Janesville School Board candidates talk budget problems
The question came up at a school board candidates forum hosted by the Janesville Noon Rotary Club on Monday.
Incumbent Kevin Murray talked of using $3 million or $4 million to help fill the district's projected $13.4 million deficit in the coming year. The administration already is working on cuts that could cover about $11 million of the deficit.
Candidates John Burt and Scott Feldt were resistant to dipping into the reserves.
Incumbent Bill Sodemann didn't like using the reserves, either, but he said there might be no better option.
Two other candidates, Kirk Henry and Fred Shahlapour, did not attend the forum.
The size of fund balance fluctuates throughout the year but is likely to be around $24 million by the end of the fiscal year June 30 if the board doesn't use any of it.
Use of the money is restricted by a board policy, however, and only about $1.1 million could be used. Board members have discussed the possibility of changing the policy.
The fund balance is divided into three parts:
-- An amount equal to 17 to 23 percent of the operating budget. This amount is used to avoid short-term borrowing during the year.
-- An amount equal to between 20 to 25 percent of the expected health insurance claims costs. It is used to cover unexpected increases in health claims.
-- The remainder, which could be used for one-time expenditures, is used to fund the district's unfunded retirement liabilities or to reduce the property tax levy.
This last amount comes to the estimated $1.1 million that could be used to fill the budget hole.
The board could shift those percentages, but using too much fund balance could force the district into short-term borrowing to cover expenditures during the year, Sodemann said.
Drawing down the fund balance also could harm the district's bond rating, which would mean higher interest costs if the board borrows on the bond market.
Sodemann said he doesn't want to use the fund balance, but he sees no other option. In previous comments, Sodemann said a referendum to allow a tax increase is one way to raise money, but he didn't like that option, either.
Henry said at a previous forum that a referendum probably would be needed.
Feldt said all options should be on the table, but he opposed using reserve money for ongoing expenses.
Once the fund balance is drawn down, there is no automatic replenishing. Meanwhile, expenses such as salaries, benefits or electricity repeat themselves each year.
Burt said if the board uses $4 million in the coming year, it would have to use $5 million in the following year.
Burt apparently was referring to the fact that the district's unions have contracts that lock in pay increases through June 2013.
Burt said he couldn't see using the taxpayers' money to balance the budget when the unions have not been willing to give concessions to save the district money.
Property taxes do not appear to be a way out of the budget crisis. Gov. Scott Walker's proposed budget would not allow the district to increase taxes more than a very marginal amount.
Bill Boyd, chairman for Janesville Noon Rotary political committee, said Shahlapour had an important appointment out of town.
Boyd said Henry did not respond to attempts to contact him.
The six men are vying for three seats on the nine-member board in the April 5 elections.