BOTETOURT – Add another half million dollars to the amount of cuts the Botetourt County School Board is going to have to make to the 2010-11 school budget—for now.
That additional loss of state revenue combined with higher than hoped for costs for Virginia Retirement System (VRS) contributions mean the school division may be cutting even more positions as it wrestles with what seems to be ever-changing information coming out of Richmond.
The change in budget projections prompted a lengthy discussion among the committee members about cutting staff, cutting pay and what Superintendent Dr. Tony Brads called “the most palatable option,” requiring employees to pay part of the employee contribution to the VRS.
The School Board Budget Committee learned of the change during its scheduled meeting last Thursday when Brads said the school division will have to now cut just over $3.3 million from its operations budget. Two weeks before, the school division expected to have to cut $2.7 million.
Brads told the committee at this point, the school administration was recommending cutting another $233,000 from personnel expenses and further reducing expenditures for capital improvements by another $360,000.
The administration had already recommended cutting $871,000 from personnel and $405,000 from capital projects.
Even with the added cuts, the school division is still short $190,907 of what administration projects it will need to balance the budget—and that’s still assuming the school division gets level funding from the Board of Supervisors.
It also doesn’t include the prospects of further cuts in state funding as the General Assembly wrestles with the state’s financial woes.
There are several issues involved in the funding cuts. One is the change in the Composite Index used by the state to decide how much money localities get under the state’s basic aid formula.
The CI changes every two years—and this is the year—and Botetourt’s “ability to pay” based on the CI improved, so the school division will get less state funding per pupil.
Interestingly, counties in Northern Virginia will get more state funding because their “ability to pay” declined, according to information provided by the school administration to the budget committee.
That CI change cost Botetourt $208,454 in state funding.
The school division’s contribution to the VRS also will go up $453,668, which was anticipated when the budgeting process began.
As the committee wound its way through the discussion about cutting dollars out of the personnel category (personnel accounts for about 85 percent of the school budget), Board of Supervisors committee members Don Assaid and Billy Martin offered again their concern about cutting positions and instead ask the School Board members to consider cutting salaries instead.
“I hate to see anyone lose his job,” Martin said.
But the School Board members did not want to cut salaries. They said that affects retirement and they were uncertain how those salaries might be restored once the economy improves.
Brads also said the cuts the state is making in what it considers adequate funding levels for everything from administrators to custodians will essentially be permanent—so the school division will have to deal with those funding levels anyway.
He said the best option for Botetourt would be if the state’s final budget bill includes provisions that allow school divisions to have employees pay a share of the employees’ contribution to the VRS.
Under state law, and because the school division opted to make the contribution permanent some years ago, Botetourt schools are required to pay the 5 percent employee contribution to the VRS.
If the school division is allowed to have employees pay 1 or 2 percent of that 5 percent, it would serve almost as a “source of revenue,” Brads said.
But, that provision in the budget bill still has to make it through the General Assembly grind, so it may not be an option.
Brads said if this is an option, it would mean the school division could reduce its contribution to the VRS by having the employees pay part of it. That would allow employees to maintain their current pay levels, which protects the amount of retirement they will receive.
It also means employees have what Assaid called “skin in the game,” where the employees themselves are vested in what happens with VRS.
Assaid said state employees have been insulated from hits the private sector retirement plans have taken because of state law. “Their benefits are guaranteed,” he said, “but we have to pay more into it.”
Brads said the school division’s best hope in dealing with the budget cuts would be flexibility with the VRS, and he called it “fair and equitable.”
If the schools have to cut employees to make up the budget shortfall, he estimated they’d lose about 32 positions.
If the school division can have employees pay a part of their VRS contribution, Brads believes it could be structured to cover at least the $453,668 increase the division is going to have to pay.
Brads also expressed reluctance at trimming the school’s capital improvement plan further, particularly in light of what happened at Blacksburg High School over the weekend when the gym roof collapsed because of snow. Much of Botetourt’s capital improvement plan addresses roof replacements.
The budget committee is scheduled to meet again February 25 at 8:30 a.m. in the School Administration Building in Fincastle. Brads told the committee the numbers would change again before that meeting.
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