Shortfalls proving costly
By By Paul Keane
(Editor's Note: This is the first in a six-part series looking at the funding crisis area schools are facing and alternatives to providing additional funding for the system. Today's installment provides a general overview of the situation being faced by administrators.)
Refinancing debt, consolidation loans, getting a better job that pays more, cutting back on expenses – everyone, it seems, has faced these decisions from time to time when faced with a household budget crunch. Economic hardships happen, and people naturally adjust accordingly.
Imagine that crunch multiplied by millions of dollars – with funds shrinking and no new revenue streams guaranteed – and you have a small idea of the budget crunch school districts around the state are facing.
Escambia County's district is no different, as Superintendent Melvin "Buck" Powell learned last week to expect a $1 million cut in state funding and that the City of Atmore would no longer be making contributions to the district via a city sales tax. The two cuts amount to more than $1.25 million in funding, a large part of a deficit Powell and his staff faces as it prepares for next school year's budget.
"We're looking at about $2 million in lost funding for next school year," Powell said. "That will mean we have to make adjustments and cuts as needed to make up for that shortfall in funding."
Powell says that cuts could come in personnel, but that most personnel cuts have already taken place. The next move would be to start looking at programs to cut.
When Powell took over as superintendent more than two years ago, the system used local funds to hire 38 teachers over the state limit. Traditionally, the state will fund the salaries and benefits of a limited number of teachers based on enrollment numbers. Any teachers hired above that number must be funded through local means.
The number of locally funded teachers is now down to 14, and Powell said more cuts are needed.
"For us to survive, we are going to have to get that number of locally funded teachers down to zero," he said. "Actually, we may have to make that 18 positions before it's all said and done, but four of those were being funded by the City of Atmore. Without that funding, we will have to look at cutting those positions."
Powell has said in the past that some of the cuts could be absorbed through attrition, mainly through teachers and staff retiring, moving away from the area, or leaving the teaching profession altogether. A concrete number on how many positions that would be is not known this early in the school year.
The problem is one that will require great scrutiny and the help of many residents and community leaders, Powell said.
"I think that solving this situation will take a great effort by people who really care about education," he said. "We are getting that support from people that are showing up for the town hall meetings we've been having the past few weeks, and I think there will be some people that step up to help us get through this situation."
The final of three such meetings is scheduled for Thursday at 6 p.m. at Escambia County High School. The public is invited and encouraged to attend.
The main thrust of the meetings has been to advocate an increase in the ad valorem taxes for education. Those taxes have not been raised since 1925, and Powell said an increase would help solve many problems.
The millage has remained at about the 7 mills level for nearly 80 years because of a combination of factors. Cities have increased their sales tax and earmarked that for education, the county took similar action and the oil and gas severance tax has helped keep local funding nearly level for most of the time.
But that funding fluctuated and has decreased dramatically over the past few years. The county's sales tax for education requires a percentage of the first amounts to go to the county before heading to the school district, and the oil and gas severance tax has decreased significantly in the past few years.
Add in the fact the state announced a 6.2 percent cut in funding – often called proration – three years ago, and things began to get tight.
Powell and other superintendents began dipping into the reserves of their districts, with many districts depleting those funds. The state requires districts to keep the equivalent of one month's operating capital in reserve at all times, and many districts are feeling the crunch of having expenditures and not enough revenue to cover all the bills.
Powell said an increase in property taxes would help the local school district weather the storm and even begin moving forward and out of the proration era that dwindled the system's reserves down to nearly nothing except the required amount to operate on for one month.
"We need an increase of about 10 mills at the minimum," he said. "Raising it by 10 mills would solve the problem, if we can survive that long."
Survival may mean a combination of things to the system, including an additional sales tax that could be temporary or permanent or even borrowing against the assets of the system in order to operate. Even if voters immediately approved an increase in property taxes, conservative estimates are that the first proceeds of such a tax would not be realized until 2004.
That leaves nearly an entire school year to pay for before a tax would take effect and begin returning dividends.
"We could borrow against our assets," Powell said. "There are 50 or more systems in the state that have already done that, and 32 of those have already reached their credit limits. And, if we borrowed the money, then we would have the debt service that would have to be addressed by any type of tax that we passed."
Privatization of some operations has also been considered, but Powell questions how much money that would save.
"We could look at privatizing our lunchroom services, but those services are already separate from the district," he said. "The food service program is already in the black and self-supportive, and they have a surplus, so I don't know that letting a private firm handle that would save us money.
"And the transportation system is the same way. Right now, we run about 83 busses on the road and have 10 spares. I don't know that a private company could run it any more efficiently or less expensive than what we are already doing."
That leaves cutting personnel and programs, options Powell and his staff are considering.
"There will probably be no field trips other than for competitions next year," he said. "We would take trips for math competitions, band competitions and athletics, if those programs are here next year."
Powell, a former football coach, doesn't rule out the possibility of closing some or all athletic programs in order to make necessary cuts.
"I would hate to do it, but if we have to cut the band or choir program, then football, basketball and baseball would be cut, too," he said. "I can't look at a band program and tell those parents, teachers and students that their program is being cut but that the athletic programs are remaining. If we have to cut a program, we're going to look at athletic programs right along the same lines as all of the programs."
Powell also is entertaining the idea of opening school later in the fall and keeping it open until the summer, giving the district some breathing room to build up a reserve. "We may have to start school in October and go through July," he said. "That is one option being discussed."
Powell said the 10 mills increase would give the system enough breathing room to weather the storm, but that it may or may not provide adequate shelter.
"The amount of an increase is tough to determine," he said. "If you ask for 10 mills and get it, then you wonder if you should have asked for 15 mills. If you ask for 10 and don't get it, then you wonder if you should have asked for eight mills. Having an 10 mill increase would certainly help."
(Next: Does more funding mean better performance?)