The Cape Girardeau School District will dip into its reserves to balance its budget, dropping its fund balance below the amount the Missouri School Boards' Association recommends but higher than the state requires. The board approved a $46.5 million preliminary budget for the 2008 to 2009 school year Monday night.

The district's operating fund balance is estimated to decrease from $9.16 million to $6.43 million, or 29.8 percent. Overall, the fund balance will drop from more than 22 percent to 15.3 percent.

Using the surplus is necessary to cover increases in transportation, insurance and utility costs, said Misty Clifton, the district's director of finance.

"I hope those things stabilize and we won't see those huge jumps in the future," said superintendent Dr. Jim Welker, noting that while the district will not meet MSBA's fund balance recommendation of 20 percent, it does exceed the minimum state requirement of 3 percent.

But part of the increase in operating expenses stems from creating new positions or expanding programs, which are recurring costs. Typically, when revenue is stagnant or increases minimally but expenditures continue to rise, cuts or a tax increase are necessary.

The board has discussed a possible bond issue, but the issue would be no-tax and would be directed to a new facility or renovations to an existing facility. A facilities and financial plan is currently being developed.

Board president Kyle McDonald said he is not concerned about the lowered fund balance.

"As long as we keep the required balance the state requires," he said. "We're just trying to get back up to par to where we need to be," he said.

The approved budget includes teacher pay raises and the addition of dental benefits and life insurance for employees, which had been eliminated during budget cuts years ago.

It also funds new positions: four Preparing for Academic Success teachers at the high school, a literary coach at the junior high, an elementary/ alternative school counselor, a fourth-grade teacher at Franklin Elementary, a social worker, and a seventh- and eighth-grade teacher at the alternative school. New programs are also being funded, including a preschool program at Alma Schrader Elementary.

Basic operating costs are increasing faster than in years past. Transportation costs alone rose 40 percent, Clifton said.

Meanwhile, revenue is slowly increasing. State funding is expected to increase by about $99,000, less than the $480,000 increase the district enjoyed two years ago. The is due, in part, to a slight decrease in student enrollment and attendance.

However, the district is anticipating bringing in an additional $749,000 from local taxes, a result of the tax levy returning to the level used during the 2006 to 2007 school year. Last year, because of a paperwork mistake by the former director of finance, the levy decreased.

The public may have difficulty comparing the budget with that of previous years because of a "cleanup" of account codes, Clifton said. Several departments show major increases, but most are because the codes are being streamlined, she said.

"Maybe before we had multiple account codes that were actually doing the same thing ... We want to make it easier for board members to see, read, and understand the budget," she said.

Following the tax levy mistake last year and an audit finding several significant problems, board members expressed confidence the district's finances are improving as a result of Clifton's leadership.

The preliminary budget, while not approved by the July 1 start of the fiscal year, is in place several months earlier than in previous years. Last year, the budget was not approved until November, after Clifton began. This year the budget was delayed because several board members were absent at the June board meeting and because members said they did not have enough time to study the document.

The adopted budget is subject to revision as numbers become firmer. During the 2007 to 2008 school year, the district had anticipated a fund balance increase of $330,066. In actuality, the fund balance decreased by more than $1.4 million, or 13.3 percent, in part because of new capital projects.

lbavolek@semissourian.com

335-6611, extension 123

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