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State warns 4 area schools on budget deficits, but may not tell the whole story

Tuesday, July 29, 2008

State officials have warned 60 school districts to cut their budgets, including area districts Alta, Aurelia, Laurens-Marathon and Pomeroy-Palmer, all projected to overspend their budgets for fiscal 2009.

But local schools leaders say that news does not fully reflect their current efforts to trim spending while protecting the quality of education for their students.

Two districts in the region are reportedly in even more serious straits with two straight years of projected deficits, according to the State Department of Education. Spirit Lake and Okoboji have both been in a deficit spending situation for two straight fiscal years. The Okoboji district is projected with a budget shortfall of over half a million dollars this fiscal year, while Spirit Lake is in a deep projected $1.3 million hole for fiscal 2009 after falling over a half million short for fiscal 2008.

Schools are required by law to operate within their approved budgets, and can be shut down for repeatedly failing to do so.

Iowa Department of Education officials say they sent letters to school districts on track to overspend in the upcoming year.

Most on the list are small school districts. But the list includes some large districts such as Urbandale and Dubuque.

State records show 17 of Iowa's 364 districts overspent their budgets in the 2006-07 school year. Twenty-two were expected to overspend in 2007-08, and 60 are on the list for 2008-09.

"It was meant to be informational and nonthreatening," said Joyce Thomsen, a financial consultant at the education department. "I just sent the letters out in case they hadn't recognized it."

Alta, with 573 students, was listed at a $113,842 projected deficit for fiscal 2009. The district is one illustration that the list does not tell the complete story.

"We know it is there, and we have taken proactive steps to deal with it," Alta School Board President Val Rosenthal says. "We did have some staff reductions, some early retirements, and looked at reducing supplies costs and transportation costs - we know fuel is going to be an issue this year."

However, the district had not received the warning letter from the state, and Rosenthal says that in light of recent efforts in Alta, she does not feel the overspending projection is completely accurate.

"We are concerned that people will hear about this and think these schools are going broke," said Alta Superintendent Fred Maharry. "In Alta, we actually have a positive unspent balance of $850,000 right now. Do we have to watch our spending for the coming year closely? Very much so, but this list tells only part of the story. We have been working two, two-and-a-half years on this. We brought in a very good financial consultant to help, and we have cut $327,000 for fiscal 2009."

It appears that the state based its projections on an average of spending over the past three years plus a percentage figured for cost increases.

While that's not a bad estimating tool, it doesn't reflect all that is being done, Maharry said.

In Alta for example, both the teaching staff and the administration this year voluntarily requested no pay raise aside from insurance adjustments, according to the board president.

"They really stepped up and recognized that by finding a way to save some money, they could save a couple of positions," Rosenthal said.

Maharry also notes that the state allowable-growth funding itself has not kept pace with schools' actual costs for utilities, fuel and other needs.

Elsewhere in the area:

* Aurelia with 298 students was listed at a $13,874 projected deficit.

* Laurens-Marathon with 442 students is listed at a $523,881 deficit.

* Pomeroy-Palmer with 220 students is listed at a $406,883 deficit.

Many of the Iowa districts on the list are blaming rising teacher salaries and skyrocketing fuel costs for budgetary woes. Some say they may resort to layoffs to trim the spending for the coming year. Salaries commonly make up 80 percent of district budgets, and while student populations have fallen for many rural districts, staff size may not have.

"A lot of the issues I've seen in schools is, you've got a 300-kid district that's staffed for 500 kids," said Larry Sigel, school finance director of the Iowa Association of School Boards.

Last year, legislators gave the state Board of Education authority to close school districts that have been overbudget two years or more.

The board's first action was to close the tiny southern Iowa community of Russell's financially troubled school district. The town's 120 students will enroll in nearby districts this fall.

The West Bend-Mallard school district might have barely escaped being next to suffer that fate. With an $850,000 deficit, the district was told in June that they had only weeks to raise the money. The district reportedly slashed another $400,000 from their budget this month, eliminating the high school principal position, and making the superintendent and several teachers part-time. The principal and superintendent both resigned this spring.

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