THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, January 16, 1996 TAG: 9601160264
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY ALETA PAYNE, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Medium: 100 lines
Despite stringent spending restrictions which began last fall, the school district faces the possibility of a second budget shortfall, this for the 1995-96 fiscal year, unless additional money is found.
The division's administration has recommended asking the City Council for enough additional funds to cover the projected shortfall in state and federal money that, in the best case scenario, stands to leave the district more than $1 million in the red for this fiscal year.
School Board members will discuss a report outlining the district's financial status and the administration's recommendation at their meeting today. Most contacted Monday said they needed more time to study the report before commenting.
Board member Donald F. Bennis said he would need additional information from interim superintendent James L. Pughsley and his staff about the status of current reductions and the impact of additional cuts.
``We don't want instruction to suffer at all,'' Bennis said. If requesting more money from the city is the only way to avoid that, ``We'll have to go back to the city,'' he said.
District offices were closed Monday for the holiday, and Pughsley could not be reached for comment. It was unclear if there are other alternatives to seeking additional money from the council.
In October, the board approved more than $5.4 million in spending cuts, a move which school officials expect will bring in expenditures for the year at $3 million less than budgeted. But the revenue side of the equation has not cooperated. It is unlikely that income from the state and federal government will meet even the reduced projections that school officials discussed when the cuts were approved.
In particular, a slow Christmas buying season hurt sales tax. And impact aid - the money the federal government pays districts which serve large military communities - was grossly overestimated in the original school budget.
Between the district's October and December projections, estimates of federal aid dropped an additional $1.7 million, state sales tax dropped $600,000 and state funding dropped more than $500,000.
The district hopes to pull in more than $3 million in potential revenue that was never budgeted - including almost $2.2 million from the state for a funding miscalculation made last year. Additional money also could come from early retirement program savings, some enrollment growth and other areas. Even if that windfall materializes, the school system would need up to $1.2 million for this year. Without that revenue, the projected shortfall could grow to more than $4 million.
When the board approved the first round of cuts in October, Pughsley said the administration would come back in January to update the situation. In December, with reports that sales tax revenue was down statewide, school officials alerted the city that additional money might be needed.
Many of the budget problems from the 1994-95 fiscal year, which ended in an unprecedented $12.1 million budget shortfall, were repeated in this year's financial plan including overestimating revenues and underfunding some programs and jobs.
Unlike last year, however, the board has been updated frequently on the budget situation and has been involved in making decisions far earlier in the process. Several board members said they were pleased that they were being kept abreast of developments.
Relations between the School Board and City Council have been strained of late. The council has made consolidating some school and city financial operations a condition for covering the 1994-95 shortfall. Board members have said they will continue to study consolidation, but they won't be rushed in making such a decision.
The council, like the school division, receives sales tax revenue and will see some effect from the downturn there.
School Board member Elsie M. Barnes said she considered going back to the council a last resort.
``Given the political climate and the belief we've been remiss in our responsibilities, I think we need to see if there's any other way to balance the budget,'' she said.
Barnes said it was wise of school district officials to update the situation now, so that more detailed information could be collected if a request did have to go to the city.
Vice Mayor W.D. Sessoms Jr. also said he was glad officials were being ``put on notice'' now about the problem.
``The right thing is to be informed as to the worst case scenario,'' he said. ``Let's give the board the chance to find the money through cuts or whatever and let's monitor it very closely.''
KEYWORDS: VIRGINIA BEACH CITY COUNCIL BUDGET VIRGINIA BEACH SCHOOL BOARD
by CNB