257 braces for more cuts

By BOB JOHNSON
Register City Editor

Dr. Craig Neuenswander, superintendent of schools, told USD 257 board members to be prepared for additional cuts in state aid, after explaining financial setbacks the district had suffered at the start of the 2009-10 school year.
“Other cuts may be needed,” Neuenswander said.
Gov. Mark Parkinson, to deal with lagging state revenue, reduced base per-pupil state aid to $4,218 last week. That was the third reduction in the past year. At the start of the 2008-09 year, state aid was $4,433 per pupil. It was reduced to $4,400 late last fall when tax revenue failed to meet expectations and to $4,218 by legislators when additional revenue reversals surfaced in the spring.
The latest cut will cost the district $124,000 in general fund money.
Neuenswander specifically did not say what the district might do to absorb the latest cut. He and board members will take on that task when they review the new year’s budget at their July 27 meeting.
The superintendent did note that the district has $425,000 in a contingency fund, which has been built up over several years, and that it could tap into those funds. That would be a one-time solution, however, and would leave the district in a precarious position if something extraordinary were to occur that normally would be expected to be met with money from the reserve fund.
Meanwhile, the district also has $72,500 less in its capital outlay fund; its balance was $409,000 when the new year started July 1. When levies were reviewed by county officials last fall, the levy was reduced from 5 to 4 mills, on the assumption that the 5-mill levy was incorrect. For years capital outlay funds were limited to 4 mills. The Legislature upped the limit to 8 mills a year ago, a fact overlooked in county offices.
Neuenswander said the district could not recover money lost and the mistake was particularly painful because state aid, which would have provided $22,500 of the $72,500, no longer was attached to capital outlay funding.
The district also will lose $27,000 in local option budget funding because its valuation increased $6.3 million with the addition of the Russell Stover Candies plant and new Wal-Mart store to tax rolls. LOB funding is figured on a relative wealth formula.
“We picked a bad time to get more wealthy,” Neuenswander said.
State participation in the LOB fell a point to 65 percent and an additional 6.2 mills local property tax levy will be required for the district to take full advantage of the LOB, figured at 30 percent of the general fund. This year the district expects to raise $3.2 million in LOB funding, which supplements the general fund, from a levy of 23.9 mills. Last year’s levy was 17.7 mills.
Board members earlier had considered raising the capital outlay levy by a mill or two so they could use the money to make this year’s lease payment of $121,000 for use of classrooms and performance areas in the Bowlus Fine Arts Center.
Now, Neuenswander said he was reluctant to propose bumping up the capital outlay levy in view of the increased LOB levy. He also noted that to recover money lost when the levy was decreased would require about 1 1/2 mills.