Governor presents deadline for school aid cuts

JEFFERSON CITY, Mo. -- Cutting $360 million in state aid school districts and colleges have already budgeted for the current school year will be the only option if lawmakers balk at borrowing against Missouri's financial settlement with tobacco producers, Gov. Bob Holden said Tuesday at a meeting of state school board members.

Holden, a Democrat, gave the Republican-controlled General Assembly a Feb. 15 deadline to authorize that money raised from tobacco bonds, which haven't yet been sold, be used to balance the state budget for the current fiscal year, which ends June 30.

So far during the state's continuing budget crisis, Holden has kept elementary and secondary education funding off limits from cuts. His withholding plan for the new state budget would cost local districts $259 million.

The biggest losing school systems in Southeast Missouri would be Poplar Bluff, $1.21 million; Jackson, $1.16 million; and Sikeston, $1.4 million.

Public colleges have borne the brunt of the $900 million in budget reductions enacted in the last two years and would take an additional $91 million hit, $41.5 million of which would come from the University of Missouri system.

Southeast Missouri State University would experience a $4.6 million reduction. Three Rivers Community College would lose $429,000.

Education would be targeted because it is one of the few sources in the $18.9 billion budget that receives large quantities of discretionary revenue.

"I will do everything in my power to avoid taking this action," Holden said. "Quick action to pursue tobacco securitization is the only avenue I can see to avoid cuts. If anyone knows another way to do it, please don't keep it a secret."

Skeptics in audience

Holden outlined his proposal before members of the Missouri State Schools Boards Association, whom he urged to put pressure on lawmakers to approve the tobacco deal.

Some of the dozens of Southeast Missouri school officials in the audience, however, expressed skepticism.

Perry County School Board president Carolyn Pontillas said the tobacco plan sounds like a short-term fix for a long-term problem, but that it could be the only way to avoid a $600,000 hit her district can't afford.

"If we do this this year, what are we going to do to bail ourselves out next year? It's snowballing and will not be remedied by this tobacco funding," Pontillas said. "I disagree with the concept, but we almost have no other alternatives."

Nell Holcomb School Board member Kim Kelley also voiced concerns about the governor's plan but is most worried about her district potentially losing almost $133,000.

"We certainly hope it won't come to that," Kelley said. "We're hoping that even if it doesn't go the way the governor wants and the bonds are not issued, there will be other ways legislators come up with to raise funds."

The amount of money the 317-student Nell Holcomb district would lose is only slightly lower than the nearly $139,000 in withholdings threatened in the Cape Girardeau School District, which has almost 13 times more students.

Cape Girardeau would endure comparatively smaller cuts than other area school systems as an ironic byproduct of its status as a "hold harmless" district, a situation local leaders have long decried.

Hold harmless districts are funded at 1992-93 levels but get more money per pupil than they are entitled to under the state formula for distributing education funds.

Cape's protection

Since the cuts largely would come from the formula, Cape Girardeau is relatively insulated, said superintendent Mark Bowles.

"We say we get so little money from the state and that's a problem for us. On the other hand, we finally get a chance to see that provide us a little bit of security," Bowles said.

Bowles said he was worried the tobacco plan could hurt the state's attractive bond rating. If that occurred, it would force the district to pay a higher rate on its outstanding debt.

The General Assembly authorized bonds against future tobacco settlement collections last year but only appropriated $50 million in spending for the FY 2003 budget. Lawmakers would have to approve a supplemental spending bill to allow more than $300 million in additional tobacco money to be used to plug the budget hole.

The initial plan called for bond holders to assume the risk should future payments from the tobacco industry prove lower than expected. However, that would have resulted in high interest rates.

Holden recently proposed selling bonds the state would back with other funding sources if tobacco revenue fell short, which would save Missouri $100 million in interest charges.

However, some lawmakers say that instead of the special bonds they approved, Holden's plan would make these general obligation bonds, which creates constitutional problems.

"When the state puts its full faith and credit behind it, it's a general obligation bond," said House Majority Floor Leader Jason Crowell, R-Cape Girardeau. "We can't go into general obligation debt without a vote of the people."

mpowers@semissourian.com

(573) 635-4608

COUNTING THEIR LOSSES

How much state money selected area public school districts and colleges would lose for the current fiscal year, which ends June 30, if Gov. Holden's proposed budget withholdings are enacted:District/ Withholding

college amount

BOLLINGER COUNTY

Meadow Heights $183,089

Leopold $65,299

Zalma $81,627

Woodland $270,590

BUTLER COUNTY

Neelyville $203,367

Poplar Bluff $1,210,388

Twin Rivers $333,418

CAPE GIRARDEAU COUNTY

Jackson $1,163,722

Delta $111,603

Oak Ridge $110,267

Cape Girardeau $138,827

Nell Holcomb $132,962

DUNKLIN COUNTY

Malden $339,976

Campbell $199,147

Holcomb $150,492

Clarkton $112,971

Senath $249,923

Southland $112,880

Kennett $547,484

MADISON COUNTY

Marquand $61,586

Fredericktown $495,544

MISSISSIPPI COUNTY

East Prairie $299,343

Charleston $363,885

NEW MADRID COUNTY

Risco $101,791

Portageville $209,456

Gideon $109,484

New Madrid $98,041

PEMISCOT COUNTY

North Pemiscot $124,522

Hayti $330,157

Pemiscot Co. R-III $64,299

Cooter $3,332

South Pemiscot $227,442

Pemiscot Co. C $751,840

Caruthersville $447,905

Pemiscot Special $191,321

PERRY COUNTY

Perry County $600,176

Altenburg $46,617

SCOTT COUNTY

Scott City $269,500

Chaffee $162,319

Scott Co. R-IV $273,159

Scott Co. R-V $91,060

Sikeston $1,137,125

Kelso $21,409

Oran $123,028

STODDARD COUNTY

Richland $147,990

Bell City $26,972

Advance $132,858

Puxico $272,626

Bloomfield $222,833

Dexter $538,346

Bernie $158,580

WAYNE COUNTY

Greenville $243,879

Clearwater $253,403

UNIVERSITIES

Southeast Missouri State University $4,567,090Three Rivers

Community College $429,170

STATEWIDE

Elementary and

secondary $259 million

Higher education $91 million

SOURCE: Department of Elementary and Secondary Education, Department of Higher Education