List of financially stressed school expected to skyrocket

KANSAS CITY, Mo. -- One indication of how Missouri schools are coping with huge state funding cuts could come in November when a new list of financially stressed school districts is announced.

Schools have until Aug. 15 to submit financial reports to the state from the fiscal year that ended June 30. Those that had cash reserve balances of less than 3 percent of their total budget at the end of the fiscal year will be added to the list of financially stressed schools. Those with a negative fund balance on June 30 or any tax-anticipation borrowing the previous year also make the list.

Just eight of the state's 524 public school districts were on the list at the beginning of the 2002-2003 academic year.

Orlo Shroyer, deputy commissioner with the Missouri Department of Elementary and Secondary Education, said Friday that he expects at least eight times that number of districts to be on the 2003-2004 list when it is released Nov. 1.

"Our estimates are strictly that, based on reviews of where schools were before the 2002 year and knowing what withholdings happened," Shroyer said. "Some won't be able to keep themselves from being on the list, unless they've raised taxes."

Because of slumping state revenues, Gov. Bob Holden withheld $90 million in budgeted spending for schools near the end of last school year. Citing the same reasons, he already has withheld $192.5 million from schools as they prepare to resume classes.

School districts are not penalized for being on the financially stressed list, Shroyer said. It's simply a tool the state uses to monitor the financial situations of schools and identify when districts need a little extra guidance of how to manage their budgets.

Denise Pierce, the state department's director of school finance, said rural schools that rely most heavily on state funding will have the hardest time staying off the list.

"Many school districts receive up to 60 percent of their money from state aid," Pierce said. "If that's cut, it really has an impact on their budgets. A lot of rural schools have to make changes to address changes in funding."

School districts on the list have to file a plan with the state to show how they plan to improve their finances. Pierce said it sometimes takes more than a year or two for districts to build up enough reserves to get off the list.

Shroyer said the department has nine area supervisors statewide who stay in close contact with school districts. Those supervisors are seeing firsthand how districts are struggling to make ends meet.

At least this year, he said, school officials know before the start of the academic year how much the state will be withholding in aid.

"They certainly face some challenges," he said. "That's one reason why we encouraged the governor to announce withholdings up front this year, rather than wait until school districts move on. In April if they get a big withholding, boy, there's not much they can do. They have to continue with the school year, with the teachers. They've already spent money on supplies, maintenance and those types of things."

Shroyer said he doesn't think there will be any cutbacks beyond what Holden already has announced for the coming school year. But more cuts could be in store for the 2004-2005 school year, he said.

Schools have until Aug. 15 to submit financial reports to the state from the fiscal year that ended June 30.

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On the Net

Department of Elementary and Secondary Education: www.dese.state.mo.us