Nashville Schools Wrestle With Less Funding

January 13, 2010

Metro schools face a $35 million budget shortfall next year, and money can’t be pulled from savings to make up the difference.  

Board members Tuesday explained the district’s financial woes at the first of several meetings to create the 2010-11 budget.

Based on current estimates, the school district will have to absorb $6 million in insurance increases, $ 12.4 million in pension fund increases and $7 million in scheduled pay raises. Those new expenses are colliding with months of sluggish sales tax collections and a depleted savings account that was used to fill in gaps in previous years.

"One thing we’ve relied on, every three of four years, is the reserve fund to carry us over," said board member Steve Glover, chairman of the district’s finance committee. "That is something we don’t have the luxury of going forward."

In the past two years, the district has dipped into savings to fund part of its $620.7 million budget. Last year, the district double dipped from the account to make up for sales tax collections, which didn’t meet projections.

This year sales tax receipts are $7.5 million below projections, which means the board may again have to dip into the account. That would bring the balance to around 3 percent of the total budget, and at that level school districts are no longer allowed to use the reserve fund to supplement their budgets. They can dip into it only for unexpected expenses.

The balance of $27.4 million represents about 4.4 percent.

School officials aren’t saying where cuts would come from, but Director of Schools Jesse Register said he plans to avoid cutting teachers. Last year, 150 teaching positions were eliminated in an effort to save money.

"This is a dilemma, but it’s not of anyone’s doing," Register said. "It’s the hand we’re being dealt because of the economy."

Board members hope to have a draft of the budget by Feb. 23, and to vote on a final budget by April 13. It will then be sent to th e mayor for approval, and then to the Metro Council.

Board members stressed that, at this point, figures are tentative because they do not have up-to-date sales tax information or direction from the mayor’s office about how much money schools will get. 

There was no increase to last year’s budget, and teachers and staff haven’t gotten raises in two years, aside from so-called "step increases," which kick in after various years of service.

Metro Finance Director Rich Riebeling would not comment on whether Mayor Karl Dean would recommend a tax increase this year, but said the goal is to fully fund schools.

Tax talk premature
The Metro Council could approve a 56-cent tax increase, which would bring an estimated $95 million into the county, but Councilman Ronnie Stein, who attended Tuesday’s meeting, said it’s too soon to say whether the group will take up the issue.

"There’s a prospect things are not going to look good, but we don’t know that for sure," said Stein, chairman of the council budget and finance committee. "The mayor will have to look at this and make a recommendation, and I think it is far too early to do that."

Stein also said it is unusual for the mayor or council to approve a tax increase in the third year of a term cycle. Most increases typically come in the first or second year, he said.

The last tax increase was in 2005 under Mayor Bill Purcell’s administration.