BROOKSVILLE — Hernando School Board members on Tuesday received what might pass for good news in these tough financial times.
The district's estimated shortfall for next year's budget is about $2.6 million, much lower than the nearly $7 million deficit chief financial officer Desiree Henegar had projected in recent weeks. The smaller gap is the result of dollars the district will carry forward into next year by leaving vacant positions open and using long-term substitute teachers.
The bad news: Most of the cost-cutting ideas superintendent Bryan Blavatt brought to the board, such as eliminating middle school sports and asking unions to forgo automatic annual raises, would be unpopular with employees, students and parents.
On top of that, officials say, the school property tax rate is expected to go up.
The state increased school funding this year, but the district will still be forced to operate at 2003 levels, with estimated general fund revenues of about $162 million, Henegar said. Meanwhile, the cost of meeting state mandates and other expenses, such as electricity and fuel, continue to rise.
One option, Henegar said, would be to reduce the district's rainy-day fund and divert it to operating costs. That would take a roughly $1.4 million chunk out of the shortfall. But it would also put Hernando on a state watch list for districts that let their reserve fund fall below 3 percent of the general fund.
Other options will require negotiations with the district's unions, Blavatt said.
"We're going to need the cooperation of others," he said.
Suspending the automatic annual "step" increase for teachers and noninstructional employees would save about $2 million.
Another idea on the list was to suspend another two paid holidays for the 2012-13 year to save $850,000. But by Monday evening, after Henegar had prepared Tuesday's presentation, that was no longer an option.
As part of a contract agreement reached Monday with the Hernando Classroom Teachers Association, the district will pay teachers for one of the two paid holidays that had been tentatively suspended in the current budget year. The district also agreed to take off the table the idea to suspend any paid holidays next budget year.
As part of the deal, the teachers union will help put a $200,000 dent in the projected shortfall by helping devise a plan to cut by 20 percent the overall cost to pay teachers supplemental stipends for extra duties such as coaching athletic teams.
Board Vice Chairman Matt Foreman suggested that the board not publicly discuss any cost-saving ideas that would involve negotiations with the union. His fellow members agreed.
But that strategy also cut off discussion on ideas to eliminate middle school sports (saving nearly $200,000) or to suspend high school junior varsity sports (saving about $220,000), because those programs involve supplemental pay.
"I think it's a very thin list (of proposed cuts) and doesn't give a chance for other ideas that might be out there," teachers union president Joe Vitalo said after the meeting. "They're looking at placing it back on us."
School principals are already making painful decisions.
Blavatt has directed principals to cut their respective staffing levels by 10 percent, saving about $3.1 million in the 2012-13 budget. District departments are doing same and trimming other expenses, too, for a savings of about $1.4 million.
The state, not local school boards, sets the local school tax rate, based on taxable property value. The state had projected Hernando County's taxable value to increase by .01 percent.
The Hernando County property appraiser's good-faith estimate, however, predicts a roughly 6.5 percent drop. If that holds, Henegar said, the total school tax rate will likely be set at 7.93 mills, or $793 for a $125,000 home with a $25,000 homestead exemption. A property owner with the same value last year paid $750.
The first public hearing on the district's 2012-13 budget is set for July 31.
Tony Marrero can be reached at (352) 848-1431 or [email protected]