Facing a projected $1.2-million deficit, the Payson Unified School District Board decided on Monday to ask the voters for a 10 percent budget override in March.
Last year, voters shocked school officials by rejecting a similar measure.
But after peering into the frightening depths of the budget crystal ball for 2010-11 on Monday, the board decided a new override offers the only hope to avoid layoffs, program cuts, increased class sizes and extracurricular fees.
“It is a fairly somber picture,” Superintendent Casey O’Brien said to the board during a special meeting Monday afternoon to pass the override. “The magnitude of the problem at the state level is extraordinary,” he said.
With little discussion, the board unanimously approved the special budget override election for March 9. If approved, the average homeowner could see a $12 increase in their taxes, assuming an averaged assessed value of $116,000. The new rate would still be well below the peak rate in 2005.
Budget troubles started brewing for the district in fiscal year 2008-2009 when the Arizona Legislature cut $350,000 out of the maintenance and operations and and soft capital budgets mid year. For that year, the PUSD had already passed a $15.7 million maintenance and operations budget, which worked out to $3,500 per student.
For the current fiscal year, the board faced even deeper reductions from the state.
The budget was reduced $1.33 million due to a $250,000 cut per student from the Legislature, the loss of 50 students, $450,000 from the override phase out and $549,000 for utilities, for which the district did not get reimbursed.
“So $250,000 was from a natural loss of students, but $1.1 million was completely unanticipated,” O’Brien said.
How did the district make up for the massive deficit when the override failed? The PUSD eliminated 11 positions, took dental coverage out of teacher’s health care plans, froze salaries, eliminated programs, increased class sizes and improved energy management systems to control utility costs. It also started a solar project to further reduce utility costs.
Fortunately, another $2.9 million in stimulus money and a Forest Service program for rural schools offset the district’s deficit.
For next year, stimulus funds will have dried up, making the budget outlook bleak without the override, O’Brien said.
The district expects to lose 35 students (representing $114,000 in funding), another $455,000 from the phase out of the override and $630,000 from the state budget — a total of $1.2 million.
“With reductions of that magnitude,” O’Brien said, the district is more concerned with preservation than expansion.
To cover the million-dollar gap, the district could require students to pay extracurricular fees (bringing in $137,000) and make the rest up in personnel cuts.
“There is nowhere to get that except from personnel,” O’Brien said.
The district’s only glimmer of hope is passing the override in March.
In fiscal year 2004-2005, voters approved an override to last the next five years. At the time, the tax rate was $53.37 annually on a home with a $100,000 assessed value. In fiscal year 2009, the average homeowner paid $38.24. When the override failed, the fiscal year 2010 tax rate fell to $23.34.
With the 10 percent override, the tax rate would go up to $35.06.
“However, the increase is estimated to be only $11.64 annually on a $100,000 assessed value home,” O’Brien said.
Even if the override is passed, the district still faces a $400,000 deficit.
Rory Huff, PUSD board president, asked O’Brien if the district could ask voters for more than a 10 percent override to cover the entire deficit.
O’Brien said the district could have gone for a 15 percent rate increase but “we have to be careful because this is not a slam dunk.”
“People are still hurting out there. We need to be concerned with asking too much and losing.”
“I know it is still rough times, but we still have to look out for the betterment of the kids,” said board member Barbara Underwood.