Dipping into the school district's significant amount of savings is the ideal way to manage the financial shortfall, Carson City School Board trustees advised officials Tuesday. By doing so, however, it drains that surplus for coming years.
"It seems like the ending-fund balance has always been a sacred cow for us," said Lynette Conrad, vice president of the board. "And it's been nice to have that cushion. Although it makes me nervous to dwindle down our ending-fund balance, I think we need to do what's best for the education of our students. I'm OK with killing our sacred cow."
The school district spends just under $60 million per year on operating costs, finance director Tony Turley told the board. However, he said, declining enrollment - which is the basis for funding received from the state - coupled with decreased funding for several programs from state and federal coffers, leaves the district with $53 million in revenue.
To make up the difference, district officials recommended taking from the $10.8 million ending-fund balance.
Officials and trustees met Tuesday, replacing the regular board meeting for a workshop-style session to exchange ideas.
While districts throughout the state have faced significant budget shortfalls - including a reported $40 million deficit in Washoe County - and made dire cuts - including combining some schools in Lyon County - Carson City has been the anomaly because of the substantial savings it had built up over the years.
Superintendent Richard Stokes reminded board members that this year is the second in a two-year budget cycle passed by the Legislature. When the Legislature meets next year, he said, the budget is likely to change. He recommended the district maintain the status quo in the interim.
"For us to do otherwise, it would be a fast turnaround," he said.
Budget discussions in the past have brought suggestions of more drastic cuts, such as the recommendation in 2009 to close an elementary school or the proposal last year to implement a 1.1 percent salary cut for all employees.
Those ideas were met with strong opposition from the community and school employees.
Instead, Stokes said, the district used attrition and other less dramatic cost-cutting measures to save money and have made up the difference by using the ending-fund balance.
This year's proposed budget, however, by far will consume the largest chunk of that account.
According to the tentative budget, which must be submitted by April 15, $5 million will be withdrawn from the ending-fund balance, along with $1.4 million that had been set aside years ago in a special fund, to fill the shortfall.
That leaves 5.8 million in the ending-fund balance. By law, district's are required to keep a month's worth of operating costs in that fund, which is about $4.4 million in Carson City.
That would leave about $1.2 million available for use next year when planning the 2013-2014 budget, Turley said.
Trustee Joanna Wilson said she was uncomfortable with such a small cushion, saying it left the district in a position to "hope and pray that something falls out of the sky."
"When it's gone, it's gone," she said. "I think we need to protect that sacred cow to some extent because that's it. That's all we have."
Stokes said the board and school district officials need to begin right away educating the community about cuts on the horizon.
"We have to modify how we do business," he said. "We are going to get to the point where we no longer have savings to spend. There will have to be some significant modifications to our system in order to operate under the funds available to us."
He said some of the past proposals will be back on the table to fill that $7 million gap in revenue and expenditures - a cost equivalent to 65 to 75 teachers or about double that number of classified employees.
The hearing for the final budget will be May 16.
