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School district looks at loss of funding

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KC MacDonald is recognized by VFW as Teacher of the Year, which may not protect him from budget cuts. KC MacDonald is recognized by VFW as Teacher of the Year, which may not protect him from budget cuts.

Will staff feel the pinch of budget cuts this year? Or will they get a pass?

“We weren’t fat to begin with,” said Superintendent Dick Cvitanich, trying to explain the situation facing the Lake Pend Oreille School District’s board of trustees and administration staff in the upcoming months as they struggle to set a budget for the next school year with less money than they had in this one. Maybe a lot less.

Idaho’s legislature thought workers would earn more money last year, but they didn’t. The lege thought folks in Idaho would buy more stuff, and thus pay more sales tax, but that didn’t happen either.  And that means their budget for this fiscal year (2010) is running about $69 million short; what they thought would be coming in for the following fiscal year, which begins July 1, was also over-confident, to the tune of about $59 million. Now, public education, which eats up over half their yearly budget, is sitting right smack dab in the middle of the path of this windstorm of plans on how to spend less money. You gotta wonder how many legislators are looking back on those heady days of 2007, when excess money in the bank account led them to enact property tax reform, and therefore take upon themselves the burden of funding the bulk of public education.

For only the second time ever, the Joint Finance and Appropriations committee is having to cut the actual amount of dollars they’re sending to local school districts, with current proposals suggesting an overall cut of 7.5 percent. Last year, the federal government stepped in with an umbrella known as stimulus funding, which kept Idaho’s public schools from experiencing an actual cut in funding. This year that’s not the case. “Last year, we covered,” explained Maxine Bell, a Republican from Jerome and the co-chair of JFAC. “We’re out of cover.”

The recommendation accepted March 3 eliminates salary increases based on experience and education for this year, plus cuts instructional and classified salaries by 4.1 percent, with a 6.5 percent cut to salaries paid to administrators. It applies a ten percent cut in transportation reimbursement, dropping it to a 50 percent reimbursement of expenditures, and eliminates all reimbursement for field trips. It eliminates the early retirement incentive and allows for districts to have discretionary use over several different fund amounts, though it restricts those dollars from being used for salaries; and provides for an overall cut in general fund funding to public schools of around 8.5 percent, which is offset around one percent by federal stimulus funding.

That’s the easy part. Now our local district will have to look at how to apply those cuts in a budget that doesn’t offer much discretion.

Take those salary cuts, for example. The legislature is quite clear that it’s time for teachers, principals and school custodians to feel the pinch being felt elsewhere throughout the state, at least as far as seeing fewer dollars in their paychecks. But staff work under a negotiated, union contract that local districts are not simply free to set aside. Especially the Lake Pend Oreille district, whose conservative financial planning has left them with a reserve—a rainy day fund, so to speak—in excess of five percent of their budget. That reserve makes them ineligible to declare a financial emergency last year, a requirement to set aside contracted agreements regarding pay.

“The language is written in a way that can put districts in possible legal jeopardy,” explained district business manager Lisa Hals. In layman’s terms, it puts them in a place where they can’t win for losing—they can’t cut salaries, but might not have the actual cash money to pay them, either; at least, not pay them and keep the heat on in schools.

The legislature responded by declaring a financial emergency on behalf of all school districts in the state of Idaho, thus opening the door to renegotiating contracts.

With Lake Pend Oreille as an example, most dollars not fully restricted under federal and state regulations reside in their $24 million general fund budget. And about 83 percent—almost 20.5 million—of those dollars are used to pay salaries and related benefits, including things like worker’s compensation and unemployment insurance. Within those dollars, the district pays an additional $1.875 [Ed. note: it's actually $3 million] million toward salaries over and above what’s provided by the state.

Benefits for salaried workers include fully funded health, dental and vision insurance for all workers who work more than 20 hours in a week. There are also other benefits; for example, $75,000 is paid out to reimburse teachers for classes they take as part of their continuing education requirement.

The remainder of the general fund monies puts gasoline in the buses, electricity in the buildings, and paper on the desks, among other things.

The money coming from the state, however, takes away about $1.9 million, on top of $640,000 the district knows it will lose based on a decrease in enrollment from previous years. (A further complication has to do with a provision called ADA protection, whereby a district is guaranteed not to lose more than one percent of its previous year’s funding due to lower average daily attendance. If that were also to go away this year, the district would face an additional $825,000 loss.)

If salaries and benefits are held harmless, the pinch is going to be tight indeed.

To the outsider, items that look like “easy calls” for cutting are not as simple as they appear. Take athletic funding, as an example, an item some have already suggested should be eliminated given the budget constraints.

But athletic funding isn’t paid out of the general fund. Those amounts are paid for with monies generated from the supplemental levy voters supported last year.

Not that athletics is guaranteed to continue without changes next year; the levy line item that funds them was called “school classroom improvement funding,” and those dollars may well have to go to plowing snow and paying the heat bill next year instead of paying coaches and buying footballs and soccer nets.

That kind of decision, however, will leave the board in the unenviable place of trying to explain to voters why what they thought they had already paid for is disappearing. But as board chair Vickie Pfeifer explained in a meeting at Kootenai Elementary in February, “Everything has to be on the table to some extent,” and as Supt. Cvitanich remarked, the issue as far as athletics goes might well be moot. “Other districts aren’t doing as well as we are financially,” he explained. “Frankly, there might not be teams to play at the B and C level.”

That supplemental levy, in fact, is a major saving grace to the financial situation facing the school in the coming year. Around $1.9 million was allocated to school classroom funding support, while a little over $9 million was slated for staffing, over a two-year period starting July 1, 2009 and ending June 30, 2011, with the greatest percentage of those dollars to come in next fiscal year. What was intended to save wanted programs, such as technology and upper quartile programs, may now stand in as an emergency slush fund to keep the schools functioning, although on a much lower level than anticipated.

The board may also choose to spend the dollars allocated to staffing in the levy to nullify pay decreases from the state, though if they do layoffs will be certain.

“The tough part is we’ve really built a high-quality program district-wide that is now, at some level, in jeopardy,” said Cvitanich.

And there’s not much they can do about it either, except try to make the cuts in areas where recovery, if recovery comes, will be easiest to achieve. With one supplemental levy on the books, they cannot go back to the voters and ask for another. The state has nothing further to give. And the national government, at least so far, is not ready to step in with additional dollars to fill the gap.

The “rainy day” long anticipated has finally arrived, and storm warnings are ahead. Right now, district employees and board trustees are gearing up to put on their waders and jump in to their local budget, looking for a way to keep their heads above water while meeting all their required obligations.

-Trish Gannon

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Landon Otis

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Lake Pend Oreille School District, levy, eduation, funding, salaries

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