Message to Staff and Community
October 2008
Dear Staff, Parents, and Community Patrons,
It is my desire to keep you informed as we work through the financial challenges that we are wrestling with in our district. We have already started making decisions that will lead to significant savings. The types of budget reductions we are currently making will have a very minimal impact on students; in fact, they will probably not notice them at all. These items include adjusting our thermostats slightly to lower our utility bills and delaying parking lot sealing and other optional maintenance and capital projects. In the upcoming weeks, we will be working with the principals and other administrators to identify areas of possible savings. When all is said and done, we must reduce recurring expenditures by approximately $6 million which will result in a reduction of $18 million over the next three years.
There are several reasons for these financial challenges. The most significant include:
1) A new state funding formula that is being phased in for all Missouri school districts
While additional state dollars were provided to our district in the past several years, the new state funding formula is less generous to certain school districts than it has been in prior years . Simply stated; we are seeing a slowing in increases in the funds we receive.
In the past, the funding formula was a “levy driven formula,” which means districts like Liberty that have a relatively high levy also received more state-allocated funds. These were financially good years for Liberty, but not so good for districts with a relatively low tax levy.
The new formula is a “student-needs driven formula,” which means districts that have a higher percentage of free and reduced lunch students, special education students, and English as a Second Language students receive more of the state allocation, and districts like Liberty receive less. State officials feel the new formula is more equitable in the distribution of state funding.
With implementation of the new formula, the state has increased the overall amount of money provided for public education. We anticipate seeing healthy increases in 2011-2012, once we are on the formula 100 percent, as long as state revenues allow them to fully fund the formula. I realize this might seem a bit confusing, however, I want to clarify that our financial challenges are not caused by the new formula, it is just one factor.
2) Recurring financial commitments were made based upon unsustainable revenues
Programming, salary, benefits, and other recurring expenses were added when our revenue streams were very generous, yet these revenues have been slowing for the past few years. Instead of reducing expenditures to match our revenues, money was borrowed to balance the budget. This loan payment (lease purchase) is now placed on top of the rapidly growing expense of running our district. The escalating cost of fuel, electricity, and other expenses make our challenges even greater.
3) The absence of accurate and transparent budget projections
There is no other way to put it than to say that less-than-transparent reporting was provided to the school board, staff, and patrons. Additionally, projections were not based upon reality, but were simply percentage increases applied to revenues and expenditures that were not accurate.
4) A slowing economy
Many area districts are seeing little or no increase in assessed valuation. We believe this trend will continue with Clay County and are projecting reduced increases to our assessment numbers in the years to come. We are fortunate to have more new construction than many districts; never-the-less, we are seeing the impact of the slowing economy on our revenue. Additionally, the slowing economy could very well impact state funding to the point that the allocated amounts for public education could be reduced, which causes us to use conservative numbers as we project revenue once we come off our “hold harmless” status in the state formula.
During the next few months, the Board of Education will make tough decisions about a budget reduction plan. We anticipate reducing the current year expenditure budget by $2 million. Future reductions beyond the current year could impact programs and staff, as approximately 80 percent of the district’s operating budget is expended on personnel. We will work to minimize the impact these budget cuts will have on students and staff.
Please understand that all of our budget reduction strategies will be designed to minimize the impact on student learning in the classroom. Protecting our quality instructional programs and meeting the needs of all children are among our highest priorities.
We are fortunate to have dedicated and caring employees in our district. It is incumbent upon us as leaders to do our best to minimize the negative impact the budget reductions have on staff and students.
I can assure you that timely and specific communication is our foremost goal as we weather these challenging times together. In the next four months, we will announce the recommended reductions in Phase One. We welcome your suggestions for cost savings. You can send us your comments through our Web site at www.liberty.k12.mo.us/budget-reductions.
I want to thank you personally for your support to our school district. We will meet these challenges head-on by working together, and in the end, we will be a stronger and more efficient school district.
Sincerely,
Mike Brewer
Interim Superintendent
