School Trustee Chris Cuny asked a key question Monday morning near the end of an hour-long special meeting of the Rockwall Independent School District school board that was called to discuss employee compensation.
His question: “Doug, where are you?“
“Mr. Bailey just sang music into my ear,” Trustee Doug Hamilton said of Superintendent Jeff Bailey. “He said he’s comfortable with 2 percent. He believes we will make up that 490,000 (dollars). That’s good enough for me. That’s what we hired him to do. I believe him. So, I’m good.”
“I don’t know what he’s going to present Monday night,” Hamilton added. “But what he presents to us on Monday night is his administrative recommendation. I’m going to support him.”
Seconds later, the meeting was adjourned.
The 2 percent is the possible pay raise that school district employees will receive the next fiscal year. The school district expects to have all but about $490,000 needed to fund the pay increases. If the school district can’t “make up” the $490,000 by the end of the current fiscal year, then the funds would come out of the fund balance.
The pay issue is expected to be discussed again during the school board’s regular meeting Monday night. According to the school district’s budget planning calendar, a public hearing on the budget and tax rate will be held at the meeting. School board members are scheduled to approve the budget during a June 28 special meeting. The 2010-2011 fiscal year will begin on July 1.
The Monday morning special meeting was called after the preliminary budget was presented to school board members on June 7. The meeting this week was called to focus on the compensation issue.
During budget meetings, school board members have agreed that they want to give teachers a pay raise. They also have agreed that they want a balanced budget. A balanced budget means they don’t have to dip into the school district’s fund balance.
Chief Financial Officer Mike Singleton presented a balanced preliminary budget at the June 7 meeting. The proposed budget would not require a tax rate increase for the fourth consecutive year. Projected revenue and expected expenditures in the general fund are identical -- $104,249,107.
There is a focus on balancing the budget because the school board and administrators have been dealing with a deficit of almost $7.9 million in the current budget. Singleton presented recommendations to address the deficit during the school board’s Dec. 14 meeting. The overall effectiveness of the recommended action will not be known until after the current fiscal year ends on June 30.
Proposed pay raises weren’t included in the preliminary budget proposal. However, two pay raise scenarios were presented. If the board supported a pay raise recommendation, the school district would have about $1.1 million available to fund the pay hikes.
During the Monday morning meeting, Singleton described the “midpoint” method of setting pay increases.
For the example, he used a pay grade that has a minimum salary of $45,750 and a maximum salary of $56,443. The midpoint or average of the two salary figures is $51,097.
If a 2 percent pay increase is proposed, the midpoint figure of $51,097 would be multiplied by 2.0 percent. That would mean that each employee in that pay grade would receive a $1,020 pay increase.
Singleton said the percentage of increase for minimum-salaried employees would be 2.23 percent and 1.81 percent for maximum-salaried employees. Even though the percentages of increase are different, everyone in that pay grade would receive the same dollar increase.
If the midpoint method is used for all of the school district’s 1,925 employees, it would cost $1,652,150. A salary of 2 percent of midpoint would require dipping into the fund balance for $490,750.
The school district currently has a fund balance which represents 23.19 percent of the operating expenses. If fund balance money is used for pay raises, the percentage would decrease slightly to 22.83 percent. A school board policy calls for the fund balance to be at least 20 percent.
“My issue is the same as it was last week,” Cuny said early in the Monday morning discussion. “All I’m saying is, you know, I wish there was more than 1.161 (million dollars) left, but there’s not. And I’m not criticizing how this process has come down, but I just don’t feel right in going in the fund balance again to make up the difference. We’ve got 1.161. I think that’s what we need to be talking about.”
Later, he added: “That’s my opinion. I’m not going to fall on the sword on this … I’m going to follow the consensus. But that’s my opinion. I just think if we keep going into it (the fund balance), eventually, it’s going to catch up with us.”
“I just know that at some point in time, we’re going to hit that 20 percent with the rate that we’re going,” added Hamilton. “When we hit that 20 percent, how do we present that to the teachers and all the other positions that we have? … that we have to live within our means now because we’re not going to go to the 20 percent. So, how do we position that?”
Board members later talked about the possibility of cutting some operating expenses to ease the impact on the fund balance.
Hamilton said the operational expense cuts could involve “any kind of projects out there that we could execute to drive operating expenses down some, 1 percent, 2 percent, whatever. Then, that frees up that operating expense that could be reallocated to go to something else, which could be raises.
“But my fear is if we keep digging into it, digging into it, we’re going to hit that 20 percent and then we’re going to have some really, really hard discussions because at some point in time, discussions are going to revolve around let’s look at all the different programs we’re funding and if we really want to give raises, what programs have to be cut?”
Cuny asked board member Stan Lowrance for his thoughts on the issue.
“You don’t have a problem going into the fund balance with this, do you?” Cuny asked.
“No, because I don’t think we’ll end up getting into the fund balance,” Lowrance responded.
Board member David Loftis expressed confidence that the school district will not have a deficit budget.
“This year, if we make up $500,000, then we don’t have a deficit budget,” Loftis said.
“By the end of the year, there’s probably going to be 500,000 (dollars) that you don’t spend,” he added. “We’ve never come in over budget in the last seven years of what we projected our budget to be.”
Hamilton agreed with Loftis, then added: “I don’t want to put words in your mouth, but if I’m hearing what I think I’m hearing, you’re saying let’s borrow 490,000 (dollars) from the fund balance with the hope that we’re going to come in and don’t have to go into the fund balance.”
“I don’t have a problem using our fund balance as a savings account to give our teachers a 2 percent pay increase,“ Lowrance said. “And I believe … at the end of this time, we will not have to do that. But the whole idea of having the fund balance is having that savings account to be able to do the things we need to do and I think part of that is continue to give our teachers somewhat of a raise.”