New operating budget

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New operating budget adopted – what’s next?
Everyone is concerned about budgets these days and that includes the school division. Given this volatile fiscal climate, creating a budget for fiscal year 2009-10 was challenging to say the least. Proof positive were the numerous School Board workshops and budget deliberations that took place throughout the winter and spring, prior to the formal presentation of the budget to City Council in April and its adoption in May.

Because of the complexities of the annual budgeting process and its duration, the funding reality often changes along the way, especially based on actions taken by the General Assembly and federal government. Case in point, when Superintendent Jim Merrill first presented his Estimate of Needs, Virginia Beach City Public Schools was faced with the need to cut its already approved 2009-10 budget by $55.6 million. As you may know, in Virginia Beach we prepare a biennial operating budget, so that is why the 2009-10 budget had already received City Council approval.

It was the receipt of economic stimulus funding, known formally as the American Recovery and Reinvestment Act of 2009 (ARRA), which helped mitigate the extremely negative effects of the shortfall. VBCPS is receiving $48.5 million in stimulus funding, some of this over a two-year period.

The ARRA funding breaks down this way:

•	$22.1 million (approximately) to be funneled through the State Fiscal Stabilization Fund (SFSF) for 2009/10
•	$9.2 million under Title I, Part A, over a two-year period
•	$17.2 million under IDEA, Part B (special education), over a two-year period

Of this money, SFSF is where there is some flexibility in how the money can be spent. This is the funding that helped plug holes in the operating budget. The Title 1 and IDEA funds do come with some stringent restrictions and have non-supplant rules. This means we cannot move money out of those programs to address other needs. Title 1 and IDEA monies can only be spent on these programs.

Because of the stimulus funding, we were able to make some restorations to the operating budget. The Teacher Production Center, tuition reimbursement funding, professional improvement funding, capital outlay monies and departmental funding are back in place. The school division is also placing $13.9 million into the capital improvement program budget. This will allow us to move up the Kellam High School replacement project from 2015 to 2014. It also expedites the replacement of Princess Anne Middle from 2017 to 2016.

However, ARRA funding did not equate to a dollar to dollar restoration to the 2009-10 operating budget. In the end the budget approved had to endure a cut of $35.7 million. It will stand at $851.2 million come July 1, when the new fiscal year budget goes into effect.

“Our employees were overwhelmingly supportive during the difficult budgeting process. Even when we acknowledged we could not recommend any salary increases, our staff members focused on the big picture. They understood the difficulty of the financial times facing us. Because of that support, I feel compelled to address what may be a question in the minds of some. That question is: Why couldn’t stimulus money be used to implement staff raises or bonuses?” notes Chief Financial Officer Farrell Hanzaker.

“Stimulus money is at best one-time funding. So we cannot use it to underwrite the ongoing expense associated with a raise. In addition, guidance we received from the state Department of Education indicated that using stimulus monies to underwrite a one-time bonus was inconsistent with the intent of the money – which is to save or create jobs.”

In the face of fiscal uncertainty, Virginia Beach Schools has been able to weather the financial storm. Much of that ability is testament to the cost- saving measures that have been put into effect over recent years. Many school districts and cities in the state and across the country have had to resort to layoffs and mandatory furloughs. Fortunately, VBCPS has not had to face these scenarios, despite the extremely difficult budget cycle.

So where do we go from here?

The short-term answer is that the School Board has passed a budget that provides for children. The division is still hiring. Employees still enjoy job stability. And VBCPS will continue the pattern of fiscal responsibility and savings that Dr. Merrill initiated several years ago. One huge benefit to this year’s budget is that the city agreed to the division’s request to receive its local funding in a lump sum. This allows increased flexibility in managing expenditures and will be a money saver in the long run.

In the longer term, while we continue to hope for the best regarding the economy, we at the same time should be prepared in the knowledge that next year’s budget process is likely to be just as volatile as this year’s, if not more so. As we progress through the coming months, we will continue to keep you informed as the new biennial budget takes shape.