Published: October 27, 2009 09:15 am      

School district may borrow to meet budget

Superintendent says 10% budget cut can best be met by borrowing

CLINTON — A $2.13 million budget cut dominated discussion at the Clinton School Board meeting Monday, as district officials and school board members hashed out options to meet their portion of the 10 percent statewide budget cuts for 2010 announced by Gov. Chet Culver last week.

State legislators Sen. Shawn Hamerlinck, Sen. Roger Stewart and Rep. Polly Bukta took questions and comments from board members for more than 45 minutes after the meeting was called into session. The three offered suggestions on options for satisfying the deficit, but gave few specifics on possible future cuts by the governor and provided limited guidance on how the district will meet the required cuts for 2010.

The board has three options for possibly allowing for the deficit, but only one of them — borrowing the funds — is feasible at this time, according to Board Secretary Gayle Isaac.

The board could raise local property taxes, which are already among the highest in the state. Superintendent Richard Basden said raising taxes by $1 would raise revenue by $800,000, but Isaac said the revenue wouldn’t be available until after the fiscal budget for 2010 is due.

Another option is absorbing the cuts within the district. The district’s more than 700 employees make up 80 percent of the district budget. Of that number, about 450 employees are full-time, and about 350 of them are teachers. Isaac said the district cannot lay off teachers, because their contracts are protected by law. Further, School Board President Jim McGraw and Vice President Mercia Wolf reiterated their goal Monday of keeping class sizes in the district under 20 students each to protect the quality of education.

Isaac said the board’s only realistic option for meeting the 10 percent cut is borrowing the money. The district cannot use reserve funds; it has about $500,000 in reserve funds that Isaac says will likely stay put as a cushion. Wolf said that more than 50 districts among Iowa’s more than 300 are facing reserve deficits.

Gayle suggested to board members that the district could borrow the $2 million from the self-insurance fund that covers district employees.

“We’re basically borrowing from ourselves,” Isaac said as he explained the concept.

He said the downfall of borrowing the funds would be the requirement to pay the money back with interest within a fiscal year. If the state announces similar or more aggressive budget cuts for 2011, the district would have to satisfy a deficit over two times greater than its current deficit for 2010.

Basden said the school board will continue to keep budget discussion at the forefront of its meeting discussions, and Isaac will provide more specific budget numbers at the board’s next meeting Nov. 9 at Washington Middle School.