Battling the budget

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SPRING VALLEY — Hall Superintendent Mike Struna warned the Hall High School Board this week a financial “perfect storm” could further wrack Hall’s already battered budget, raising the specter of district cuts, fee increases or future tax hikes.

Some fiscal squalls Struna forecasts: Continued shortfalls in state grant payouts for special education and transportation, and a low tide in student enrollment and expected tax assessment increases.

A major threat for a worsening budget deficit at Hall is a health care cost increase Struna said could make landfall next year. He said costs for Hall’s staff health insurance through Blue Cross Blue Shield could climb 21 percent by January 2010, resulting in an $80,000 cost increase over the next calendar year.

“We’re hoping that we see a drop down,” Struna told the board this week, noting Hall’s insurance committee will seek alternate bids through its insurance agent.

But Struna said even if Hall can negotiate more modest insurance cost increases of 10 to 15 percent, the district still could face other fiscal storms.

For one, Struna said officials predict assessments in the school’s taxing district will climb just 2 percent – a trend he said is linked to farm property values and homestead exemptions. The result — a flattening of revenues the district could collect from property taxes, Struna said.

Add the fact the state has again missed a payout deadline for categorical grants in special education and transportation. The state grant shortfalls are part of an ongoing financial riptide that left a $24,000 gash in Hall’s transportation reserves last year.

Board President Todd Fanning remarked half-jokingly the news media should write about state funding shortfalls “in screaming headlines.”

Another issue is Hall’s slumping enrollment. Struna said in the short term, the number of students at Hall could fall from around 430 last year to as low as 360 by 2011. That could lead to a loss in some general state aid, Struna said.

Overall, Hall has had a combined budget deficit of $100,000 in the last two years, Struna noted. He said the district could see an even bigger deficit this year and suggested the board consider whether it’s time to borrow money, raise the annual district tax levy or implement fee increases.

Struna also raised the issue of personnel and program cuts.

“Any cuts you make now are going to adversely affect education,” Struna acknowledged. “But the question is, our enrollment’s dropping ... if I had four cars at home and I had three people driving, I probably would get rid of that fourth car.”

The board recoiled at the idea of cuts at Hall, with Fanning and board member Jack Boroski suggesting instead the district borrow money to cover a deficit. Fanning and Boroski both are employed by Citizen’s First National Bank.

Fanning warned cuts could ruin public relations inroads Hall has made during recent outreaches, like the school improvement “vision retreat” it held in October. 

“No matter what you cut, it isn’t going to make enough to make a difference,” Boroski said. “It’s going to cause more heartache than anything else.”

Fanning then told Struna “the borrowing aspect is huge,” and Boroski and Fanning indicated that given currently low interest rates, “you’re in an environment you may never be in again.”

Struna told the board he’d examine the district’s bonding capacity to see if borrowing more money would be viable. And Principal Tony Valente said the district plans to look at “increasing class sizes” rather than cutting school programs...

Meanwhile, the district plans to vote next month on its 2009 tax levy, which is set at about $2.9 million with an extension increase of 2.5 percent. The district currently does not anticipate the need for a truth in taxation hearing for the levy.

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