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Making ends meet
Schools draw from savings as proration increases
Published Friday, July 31, 2009
With three months left in the fiscal year and an additional 2 percent proration declared by the governor, the local school systems have only one choice when it comes to making ends meet.
“We’ll pull from reserves,” said Troy City Schools Superintendent Linda Felton-Smith. “We had cut all we had to cut from the very beginning. I’m grateful for the reserves right now.”
For the Pike County School System it’s the same story.
“It’s going to affect our bottom line,” said Pike County Superintendent Mark Bazzell. “It’s going to affect what our anticipated reserves are going to be.”
When Gov. Bob Riley first declared 9 percent proration earlier this year, the Troy City Schools took a $1.3 million hit to its 2009 budget, and Pike County Schools lost around $1.2 million.
“We had to go into the reserve then,” Felton-Smith said. “First, we had to adjust codes and salaries. We used all the flexibilities and options allowed by the state” to cut costs and readjusts expenses.
But, the schools still had to pull from its reserves.
Bazzell said Pike County was able to cut around $586,000 from its operating budget by cutting non-essentials and readjusting funds.
That still took around $700,000 from its reserve funding.
When Riley announced an additional 2 percent proration July 24 for the remainder of the fiscal year, Felton-Smith and Bazzell both began crunching numbers.
“For us, this means $249,838,” Felton-Smith said.
“But the good news is, that’s divided over July, August and September, so we can pull from our reserves over those three months.”
Pike County will lose an extra $280,000 from its savings account, bringing the funds that started the year at $3.2 million down to $2.2 million.
Troy City Schools reserves, which once totaled just more than $8 million, are the funds accumulated over several years of fiscal management. Essentially, each year that the district ended with undisbursed revenues in its budget, whether due to unanticipated tax revenues, sound fiscal management or reduced expenses, the funds were put aside in reserves, or a savings account.
“Alabama has what is called ‘proration’ and because the state can prorate, or reduce, what it has promised to you in funding ... when it does that, you have to figure out what your going to do to come up with those funds,” Felton-Smith said.
“That’s why we have those reserves.”
But, even if the school systems have these reserves to make it through this year, the hard times won’t be over when the budget year ends in October.
Both will begin the October 2010 budget already facing 6 percent proration. For Troy City Schools, that means an extra $663,956 reduction in the some $11 million state allocation for the budget year.
“We haven’t even talked about where we’re going with that,” Felton-Smith said.
Budget meetings begin this month, and dealing with proration issues will be key among the discussions.
“You know, 85 percent of our budget is personnel,” she said. “We will stay with the same staff we have for the 09-10 school year, but if we have resignations we will carefully review if we can maintain productivity without replacing the position.”
Moreover, she said, reductions in local sales tax revenues are compounded the constraints felt by state proration. With a 7.5 percent drop in June sales tax revenues, so far this year, Felton-Smith is concerned that July, too, may continue the decline.
While the bulk of budgeted expenses come from the state allocations, the local revenues often fund the extras in the budget, many of which could be at risk, she said.
“That’s why it’s so important for people to understand that the local sales tax receipts we receive help us do those extra things for the children,” she said. “It’s those dollars that make a difference in what we can do.”
And for Pike County that will mean a loss of $821,000 from the approximate $13.7 million state appropriation.
Likewise, Pike County Schools will not be able to cut personnel for the upcoming school year and will have to find other ways to reduce costs.
Bazzell said this year, parents, students and teachers probably felt little impact of proration, but that may not be the case as schools take the hit for the second year in a row.
“Travel might be the first things folks notice,” Bazzell said.
“We’re not going to do any traveling unless it’s absolutely necessary.”
However, keeping the cuts minimal will be the goal as the local school system begins budget planning also this month.
“One of the things we’ll try to do this year, just like last year, is try to make those cuts in areas where it affects the classrooms the very least,” Bazzell said.
With proration already taking an 11 percent toll on the state even after Riley withdrew all he could from the Rainy Day account, Bazzell said it will be years before the education budgets will recover fully.
“It’s a huge amount, and it will take years and years for us to get back to where we’re at,” Bazzell said.
“It will come off the top of any future budget when we are fortunate enough to have a turn around and have some growth.”
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Comments
Posted by turtle (anonymous) on August 1, 2009 at 2:40 p.m. (Suggest removal)
One thing that could help too is if more parents would get involved in the schools and volunteer their time and efforts as well. When kids are out fundraising for different groups in their school don't just throw the stuff on the table, forget about it, and then complain because you are asked to contribute money so the different organizations (academic and athletic) can do the things they need to do. Parents have to work with their child's school in order to have more than just the basics and too many parents are willing to send their children to school with no paper, pencils or anything else because they've gotten so used to other kids supplying their children and the teachers supplying it. Okay through with my rant for the day.
Posted by giftedmom (anonymous) on August 1, 2009 at 8:56 p.m. (Suggest removal)
I too agree Turtle, especially wih the last two sentences.
