Budget shortfalls anticipated by Kokomo-Center School Corp.

danielle.rush@kokomotribune.com

Kokomo-Center School Corp. officials estimate they will lose about $855,000 in revenue for the 2010 budget because of the way the state now funds schools.

Eric Rody, director of business affairs, gave school board members and administrators an overview of the budget during a work session this week. Rody cautioned that because some numbers built into the funding formula are unknown, such as the assessed valuation, enrollment and special education enrollment, he is advertising a higher number than what he expects to get.

He said the state foundational funding, which provides the same amount of money per student statewide, means schools with little or no growth, or schools with declining student numbers will receive less money, even though costs to run schools continue to increase.

He said in past years, schools had a minimum guarantee of increased funding, but that no longer exists since the state started funding the general fund with sales tax, rather than property tax money.

Superintendent Christopher Himsel said he and other school officials started making cuts in March, and have made $1.25 million in cuts already. That still leaves the $855,000 shortfall, Rody said.

Some of those cuts included closing the Memorial Gym pool, reducing administrative staff, offering summer school only in the high school, and paying about six teachers and two administrators from stimulus funding. Rody said the district will also have to dip into its cash reserves to pay expenses this year, "as we have not been able to reduce expenses at the same pace that the state has reduced revenue."

The corporation also saved some operational costs by closing Columbian School as part of the reorganization and consolidation, and are in the process of closing the Lincoln building by moving the special education cooperative offices to Central Middle School.

Rody said the new funding formula places a stronger emphasis on enrollment, based on the average daily membership number taken in mid-September. That number assumes it costs the same amount to educate a child anywhere in Indiana, whether he or she is in Gary, Indianapolis, Carmel or Kokomo. Based on the estimated student population, he said, Kokomo-Center Schools will lose nearly $500,000. Reduced interest rates on interest-bearing accounts mean a loss of about $200,000 more, and the state also did not fund an appeal approved for additional money for utilities after the expansion of the Kokomo Area Career Center and Kokomo High School.

Rody said the school corporation could lose even more money when the average daily membership number is taken in September and the special education count is taken in December. The full revenue loss won't be known until possibly the end of 2009, he said.

"All of these things happening to us are all signs of the economy," he said.

Kokomo does get a slight boost from a formula called the complexity index, Rody said, which factors in the percentage of free and reduced lunch students and other factors, but that does not offset the loss based on decreased enrollment.

Rody said the capital projects fund includes money for updates to Central Middle School and Lafayette Park School, among others, to prepare for the consolidation and reorganization. No money is being allocated for Columbian School, which closed, and only $5,000 is allocated for Lincoln School, which is in the process of closing. Himsel said very little money is being put into the administrative service center, slated to close as part of the consolidation. He said the only money being spent on that building is for health and safety.

Rody said in the transportation operating fund, he plans to trade in six buses and buy eight, to prepare for a two-tiered busing system instead of three-tiered, which is part of reorganization. He said the corporation will buy two additional buses in 2011 as well. The $2.7 million proposed budget also includes setting aside money to replace the Wildkat bus, which "is costing us an arm and a leg in repairs."

Himsel said he will only support replacing the coach if it is available to all student groups, not just athletes, though board member Harold Canady said it will not last as long if it is used more. Board member Karen Sosbe suggested having fundraisers to replace the coach, rather than using tax dollars.

Himsel said when buying buses, school officials will look for the most fuel-efficient buses possible, but they also must be reliable.

Both Himsel and Rody expressed frustration with the foundation formula for school funding, and Himsel said he will continue to lobby for changes and for legislators to understand "there is a certain amount required to open the doors." He said the formula assumes if 80 students leave the corporation, reductions can be made immediately to offset costs. However, if 80 students leave, they won't all come from one grade or school, making it hard to reduce by a teacher. He said so far, Kokomo-Center has been able to reduce costs through retirements and resignations, with each open position evaluated to see if it must be filled. He said he will continue to try to reduce costs without having to lay off teachers and other staff.

Board president Joe Dunbar said in the past, the corporation has been able to have a cash balance of about 9 percent, which helps with cash flow if the state is late with or misses a payment. Rody said in 2008, the corporation ended with a 7 percent cash balance, and he's estimating having about a 4.5 percent cash balance at the end of 2010.

Rody said he does not think foundational funding will be able to continue.

"It's going to have too much of a direct effect on kids. We can't stay the course with foundational funding," he said, adding that school officials must educate legislators on how it is impacting schools and hurting teachers and students.

"That is probably the best, most powerful tool we have," he said.

The board will host a budget hearing at 6 p.m. Sept. 16, and vote on approval of the 2010 budget Oct. 5.