Building the school district’s annual budget is always a challenge. Decisions must be made based on information that is accurate today, but will change tomorrow. Generally speaking, the Monroe City R-I School District receives the dollars necessary to operate its programs and facilities from three sources: Federal, State and Local
Federal dollars, in the form of entitlement grants or allocations for specific programs, account for approximately seven percent of the district’s revenue budget. These funds are designated for use in specific areas such as math and reading instruction, special education, class size reduction, technology purchases, safety and drug education and school meal programs. To date, we have not seen a drop in federal financial support, however, there are areas governed by federal statute in which certain levels of support were mandated but have never actually been made available to school districts. While it is not expected that the federal support promised with the implementation of various laws will ever reach the level noted in those legislative acts, districts are required to abide by the requirements of those laws and regulations. Such revenue shortfalls place additional pressures on state and local financial resources.
Fortunately, the outlook for local revenues is better. Local sources of funding make up nearly fifty-eight percent of district receipts and are supported primarily through real estate and property taxes. Fortunately our community has not had to endure the huge drops in property values prevalent in other parts of the country. Personal property tax revenues have dropped slightly as a result of decreased spending by individual households. For the most part, our local revenues have remained consistent. That is not to say that challenges are not ahead. As factories reduce production or close down, locally generated tax revenues shrink for school and ambulance districts, city and county services, libraries and other tax supported services. With the closing of one of our local plants, MCR-I stands to lose, in round figures, $100,000.00 annually.
One area that has been hit hard by the recent economic downturn is the state’s education foundation formula. In simple terms, the “formula” is a calculation based on student attendance and population characteristics, local tax support and cost of living computations. The result of this calculation is used to determine how much money each district will receive per pupil. It is not the only source of revenue from the state to local districts, but it represents the bulk of state support. It is important to remember that fully funding the formula does not mean that education has been fully funded.
In planning for the current school year, the district projected receipt of just over $2 million in formula money. We have recently been notified that due to lower than expected state revenues it is likely that formula payments to Missouri school districts will be reduced by two percent. This amounts to an loss of over $40,000 for our school district. The news for the 2010-11 school year is not much better. The Department of Elementary and Secondary Education (DESE) is telling districts that a four percent reduction in formula funding is being anticipated. Such a reduction will result in the loss of over $80,000 in funding assuming that there is revenue growth at the state level otherwise this shortfall could be five or six percent instead of four. The scenario is worse for 2011-12. In the absence of economic growth and with no stimulus money to prop up the state budget, current projections put possible reductions to formula funding at anywhere from ten to thirty percent. That represents a possible loss of school funding of between $200,000 and $600,000.
The result of all of this speculation is fairly easy to sum up, but difficult to execute. Financially hard times are here for districts across the state due to reductions in formula funding and the loss of financial resources from many sources. Difficult decisions will have to be made in order to maintain the financial health of our schools. I want to assure the patrons of our district that every effort will be made to limit the impact on student opportunities, but I cannot promise that some of those decisions will not be painful. I am confident that our district will move forward and our students will continue to benefit from the best our community has to offer. With your continued support and understanding, we will weather this storm.