Monday, August 9, 2010

Our View - State cuts leave few options for school districts

Printed in the Iowa City Press-Citizen, Oct. 19, 2009

Our View - State cuts leave few options for school districts

Every school district in Iowa is feeling the pinch from Gov. Chet Culver's recent decision to implement across-the-board budget cuts of 10 percent -- a huge number that state employees are still trying to get their heads around.

Early estimates show that the cuts mean the Iowa City School District now is going to get about $5.6 million less in revenue than it already has budgeted for. The cuts have not lowered the district's spending authority -- the limit on how much it can spend per pupil -- just the amount of cash that the district has on hand.

That leaves the Iowa City School Board with a few options:

• Continue to operate under the current budget and to use money from the district's reserves.

• Borrow money from another specified account -- such as the money from School Infrastructure Local Option sales tax voters approved in 2007 -- and use it for general fund expenses.

• Make decisions on how to cut the budget significantly in the middle of the school year.

• Eventually raise property taxes.

• All of the above.

The governor has suggested the first option for districts that have sufficient funds in their reserves. And right now, it looks like Iowa City area schools have just enough money in reserve to cover the cash shortage. But to do so would drain the reserves all but dry. And district officials say they are still in the process of cutting more than $2 million from next year's budget just to get out of the red -- a process that began long before the newest state budget cuts.

And district officials already have drained dry the public's trust in their ability to oversee the SILO funds in accordance with voter expectations. Many voters thought the SILO funds would be used to maintain and upgrade older schools. And they strongly disagreed with the district's decision to close the 78-year-old Roosevelt Elementary as a K-6 school. Many other voters assumed that the money would be used for a new comprehensive high school. And they already are worried that the district is moving away, rather than toward, that long-term goal.

Borrowing money from the SILO account would only add insult to injury and increase voter distrust the next time the district comes to the public with its hands out — and that includes raising property taxes.

The only benefit to using SILO money rather than reserves is that the district would be obligated to pay it back. (Although districts throughout the state already have started lobbying hard for the Iowa Legislature to give them discretion on how to use funds from these specific accounts for general fund expenses. So those restrictions may go by the wayside very quickly.)

And the district is unlikely to make significant mid-year cuts. Not when it still has more than $2 million to trim from next year's budget just to avoid deficit spending. Not when 80 percent of the general fund budget covers salaries and benefits and no one is interested in cutting back employees and increasing class sizes in the middle of the year.

With no easy solutions in sight, the School Board is going to have to tread carefully.

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