuts will be made will be known in March or April.
"We do know it's going to be deep," said Dave Rarick, director of communications for the district.
McWhorter said 91 percent of the general fund pays for salaries and benefits of all employees, excluding computer techs, bus and cafeteria workers.
He said the rainy day fund, which is at $2.25 million, may have to be tapped into to help get the district through this year.
"It's one time money," he said, adding that would leave him in 2011 still needing to make the same amount of cuts.
Things may not get better either.
McWhorter is expecting more cuts from the state come 2012, meaning the district will have to find more ways to save.
"We're assuming the worst at this point until we hear better," he said.
Superintendent Bruce Hibbard said that three administrators have accepted a retirement incentive and that he's still working on developing a retirement incentive for teachers.
"When it comes to 91 percent, we will have reductions within the staff," he said. "Our goal is to make expenditure reductions as far away from the children at New Albany-Floyd County schools as possible. That means we really don't want to impact our teaching force."
However, when asked if teacher layoffs are inevitable, McWhorter, Snyder and Hibbard all nodded in agreement.
"A lot of it depends on if the economy turns around and 2012 income from the state," McWhorter said.