Norman: Old ideas won't help districts adjust budgets

Arlington property owners whose blood boils at the thought of a school tax increase should get real busy, real soon and come up with ideas to prevent it. There are still two months until the school board sets the tax rate, but things aren't looking good.

Many other districts are facing problems similar to Arlington's as they begin their annual summer ritual of setting budgets for the next school year.

The blame for those problems goes mainly to the Texas Legislature for adopting a school finance plan that freezes per-student revenue, seizes for the state any benefit from increased tax rolls and makes higher local taxes almost a certainty.

But whining about who's to blame doesn't solve anything right away. School boards need ideas for saving money -- BIG money -- or the only idea left will be a tax increase.

Arlington's preliminary $425.4 million budget shows a $20 million operating deficit, and that's without yet including the $9 million to $12 million cost of a possible teacher pay raise, $8 million needed to replace 8-year-old computers, or $667,000 to buy eight of the 24 needed replacement buses.

The situation cries out for innovation. Here's why:

Cut the fat

Arlington, like other Texas districts, went through several lean years earlier this decade while waiting for the Legislature to revise the state funding plan. District leaders trimmed and trimmed.

The preliminary 2008-09 budget already shows expenditures trimmed by $2 million from the previous year.

End the waste, fraud and abuse

See response to "cut the fat."

Of course, anyone who can point to areas where money is being misspent should quickly do so.

Spend revenue from natural gas leases

The Arlington district has $3.7 million from Barnett Shale natural gas lease bonuses in the bank, plus another $17 million or so coming soon from bonuses on leases that are going through the district's approval process. The school board has decided to set that money aside in a separate account.

Spending that money now could cut the budget deficit. But it is one-time revenue. Spending it to pay operating expenses would solve a problem this year, but then it would be gone and the district would be in an even deeper hole when it faces those same expenses next year.

Spend savings instead of raising taxes

This is what many school districts will be doing. But it's also what Arlington and some others did last year. Without increases in operating income or further cuts in expenses worth tens of millions of dollars, eventually the savings account will run dry.

Arlington faces its own unique problem with this approach.

The primary use of a school district's savings, which administrators call "fund balance," is for cash flow. People don't pay their tax bills until around late November-December-January, and districts need cash to pay the bills and meet payroll in September-October-early November. If they don't have cash, they have to get loans and then pay interest costs.

Arlington budget experts estimate that the district's fund balance will be almost $80.2 million at the end of August. That's a comfortable cushion.

And the district is scheduled to get $135.8 million in state funding during September and October. Even more comfortable.

But that state payment schedule, specified by the Legislature, puts districts into three different categories. Arlington is on the verge of being pushed into a different category, one which would give it $58.8 million less during that crucial time before local tax money starts coming in. That change could wipe out the comfort cushion in the fund balance.

Cut payroll

Like most businesses, the biggest part of a school district's budget is in payroll -- 87.9 percent in Arlington's preliminary 2008-09 budget. Teachers get almost 70 percent of that amount, so making any big-dollar reduction in the budget makes dealing with teacher pay almost inevitable.

But Tarrant County school districts compete relentlessly in hiring teachers and other professionals.

Birdville trustees recently set a 2008-09 starting teacher salary of $47,000. Administrators in the Keller district are looking at $45,100. Arlington currently is at $44,000, a competitive disadvantage.

That points the salary needle higher, not lower.

Fire some administrators

The percentage of Arlington's budget devoted to central office personnel (2 percent) is already the lowest among the districts with which it competes, while the percentage devoted to instruction (64.3 percent) is the highest in that group.

In the end, meet the deadline

The new school year begins Aug. 27, so that's the practical deadline for districts to have their plans in place.

In Arlington, a committee of local residents has been meeting to study the budget. Their final meeting will be at 6 p.m. Tuesday at the district's Professional Development Center, 1111 W. Arbrook Drive. They're supposed to present their recommendations to the school board at a meeting that is scheduled to begin at 7:30 p.m. Thursday at the district administration building, 1203 W. Pioneer Parkway.

If board members eventually decide on a tax increase, they'll have to ask for voter approval in a Nov. 4 election.