Posted by dxegrl77 (anonymous) on August 2, 2009 at 9:11 p.m. (Suggest removal)
I hate fundraisers. I would much rather the school ask me at the beginning of the school year to contribute a set amount of money to help with expenses. I understand there are parents out there who can't, some of these are the same ones who send their children to school without supplies. That shouldn't be held against a child. With fundraisers, it always feels like begging to me and some of the people I ask, can't ask me to return the favor because they don't have kids or grandkids. I don't want to be one of those people who everyone avoids because they think you are going to ask for money for another fundraiser. I don't begin to suggest that I know what the answer is, but saying a parent doesn't support their child's school because they don't do fundraisers is not right either.
Posted by turtle (anonymous) on August 2, 2009 at 10:44 p.m. (Suggest removal)
dxegril77 I totally understand your point and to be quite honest I hate most fundraisers too (car washes=waste of time, and I LOATHE those wrapping paper ones). I was mainly referring to those parents who refuse to fundraise, who refuse to offer any assistance at all regardless of what it is and whether it will involve money or not but then want to complain when the schools cut out the things.
Posted by fanoftroy (anonymous) on August 3, 2009 at 7:31 p.m. (Suggest removal)
There is no reason for proration. Did you know that most teachers pay less than $20 per month for their health insurance which means that the taxpayer is shouldering almost all of the health insurance costs for all teachers. If the amount that teachers contribute to their own health insurance was raised by $5 per month per teacher, it would get us out of proration and no teachers is going to be hurt by paying $5 a month more for health insurance.
Posted by Ramsey (anonymous) on August 3, 2009 at 8:36 p.m. (Suggest removal)
@fanoftroy
The facts you have presented are incorrect!
I would agree that single coverage individuals pay less than $20, They actually pay $2 per month. Family coverage is significantly higher, which it should be. But even if you increased their cost ten times it would not erase proration.
Posted by Observer22 (anonymous) on August 3, 2009 at 9:42 p.m. (Suggest removal)
For $5.00 per teacher per month to erase the $250,000 cost of proration for three months would require that the city school system have 16,667 teachers ($5 x 3 months x 16,667 teachers = $250,000.00. Fan of troy, do you really believe the Troy City Schools have 16,667 teachers?
Posted by fanoftroy (anonymous) on August 4, 2009 at 12:15 a.m. (Suggest removal)
Proration is not a system by system issue -- it is a statewide issue and if every teacher in the state, every school system employee statewide increased their payment by $5.00 per month it would more than erase the proration concern. You would get the monthly additional income of $5 for every employee of every school system statewide and you would also get the freed up funds for the equivalent amount that would remain in interest bearing accounts for the duration of each month rather than going to health insurance. You add that all up and you are out of proration. It is simple accounting. When you try to see that over 12 months, each employee would pay $60 and then multiple by the number of teachers and school sytem employees statewide and then take into account that at least a percentage of that money would be put into interest bearing accounts, you have a simple solution. This is a solution that companies use all the time in order to generate interest on short-term gains. The money is put into a sweep account which earns large amounts of interest in teh short-term. That is what is done with the school money. That is how it works
Posted by Observer22 (anonymous) on August 4, 2009 at 7:31 a.m. (Suggest removal)
At the rate of $60 per head, Birmingham City Schools would have to have 200,000 teachers/and other employees to generate the $12,000,000.00 proration will cost that system. There is no way that we have enough teachers/other employees statewide to undo proration at the rate of $60 per head per year. Do those sweep accounts pay 1000 percent interest?
If, of course, we raised property taxes by an average of $60 per person per year in the state, that might do it.
Posted by alexh (anonymous) on August 4, 2009 at 9:54 a.m. (Suggest removal)
Why are teachers only paying $2 for health insurance? That is ridiculous. Maybe it won't undo proration but having them pay a reasonable amount probably will go a long way to helping fix the budget in the education system. How have they gotten away with only paying $2 for health insurance? This makes no sense
Posted by Observer22 (anonymous) on August 4, 2009 at 7:08 p.m. (Suggest removal)
The $2 per month health coverage is for an individual teacher. Teachers with dependents who pay for dependent coverage have to pay $134 monthly. A retiree with 25-years service has to pay $97.54 per month until medicare kicks in. (Smokers, dippers, spitters etc., have a $25 monthy sin surcharge.)
These rates are based on the premium negotiated with the insurance company, taking advantage of the economies of scale and off-set by appropriations from the legislature.
Like holidays which are taken by state workers, the insurance bargain is a product of negotiation between the teachers and the legislature in which the teachers have exchanged smaller raises (or often, no raises) in exchange for the benefit.
The low premium is a product of bargaining and give and take which result in a contract between teachers and the state. While the insurance is a bargain it is accompanied by deductibles, co-pays, limits, conditions etc., just like any health insurance policy.
Any increase in insurance premiums would have to be accompanied by an increase in salaries, reductions in hours or other benefits.
If anyone thinks teacher compensation is excessive, they should take a closer look at the compensation package for judges, district attorneys, and members of the legislature.
Posted by alexh (anonymous) on August 4, 2009 at 11 p.m. (Suggest removal)
a teacher on averahe makes around $40k a year in this town and that is public knowledge. There are a lot of families in this town making it on a whole lot less than that and doing it while contributing a lot more to their health insurance. I am so tired of Hubbard and that Teachers Union. Get rid of Hubbard and the Teachers Union and you will see a big improvement in the quality of education and we will get a better education for less taxpayer dollars
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