Using part of the fund balance and increasing the tax rate are options the Rockwall Independent School District’s Board of Trustees could consider to deal with state funding cuts of $15 million to $23.8 million the next school year.

Using a portion of the fund balance and increasing the tax rate — which would require a tax rate election — were among nine options discussed Monday night during a special meeting of the school board.

Other options listed during the hour-long meeting were continuing to monitor the legislature, continuing a hiring freeze, no pay increases in 2011-12, increasing class size, reducing district level administrative cost, considering a reduction in the work force and decreasing salaries.

No decisions were made at the meeting.

Projections of the State of Texas deficit for the biennium have been as high as $26 billion. Public education funding is estimated to be reduced by $9.3 billion to $9.8 billion over the next two years.

Mike Singleton, the school district’s chief financial officer, said “$5 billion (for 2011-2012) is what they’re talking at this point.”

“They will reduce funding to schools across the state,” he added. “Our piece of that is somewhere between $15 million and $23.8 million.”

In addition to the state funding reduction, the proposed legislative budget would eliminate the following grants — Technology Allotment, $396,683; Student Success Initiative, $55,005; Teacher Mentoring, $49,500; and Texas Advanced Placement Incentive,, $22,000.

“These conversations are not conversations we particularly enjoy having,” Superintendent Jeff Bailey told board members. “We start talking about potentially cutting payrolls, staff members and how that impacts classrooms and students is not something we’re in favor of for public schools. But it places us all in a position where we’re going to have to address these issues here in the next few months for us to be able to pass a budget in July.”

Singleton told board members that school officials already have been working to cut expenses. If state funds are cut by $15 million, Singleton said, the suggested reductions would leave the school district with a deficit of about $9.6 million during the next school year,

Budget action steps the school district plans to take, according to Singleton’s presentation to board members, includes lobbying legislators for additional tax rate authorization; continuing to meet with the school district’s leadership team, department supervisors and campus principals; leveraging the fund balance for the next two years; increasing revenue sources and decreasing expenditures; and continuing to look for ways to streamline support services to gain operating efficiencies.

Before listing options, Bailey summarized the current situation facing the school district:

“We’re not going to see any additional funding from any student growth. We’re not going to see any additional state aid for our shortfall on our target revenue. We are going to see a reduction of our state grants. Stimulus funding is going away. The legislature is saying there’s not going to be any new taxes to generate any new revenue. And they’re not going to access the rainy day (reserve) fund. So, the burden is put on the local school district to have to make a reduction to meet the deficit.”

Concerning use of the fund balance, Jeff Roberts of FirstSouthwest, the school district’s financial consultant, said RISD currently has a $31 million fund balance. He said sufficient funds to cover three months of expenditures is required. That total would be about $26 million, leaving about $5 million that possibly could be used to help deal with the deficit.

“The state says those are rainy day funds,” Bailey said of the fund balance. “Those are funds that should be used when days are rainy, when you have financial and challenging times. The state is saying they are not going to use their $9 billion (fund balance) to help offset the education cuts. Then, I think, we have to look at our fund balance to see if we can use them to help offset a deficit that we’re facing right now.”

There’s also the possibility of a tax rate increase.

The general fund tax rate has remained at $1.04 per $100 valuation since the 2007-08 school year.

“We do have the option to increase it (tax rate) up to $1.17, but it does require a tax rate election,” Singleton said. “Those 13 pennies will generate approximately $6.7 million in additional tax revenue coming into the district.”

He said about $600,000 of that total would have to be sent to the state, leaving the school district with about $6.1 million.

“Everyone has done a great job,” Bailey said of the staff that already has been working on the situation. “We all know that we’ve got challenges ahead of us, but we’re going to deal with them. We’re going to be able to accomplish them.”

“We don’t have a choice,” added Trustee Chris Cuny.

Dealing with budget issues is nothing new to Rockwall school officials.

In 2009-2010, the district approved a deficit budget of $7.8 million. Steps were taken to reduce the deficit to only $497,000 in the 2010-11 budget.

Steps taken to reduce the deficit involved reducing staffing by 35 fulltime employees; reducing employee health insurance premiums; reducing utility budgets; reducing department budgets by 5 percent; and increasing facility rental rates and other fee-based services.

“We need to make sure that with the media sitting here, we have been fiscally responsible with our budget and how we’ve spent our funds,” Bailey said. “We cut our budget over $7 million this last year to attempt to balance our budget. We’re in good shape until this current fiscal year now that we’re getting ready to face a $15 million deficit budget.

“And as Mr. Singleton showed us there, we’re potentially at a little bit over $9 million that we’re still short after we have come up with $6 million in budget reductions from central office as well as campuses.”

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