Shortage of revenue is forcing school to reduce staff, slash budget by Randy Dockendorf School staff will officially learn this week if they are part of $500,000 in budget cuts for 2002-03, but the district is already projecting up to a $750,000 shortfall in 2003-04.
Superintendent Bob Mayer told the board Monday night that principals will notify the staff affected by the reduction in force, scheduled to become official at the March 11 board meeting.
"You will make each one a full- or part-time reduction," Mayer told the board. "The staff were told a couple of weeks ago that they would probably be cut, because we didn't want them to learn it from a board meeting. The administrators will give them the call this week."
The board adjusted the non-personnel cuts Monday to $197,700, but it still faces $300,000 in cuts to meet the 2002-03 target.
Board chairman Tom Craig noted seniority changes, voluntary retirements and other factors could impact personnel by the March 11 meeting. However, Mayer said the board can still cut the positions.
Vermillion expects to spend $900,000 of a $1.5 million fund balance, leaving the district with a projected $665,000 balance on July 1, 2002.
"But we will spend $1 million above our revenues next year, which leaves us $335,000 in the red on July 1, 2003," Mayer said. "That's why we are looking at cutting $500,000. But the cuts still leave us with only $165,000 in our fund balance, which not much of anything."
And the problem only worsens the next year, Mayer said, as the district foresees a deficit of $665,000.
The board agreed on the need to begin immediate planning for the shortfall.
"We need three scenarios," Craig said. "We can look at a $750,000 opt out or cut the budget by that amount; look at a $665,000 opt out or cut the budget that much; or cut the budget by $500,000."
The public needs to know the specific actions needed without an opt-out, board member Mark Bottolfson said. "We need to show them a list of the cuts we're facing," he said.
The board must explain the new high school addition, financed through the capital outlay fund, is not causing problems with the general fund, Mayer said.
"A major task will be answering the question, 'How can you be in this predicament if you are just done with a building project?'" he said. "If we hadn't built one square foot, we will still be in this situation because the only thing affected in the general fund was paying more for utilities."
However, patrons may not see much difference, board member Jim Kinney said. "They will say it all comes down to the total taxes they have paid."
The district faces extremely difficult budget decisions, Mayer said. "People need to know up front. This $500,000 cut is nasty, but (a $750,000 cut) is pretty bitter," he said.
The district has already undergone the budget ax, Mayer said.
"You cut $200,000 last year, $500,000 this year and $600,000 next year for $1.3 million in three years," he said. "With all the tax referendums we have had, the most recent Amendment A and Dakota Proposition, none of those would have crippled us as much as this. None of them passed, and we are still making $1.3 million in cuts."
Mayer predicted a referendum if an opt-out is passed.
"The district looked at $500,000 the last time (an opt-out was tried) and was not successful," he said. "But the climate may have changed. Vermillion was breaking ground six years ago, and now all these other schools are opting out."
The district's anticipated state-aid increase of $154,000 has already been eaten up, Mayer said. The district will spend $40,000 for a 1 percent increase in state retirement and $70,000 on a 20 percent increase in health insurance.
"That's $110,000 already gone out of the $154,000," he said. "What's left really can't help much for salaries."
Mayer and Business Manager Sheila DeSmet traveled to Brookings Tuesday to meet with school officials about their $750,000 opt-out.
However, Brookings' valuation was $603 million in 2000-01 compared to Vermillion's $310 million, DeSmet said. The Vermillion district's valuation now stands at about $315 million, not including the tax-increment finance district.
Vermillion's initial budget cuts were relatively easy, Craig said, because the first $200,000 was comprised mostly of transfers to the capital outlay fund.
"Now we are looking at personnel and benefits, because they make up 80 percent of our budget," he said.
Vermillion is not alone in its financial straits, Mayer said.
"In hearing what was said at national conferences, Sept. 11 has had a major impact on the dollars which are available for states to provide for schools," he said.
Board member Floyd Boschee agreed. "Eden Prairie, MN cut 45 staff. This is happening not just all over our state but all over the nation."