Agenda - 04-26-2011 - 1 - Laserfiche WebLink

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Superintendent's 2011 -12 Operating Budget Message For the past two years, those who work under government budgets have been referring to 2011 -12 as the year when our respective agencies will hit a funding "cliff." For the past several years we have faced funding challenges, resulting in a decrease in per -pupil spending from three years ago. Over the last five years we have cut $5 million in expenses from our operating budget in order to fund mandated fixed cost increases or priorities to meet new needs. Our budget challenges, however, were cushioned for the last two years by additional federal ARRA revenues that provided stimulus money through Title I and IDEA and stabilization funds that plugged holes in North Carolina's budget. These ARRA funds run out at the end of the 2010 -11 federal fiscal year. This loss impacts local school districts directly through the loss of Title I and IDEA stimulus dollars, and indirectly due to the loss of stabilization funds that were received by the State and passed on to LEAs. For the Chapel Hill- Carrboro City Schools, this translates into a loss of $4.6 million in federal dollars as compared to 2010 -11. At this time, we must anticipate that new federal monies will not be forthcoming. Combining this with a shortfall in the State's budget that has been estimated to be $2.4 billion to $4 billion, the cliff that we have long anticipated is staring us in the face. Fortunately, the district administration has foreseen this situation and has taken actions that will provide considerable relief. For the past several years we have been under- spending our local budget, thereby building up reserves in our unappropriated fund balance. Although we need a fund balance of 5.5% of our local budget in order to meet cash flow needs associated with our payroll and the timing of tax receipts, the remainder becomes what some refer to as a "rainy day" fund. The fund balance also grew this year due to the receipt of $2.3 million in EduJobs funds from the federal government that was intended to stave off massive layoffs of public employees. Because these funds were not approved until last July after we had already made plans for living within our budget constraints, we did not use the EduJobs funds to avoid position reductions this year. Instead, we used the Edujobs funds to pay for local positions already in our operating budget, thereby saving local funds. This strategy has added approximately $2 million to our unappropriated fund balance. Consequently, we estimate that by the end of the 2010 -11 fiscal year, the district will have $6 million available for appropriation, some portion of which can be considered for use to address our district's funding shortfall. Because there are so many uncertainties this year about the magnitude of state reductions made to LEAs' budget allocations, it'is extremely difficult to develop a local budget request that takes the impact of the state budget into consideration. Consequently, the local budget request that we will submit to the County Commissioners will reflect federal reductions that we already know about, the increased costs to maintain current service levels, reductions that we recommend making in our local budget at this time, and a modest expansion budget for essential services. In this budget message, we will describe the possible funding reductions we anticipate from the state, and will present a prioritized list of the reductions we would recommend making if it becomes necessary to do so.