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Public schools may have to make cuts in current budget
Facing an almost certain cut in state funding next year, Rappahannock County Public Schools need to tightly control spending this year and may have to make cuts in its current budget, Superintendent Robert Chappell told the School Board Tuesday evening.
The schools “need to be more prudent than usual” on all expenditures this year, Chappell said, because he has been warned by state officials that reductions in state aid to public schools will probably be announced in December, to take effect in the fiscal year starting next July 1.
The superintendent informed the board of a memo received from Virginia Superintendent of Public Instruction Patricia Wright regarding Virginia’s budget situation. “While Direct Aid to Public Education funding has been spared for (fiscal year) 2009, most certainly reductions in FY2010 are inevitable,” Write warned. “Please pay careful attention to your expenditures this year and store up balances that could be used to offset cuts in FY2010.”
Wright’s suggestion of “storing up balances” this year refers to a bill being formulated for next year’s Virginia General Assembly that would permit school divisions to carry over unspent funds from one year to the next. Currently, any unspent balances at the end of the fiscal year on June 30 are turned back to the county. There's no guarantee, however, that the proposed carryover idea will be approved by the legislature.
Rappahannock schools’ spending in the current year is generally “on target for this time of year,” Chappell said. “However, while our utilization of electricity has declined by 13 percent, our costs of electricity have escalated by over 40 percent” due to rate increases. “We will continue to monitor energy use.”
While the schools have made efforts to turn off lights and make other energy saving efforts, it will initiate a new power usage soon with the completion of stadium lights for night games, expected to be used for the first time this month.
The school cafeteria operations, which racked up a deficit of $78,395 last year, is showing some improvement, Chappell reported. Payroll expenses are down 20 percent due to staffing reductions, but costs of food supplies are up about 20 percent due to food price increases and inventory building. A push to get more students into the federally supported program for lower-income students has resulted in a 34 percent increase (more than $4,000) in federal reimbursements for their meals, and paid meals are up about 6 percent.
“We think that the cafeteria is on a more solid footing than it was,” Chappell said, reiterating a hope that it will break even this year. Basic meals' prices may have to be raised at mid-year, next January, Chappell said, but “it is too early to determine whether it will be necessary.”
As for possible cuts in the current budget, the School Board has developed a tentative list of $93,000 in possible budget reductions. Chappell said. At this time, “it does not look like we are going to have to implement” those cuts, he said, unless the state reduces aid for fiscal year 2009. He expressed some concern that the slumping economy may result in a reduction in sales-tax revenue that may prompt a mid-year adjustment that would reduce state aid.
In other action, the School Board approved naming a new administrator for an employee 403-b retirement savings plan. The program, which is voluntary and a supplement to the basic Virginia Retirement System pension plan, currently has 34 employees enrolled and has been administered by the schools’ own finance director. But new IRS rules to be implemented Jan. 1 make it necessary to hire a professional outside firm, said Bonnie Hahn, finance director.
Hahn said she invited proposals from several firms to serve as administrator and recommended Variable Annuity Life Insurance Co. (VALIC), a subsidiary of American International Group, known as AIG. The parent company, AIG, was pulled from the brink of bankruptcy last month by an $85 million emergency Federal loan.
In response to questions from board member Rosa Crocker of Wakefield District, Hahn assured board members that the problems of parent company AIG did not affect the soundness of VALIC, and that VALIC is among the assets that AIG has put up for sale in order to raise money to pay back the federal loan. “We are not asking you to enter into a contract with AIG, we are asking you to enter into a contract with VALIC,” she said.
Chappell pushed for an immediate vote on the issue. “We really can’t wait to the November meeting to make a decision” because of the IRS deadline, he said. By voice vote, the board unanimously approved hiring VALIC as program administrator.
James P. Gannon is editor of rappvoice.com
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