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School budget picture brighter

Published Sep. 10, 2005

Superintendent John Sanders said Friday the school district will land on its feet financially after a tumultuous year when, at times, things seemed on the brink of disaster.

Sanders said Hernando's public schools finished the fiscal year that ended June 30 with at least $3-million in its fund balance after all the bills were paid. And he says the ship should be in good enough shape to leave that money untouched in the year to come when the school property tax rate will drop by 2.8 percent.

That's a far cry from the dark days of winter when Sanders couldn't say how much money the district had in reserve nor what his budget would look like by June.

In December, then-finance director Sara Perez warned Sanders and the School Board that the district was on pace to spend $5.9-million more than it would get in tax revenue.

Her predecessor in the finance office, Vince Benedict, vehemently disputed Perez's estimates. He said the budget would be "tight" and require some mid-year adjustments but that it was not so dramatically out of line.

Immediately, the School Board carved $2.4-million, or about 3 percent, from its operating budget. Sanders said it was a cautionary effort to split the difference.

For schools, the reductions meant cutting back on supplies, including paper, and shifting some people from administrative jobs into teaching positions.

According to Sanders, those cuts not only balanced the budget but added at least $1.8-million to the district's beginning fund balance, which stood at $1.2-million.

Without the cuts, Sanders said, the original budget would have been on pace to spend no more than $600,000 than was taken in, possibly less.

Every year, he said, midyear adjustments are made to bring budgets into line.

"Vince obviously was closer," Sanders said. "Fact is, his budget is what we followed."

Perez resigned as budget director at the end of December so she could return home to California for personal reasons. She was succeeded by Carol MacLeod, who has been faced with the task of sorting out reality after the public debate over differences between Perez and Benedict.

MacLeod said she would not reveal her assessment on the year's financial activity until September, when the board gives final approval to its 2001-02 budget. An initial public hearing on the budget set for Thursday could offer more clues, though, Sanders said.

Still, MacLeod acknowledged that the school district's fund balance _ a reserve made up of cash and unused supplies _ would be higher than last year. And she said all the bills from the past 12 months will be paid.

MacLeod declined Friday to say whether she felt Perez or Benedict had the best handle on last year's budget. Benedict knew the budget needed adjusting and Perez knew that a $5.9-million over-extension was a "worst case" that might not materialize to its fullest extent.

Still, MacLeod said perhaps Perez should have spent more time analyzing the budget before sounding such a dire warning that the district might be over-budgeted by $5.9-million.

In the end, MacLeod said the budget problems were the product of poor communications (shewouldn't elaborate) and a misinterpretation of the revenue picture that had been painted by the Legislature and the governor. A promised 6 percent funding increase turned out to be only 4 percent, she said.

Of course, Sanders said, errors in data entry made the district's paper budget and its computer budget out of line. Perez found the discrepancy and based her calculations on what she saw, he said. She left before she could make later adjustments, he said.

Looking to the year ahead, the School Board will set its property tax rate at the maximum allowed by law. But because of lower limits set by the Legislature, the tax rate will drop by about 2.8 percent from last year.

Taxes on $75,000 home with a $25,000 homestead exemption will be $494.35, a savings of $14.45. The millage rate will drop from 10.176 to 9.887.

Overall revenue will grow, but so will the number of students. In all, officials said the amount of money per student will actually drop by $3.55 per child.

After hiring new teachers to handle that growth and other fixed expenses, the district will have $1.29-million to spend on pay raises and other new costs, MacLeod said.

"That's little," MacLeod said. "That's puny."

Sanders said he expects teachers and other workers to get an experienced-based "step" increase in their pay. But they're not likely to see much more than that, he said.

Sanders also introduced the idea that the district might be able to forgive the $2.5-million health care debt it owes itself.

Over the past two years, taxes and employee payroll deductions pumped money into the district's health insurance fund. But the fund has fallen short about $2.5-million in meeting the medical costs. Because the district was self-insured, the difference was drained from the district's day-to-day operating budget.

Officials had said the health fund should pay back that debt. Now, Sanders said, that debt from one in-house fund to another may simply be forgotten.

"Now, we've got all the numbers," Sanders said, "And we see a light at the end of the tunnel."

_ Times staff writer Robert King covers education in Hernando County and can be reached at 754-6127. Discuss this and other issues in our Web-based discussion forum at