Poplar Bluff School District facing $2.75 million budget deficit

POPLAR BLUFF, Mo. -- Cutting employees and reducing health insurance benefits are among steps the Poplar Bluff School Board must consider to reduce a projected $2.75 million budget deficit in the next fiscal year, according to information presented Tuesday at a workshop session.

Superintendent Chris Hon expects to meet with building administrators in the coming weeks to discuss how cuts can be made.

"This is not something Poplar Bluff faces alone," associate superintendent of business Rod Priest said Tuesday, before explaining the financial picture for the next two fiscal years. "This is something every school district in Missouri will be facing on funding in the next year."

Missouri has used American Recovery and Reinvestment Act (stimulus) money to prop up its education budget for the last two years. The state has a final $189 million in federal money to distribute through a jobs bill and then schools face what Priest referred to as the "funding cliff."

The funding cliff includes at least $1 million in stimulus money Poplar Bluff is using this year to pay for Title I and Special Education salaries. The district will also need $390,000 in new money during the next fiscal year to maintain the salary schedule, as well as nearly $800,000 for increased staff health insurance and retirement benefits.

Additionally, the district has predicted a nearly $514,000 deficit this year related to operational costs.

"We don't have a lot of options," Priest said.

Hon told board members they need to consider what they wanted the 2011-12 budget to look like, if it would balance or carry any amount of deficit spending.

"I think we have to get as close as we can to a balanced budget," said board member Dr. Mike Price.

Board members Roger Strickland, Hardy Billington and Steve Sells indicated during the meeting they agreed.

Billington questioned if the money could be found in not replacing teachers who retire. Eliminating reading coach positions, which cost a combined approximately $300,000, also was discussed.

"There won't be that many people retiring," Hon said, adding later, "We have to maintain the classroom setting, but any position not tied to enrollment, we have to look at."

The district's commitment to 100 percent paid employee health insurance must also be considered, according to administrators and board members.

Health insurance premiums went up by $166 per employee per month last year, Hon said. This figure includes the cost of assessments levied recently by the R-I's self-insured insurance group.

The district cannot afford to pay more, Hon said. The average insurance increase for the next fiscal year is expected to be about 15 percent.

"None of us would think of giving a raise now, but that is what we are doing when we give an insurance increase," Hon continued.

Failure to act could leave the district with a 12 percent fund balance at the end of the next fiscal year and a 7 percent fund balance the year following, according to the numbers presented.

Poplar Bluff is projected to have an 18 percent fund balance at the end of this fiscal year, down from 25 percent the previous year. This includes some restricted funds used, for instance, to make debt payments.

The Missouri School Board Association considers a 14 to 15 percent unrestricted reserve healthy, while a district at 3 percent is considered stressed.

Information used to calculate the future budget picture is based on a best-case scenario for state funding -- that the legislature will appropriate at least $3 billion for education in 2011-12. This would be less than a fully funded formula, but more than other scenarios in which the state makes deeper cuts.

Districts are required to have a budget in place by June 30, but are unlikely to know the state's funding plans before the end of May.

"This is purely speculation, what could happen if we did nothing," Priest said. "It's still very early to know what's going to happen (with state funding.) We still don't have any good information on what (they) are going to do next year."