Administrators offer to take a 3 percent pay cut to save $75,000
Budgeting blunders have created a new financial headache for the Forest Grove School District, which already cut $7.5 million from its 2011-12 budget and has seen its enrollment drop by 77 students this fall.
Business manager Mike Schofield told the school board Monday night that faulty expenditure projections made before he arrived have put the district on target to finish this fiscal year $207,264 in the red.
Left on the current trajectory, the gap could grow to a chasm by June 2013.
'If we did nothing, we'd be about $3.2 million in the hole,' said Superintendent Yvonne Curtis. 'We know we can't do that. We have a plan to end the year in the black.'
Schofield said he has '21 months to fix things,' meaning the district will strive to end 2012-13, the second in a two-year budget cycle, with money in the bank.
He'll start by implementing $780,000 in adjustments: a $55,000 cut from substitutes, temporary employees and extra-duty personnel; a $175,000 cut from purchased services, such as utilities; a $350,000 cut from technology; and a $300,000 cut from deferred maintenance. He plans to add $100,000 to the district's expected obligation to laid-off staff members filing for unemployment benefits.
Between now and the end of the current school year, Schofield will propose another $900,000 in cuts to bring the district into the black by $572,000 on June 30, 2012.
'We owe the board that much in cuts to stay on plan,' he said.
A piece of the solution could come from district administrators, who offered Monday to take a 3 percent pay cut in the wake of the bad budget news.
If the board takes them up on it, 22 central office employees, principals and vice-principals will surrender a total of $75,000 this year, Schofield said.
They received a 1.5 percent pay hike last spring.
Off the mark
It turns out that three major expense categories - Public Employee Retirement System payouts, substitute pay and a combination of Social Security, Medicare and employee insurance contributions - were far off the mark in the budget blueprint handed to Schofield when he returned to the district after a four-year absence July 1, replacing Darin Davidson.
Since the district spent nearly $2 million on substitutes last year, Schofield sensed the newly-budgeted figure was low at $1.1 million. But when he realized last week exactly how skewed it was, 'I was sick to my stomach,' he said.
On the positive side, the district's ledger showed an ending balance of $581,182 on June 30, Schofield noted. On the negative side, expenses were unexpectedly high.
Retirement payouts up
The district's PERS costs unexpectedly rose by about $1 million after the Oregon PERS board of directors hiked payout rates from 5 to 13 percent, a move Schofield attributed to 'losses in the stock market and real estate markets the last few years.'
Careful to point out there had been 'no wrongdoing, and no misappropriation of funds,' Curtis said she was glad to have found out about the additional shortfall early in the year rather than later.
But with the recession dragging on and state revenue receipts anything but certain, she's directing her staff to continue to look for ways to save money.
'We really thought we'd planned carefully to come up with a sustainable budget,' said Curtis, who front-loaded the 2011-12 budget with most of the cuts she planned to make over a two-year period. 'These are areas we didn't know about.'
Areas of concern include a potential drop in federal funding for district programs, future state funding shortfalls, higher unemployment costs and further enrollment losses.
'We'll take a good look at all that,' said Schofield, who plans to make regular reports to the school board all year.
Enrollment 'a big deal'
Every pupil enrolled in the district brings in about $6,000 in state funding. 'If we continue to decline, it's a big deal,' said Schofield, who's keeping a wary eye on the district's flat student numbers.
As of Sept. 21, the district recorded an enrollment of 5,800 students, down 77 from the same date in 2010. But it's an increase of 35 over the report Human Resources Director Dave Willard gave the board Sept. 12.
'Our trend is to grow from now until Oct. 1,' Willard noted. He added that K-8 numbers fluctuate throughout the year while high school numbers tend to decrease.
Not included in the total were 199 students enrolled at Forest Grove Community School, he added.
'Our total claimed to the state is 5,899,' Willard said.