DISTRICT FACES CHOICES ON ITS FINANCES

The recent financial situation of the Cape Girardeau School District is reason for pause -- not panic. The district is not going bankrupt. There are no plans to fire staff or ask the voters for more tax money.

But the school district will have to tighten its belt to reverse the recent trend of budgets that spend more than the district takes in. Several years of deficit spending have eaten into once-ample balances.

For the first time in its history, the district has secured a revenue anticipation note -- a short-term loan -- to cover payroll and other checks until a sizable tax payment arrives in late January.

The procedure is not uncommon for many schools. But this first-time use does represent a call to arms to refocus district attention on building balances.

Current fund balances of $1.1 million represent about 7.5 percent of the operating budget. That's well above the state minimum mandate of 3 percent but below the district's target of 10 percent balances. The need for the larger balances is simple: cash flow. Since the bulk of the district's money is tied up in salaries, the district must have enough money on hand to cover at least a month of payroll. While the state sends its payments to the district each month, local dollars mostly come early in the calendar year when taxes are collected. The district operates on a fiscal year that starts in July and ends the following June.

Adjusting the budget won't be easy or without pain. Just consider a similar situation that occurred in the early 1990s.

The school board then approved a $19.7 million budget for the 1991-92 school year that included planned spending of $1.1 million more than anticipated revenue for the year. Balances were drawn down to just over of a million dollars. In March 1992, the school board addressed the low reserves and cut $1.2 million from the budget.

This time around the decisions may still be painful, but we have confidence they will be the best for everyone. Board members have made it clear they are confident the district's finances can be turned around after several years of decisions use reserves to upgrade the district's operation. And Superintendent Dan Tallent doesn't sidestep the issue either. The board and superintendent know what the district must do and will provide sound leadership to accomplish the goal in a pragmatic way.

Tallent plans to look at large programs for budget-adjustment recommendations as opposed to nickel-and-diming the entire budget. That makes sense considering the amount of money that must be trimmed.

The deficit spending was not unexpected. The board approved calculated spending patterns over the last few years as a way to improve the quality of education. Teacher salaries were boosted to make the district competitive, but that was just one facet of the improvements were approved. The only surprise in the equation has been a shortfall in revenue projections.

Taxpayers should be gratified that the district is proceeding with the master plan and building program that voters approved last spring in favoring a $14 million bond issue. As the district adjusts some programs to rebuild fund balances, it will be adding new programs as promised -- and funded -- by the master plan.

Tallent feels it is important that the district's fulfill its pledge to the voters about the master plan. That kind of integrity and leadership will prove crucial in the months ahead.