Big Deficit Projected For Schools

Payson superintendent puts shortfall at nearly $1 million, even without fresh state cuts in K-12 spending

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Slammed by declining enrollment and reduced federal aid, Payson schools face a $1 million deficit even if the Arizona Legislature doesn’t slash K-12 spending, Superintendent Casey O’Brien said this week at a budget briefing held at the high school auditorium.

“We are in a critical situation,” said O’Brien, who put the baseline shortfall at $925,000. “We will continue to be in a critical situation. There’s only so much you can cut before you’re no longer the same school district. That’s what I worry about.”

The district’s enrollment dropped by 111 students this year, which translates into a $534,000 loss in state funding — even if the state doesn’t impose big additional reductions in per-student funding as most political observers anticipate.

The district also won’t have this year’s $275,000 in federal stimulus funds, most of which funded an early intervention program O’Brien says he wants to keep due to its early successes.

The district will also lose about $46,500 it got this year from federal forest fees, intended to compensate districts with lots of non-taxpaying federal land. This year, Payson schools received $480,000.

The district is set to receive forest fees through 2012. After that, Congress would have to reauthorize the funding.

Meanwhile, teachers worry about how soon they’ll know if they have jobs.

O’Brien said he will keep personnel informed, but didn’t offer a specific specific timeline.

One teacher asked if the district would consider pay cuts to save jobs. O’Brien said that might make sense if the budget would soon return to pre-recession levels. However, the problem is ongoing.

Also, O’Brien doesn’t expect enrollment to grow until 2018, which could mean downsizing staff.

“I know this causes stress, anxiety, worry,” he said. “It’s better to know where you stand.”

This year’s news comes after a year of heavy cuts to satisfy last year’s $1.2 million deficit. The district cut five administrative positions last school year, including two principals.

Meanwhile, the state Legislature must grapple with a projected $1.2 billion deficit for 2012. Since K-12 education accounts for 37 percent of state spending, O’Brien said it remains vulnerable to cuts.

The state has all but used up the quick fixes — payment rollovers and selling off its buildings, which means it must now make lease payments.

“I don’t know how much more they can sell,” said O’Brien.

“It’s a good thing the state doesn’t own the Grand Canyon.”

He added, “These aren’t people who want to see us brought to our knees. It’s just that they’re in a tight spot.”

And from the lawmakers’ perspective, they have room to cut K-12, with more than $1 billion in unprotected funds available to sweep.

O’Brien said the battle could end up between the Arizona Health Care Cost Containment System (AHCCCS) and K-12 — two of the state’s largest expenses.

Arizona has a lower threshold than many other states for letting people enroll in AHCCCS, the state’s Medicaid program. Voters approved the low threshold, and lawmakers might ask them to remove it, said O’Brien. However, the federal government this year blocked several efforts to cut AHCCCS by threatening to withhold billions in funding.

Meanwhile, Payson appears superficially affluent with its ongoing facelift and brand new, state-of-the-art solar panels and vocational building now undergoing construction, said Casey.

Community members point to the upgrades and wonder why the district is whining, said O’Brien. Some residents believe the schools don’t know how to manage their money.

However, O’Brien said the pots of money used for the projects was designated solely for construction and can’t be used to sustain personnel.

The district isn’t paying anything for the solar panels. A group of investors fronted the money, and Payson schools will pay the equivalent of its utility bills to the investors over the next 15 years. After the district repays the loan, it will own the equipment.

But new buildings won’t pay for educational services over the next few years.

O’Brien said he was relieved that Payson voters recently approved the budget override.

“I can’t imagine what we would be dealing with if we had not,” he said.

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