For the first couple years of the economic downturn, Regional School Unit 18, like many school districts across the state and nation, relied on federal stimulus funds to ease the pain.
For the next couple of years, leading into the current budget cycle, the district relied on cash reserves to shore up the budget gaps, Superintendent Gary Smith said.
Now, with stimulus money long gone, declining state revenues and a fund balance that is dangerously depleted, Smith said the local tax base is the only place he can turn to, to pay for a proposed budget increase of 4.55 percent.
“This is the year we have very limited options,” he said. “I’ve got a revenue hole of $1.3 million.”
According to the district timetable, four public hearings will be held on the RSU 18 budget in April, followed by two public votes in May.
If approved as written, the total budget for the district would go from about $32,280,000 to $33,750,000, an increase of $1,470,000.
One major concern for the district is the toll that the lean budget years have taken on its reserve funds, which include a fund from MaineCare reimbursements and a general fund.
Smith said the district built the fund up several years ago in accordance with accounting practices that recommend that a certain percentage of an entity’s operating budget be set aside to prepare for unforeseen contingencies.
“That money is gone now,” Smith said.
For the current year, the district spent about $1.3 million out of its reserves. Next year’s proposed budget calls for another $800,000 withdrawal, an amount Smith said he is not comfortable with.
“That should be in the neighborhood of $1.4 million,” he said. “Last year’s audit, we were at $600,000.”
Because money that is budgeted but not spent winds up in the general fund, Smith said the future balance of the fund can’t be accurately predicted, but he thinks the proposed budget will leave it mostly depleted.
The proposed budget hike is driven by many factors, including contracted salary increases, a teacher retirement cost shift by the state, energy costs associated with a tough winter, insurance costs and cases in which attempted budget reduction plans had to be abandoned, Smith said.
“I think we found that we went a little too far on a bunch of things,” Smith said, citing an example in which an effort to consolidate bus runs resulted in students without seats and ride times in excess of 90 minutes. The bus runs — and their costs — were eventually restored, even though they weren’t budgeted for.
Smith said correcting for situations such as the bus run were responsible for about a quarter of the 4.5 percent increase.
State education funding formulas find that RSU 18′s local tax base is better off than the tax base of much of the rest of the state, meaning that RSU 18 is only a low receiver of state funds.
By law, the state is supposed to pay 55 percent of each school district’s essential programs and services, but Smith said RSU 18 actually only gets about 46 percent.
“The most important thing — it’s not going to happen any time soon — is that we find a way at the state level to fund that 55 percent,” he said.
Smith said that he sees a recovering statewide economy, which he hopes will benefit the school as both the state and local taxpayers see their own situations improve.
“Things are starting to look better,” he said. “Unemployment is down. There is economic growth and development, so the revenue picture is improving.”
Even if the budget is approved, district spending levels would still be lower than they were in 2009, when the budget was $33.8 million. Smith said that, factoring in inflation, that would amount to more than $36 million in today’s dollars.
In 2010 and 2011, the district decreased its budget by about 1 and 4 percent, respectively.
In 2012, budget increases were rejected twice by voters, forcing the district to submit a flat budget, which was approved.
Last year, voters approved a 1 percent increase for the district.
The public hearings are 6 p.m., Monday, April 14, Messalonskee Middle School in Oakland; Tuesday, April 15, James H. Bean School, Sidney; Wednesday, April 16, Belgrade Central School; Thursday, April 17, China Middle School.