School chief: Expect big cuts

Pinellas schools may have to slash $18-million from the budget to cover growing costs and build up emergency reserves.

Published November 5, 2005

Increased costs for insurance, fuel and electricity will force the Pinellas school system to consider significant budget cuts in the next few months, superintendent Clayton Wilcox said Friday.

The district is facing as much as $18-million in cuts for next year to cover operating costs and help build up its emergency reserves, he said.

Wilcox said he did not anticipate layoffs. But he predicted the School Board will have to cut some programs starting with the next fiscal year, which begins July 1.

"I think people will notice (the cuts)," he said. "I think they will be real."

The district is facing reductions of about $12-million to cover increases in operating expenses, Wilcox told thousands of district staffers in an e-mail Friday afternoon.

That alone is enough to cause pain to several programs, but there is more.

Wilcox said $3-million to $6-million more will have to be cut to solve a problem that has been nipping at the district's heels for years: its inability to amass a big enough "contingency fund" for emergencies such as hurricanes.

Last year, the fund was $10.8-million, an amount state auditors said was far too thin for Pinellas' $1.1-billion budget. This year, that budget is even bigger but the contingency fund has been halved to $5-million. The reason: Added expenses and inflation have outpaced the district's allocation of state dollars. "We have a budget problem," the superintendent said in his message to employees.

With Pinellas skating on such thin financial ice, lawyers now say the district's bond rating is in danger of being lowered unless it builds up its reserves.

The lower rating would increase interest payments on any new loans.

The silver lining: The school system's reliance on loans is relatively low.

The district also will have to sock away money more aggressively over the next several years to rebuild its contingency fund, Wilcox said.

That will mean setting aside an extra $5-million to $7-million a year, he said. The district gets an increased allotment from the state Legislature each year, but officials say it hasn't been enough to keep up with inflation.

To compare the district's situation to a household budget, imagine a painful paring of expenses up front followed by years of ongoing expenses that weren't there before - perhaps a car payment or a second mortgage.

With job cuts said to be off the table, there are limited places to trim. More than 85 percent of the operating budget goes to salaries and benefits. That leaves programs, but the options are complicated.

Some programs that might appear expendable rely, at least in part, on federal or state grants and are not easily cut, Wilcox said. Others are small enough that cutting them wouldn't make a difference, he said.

The $28.5-million now flowing into the district from last year's referendum approving a tax hike is legally earmarked to keep teacher salaries on the upswing and pay for other improvements.

In his message, Wilcox said he anticipated calls to cut programs that some consider expendable.

He mentioned the Kaplan system, a program that uses periodic tests to more accurately gauge how students are grasping reading and math concepts. The system is a diagnostic tool that officials hope will improve teaching, boost scores on the Florida Comprehensive Assessment Test and narrow the achievement gap between black and white students.

Starting this year, Kaplan is in place in 17 elementary schools and all middle and high schools. But some teachers don't like it because it adds to their duties and they don't think it helps students. The district has a six-year contract with Kaplan and has commited $1.6-million to the project. It stands to spend another $5.6-million if the number of schools stays the same.

Wilcox said others may suggest cutting a new system that allows principals and other officials to send automated calls to students' homes. But he noted the program is paid for with state and federal grants.

Canceling the phone system and the Kaplan program would not solve the budget problem, Wilcox told employees. "In the end," he said, "our choices will be strategic not reactionary."

What could be cut?

Wilcox said his initial discussions have touched on some drop-out prevention programs, the Early Success Program for struggling readers and cuts in travel and training. But he cautioned that no decisions have been made and that the School Board will make the final call.

"It needs to be a pretty public discussion," he said.

The last time the district dealt with cuts this big was in 2003 when a $22-million shortfall led to the elimination of 600 jobs. Some administrators were sent back to classrooms and the district slashed services to disabled students. A prekindergarten program serving 700 children was eliminated and the district cut heavily into its reserves, which contributed to the current crisis.

This year, Pinellas is not alone.

Hillsborough schools also are feeling the pinch of rising energy costs and construction costs.

A school that cost $10-million two years ago now costs closer to $12-million, said chief of staff Jim Hamilton. To make up the deficit, he said, more projects are being postponed.

- Times staff writer Jeffrey Solochek contributed to this report.


THE PROBLEM: A projected shortfall of $12-million in the 2006-07 budget for Pinellas schools caused by rising costs for insurance, fuel and electricity. Compounding the problem is a severe shortage in the district's reserves. In all, officials say as much as $18-million will need to be cut.

WHO'S AFFECTED: That's unclear so far. Layoffs are said to be off the table, leaving a variety of programs that could be eliminated or pared. Cutting back on new hires is another option.

WHAT'S NEXT: District administrators will spend the next few weeks combing the budget. Then they will suggest cuts for the School Board to consider. The fiscal year begins July 1.