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Schools brace for lean budgets By DAMIAN MANN Hit hard by recent cutbacks, Jackson County schools could face further budget problems if a weak economy causes the state�s revenue projections to fall short. "Schools have a lot better chance of going down in this budget session than going up," warned state legislative revenue officer Paul Warner. Medford schools will be short a few slots Escalating expenses are forcing Medford schools to consider leaving 10 to 15 staff positions unfilled next year. Superintendent Steve Wisely predicts the district�s proposed $80 million budget could be extremely tight, possibly even tighter if the governor�s $5.2 billion education package is reduced. "I expect to leave several teaching vacancies unfilled," said Wisely. The reduction in force should take place through attrition as employees retire or leave the district. There are about 1,150 full-time employees in the school system. Salaries, which make up more than 80 percent of expenses, will increase 3.7 percent. Insurance is expected to rise by almost $1 million. The district will see a natural gas rate hike of 33 percent, and electricity bills could climb 25 percent. With the economy heading downhill, Wisely also is worried that the governor�s proposed education budget could be cut, exacerbating the district�s financial problems. Medford is part of a trend in Jackson County schools, forced to reduce staff because of skyrocketing expenses and limited revenues. District business director Galen Anderson said, "It�s going to be a rough year." Even with the extra $3 million this district could receive under the governor�s education plan, Anderson says the budget could be very tight. The district will have a better idea about its financial health in the months ahead as the state releases better projections of income and anticipated expenses. The state had been predicting a $600 million shortfall with its upcoming $11.36 billion biennial budget, but so far Gov. John Kitzhaber has held firm that schools receive a relatively hefty $5.2 billion share. Even though the budget represents an increase in funding, schools throughout the state are bracing for shortfalls, staff reductions and cuts in programs because expenses have risen faster than revenues. Local school districts like Eagle Point, Phoenix-Talent and Ashland are all feeling the effects of the budget crunch. Eagle Point announced recently it would lay off 71 employees to cut expenses by $1 million. Both Phoenix-Talent and Ashland also anticipate having fewer staff members next school year. For years, these districts have been forced to spend down their carryover funds to compensate for revenues that didn�t keep pace with expenses. Although smaller districts are most vulnerable to these financial woes, large school systems like Medford�s have been hit with a projected increase in insurance costs of $1 million and a surge in energy costs. Eagle Point Superintendent Bill Jones hopes that if there are reductions, they would be relatively minor and could be handled without further staff cuts. But, he said, "If the Legislature made significant cuts from the proposed budget, I would say we would have to look at other options." Jones said he has discussed this problem extensively with his staff. "We hope to be able to live with the reductions we made." Medford Superintendent Steve Wisely is preparing his budget with caution because of the threat of reductions to the governor�s proposed education expenses. "I expect that our budget will be very tight," said Wisely. The impact to the education budget will depend on how much the state receives in income taxes. The legislative revenue office expects to receive those calculations by May 14. Since 10 percent of the state�s revenues come from capital gains on stock market transactions, a lot is riding on the health of Wall Street. Warner said, "If the income tax gets weak or declines, we could have more problems." Already there is pressure to reduce the $5.2 billion for education, and Warner said that if income levels are less than projected, there will be greater impetus to reduce spending on schools. Nancy Heiligman, director of school finance for the Oregon Department of Education, said school districts throughout the state have experienced dramatic cost increases, particularly in the price of energy, insurance and salaries. "Funding hasn�t kept pace with inflation," she said. "It�s taking its toll now." Despite the problems schools are experiencing, most officials feel good about the governor�s budget, which offers almost 50 percent of the general fund to grades kindergarten-12. But Heiligman said, "There is a high level of concern if the economy worsens." Schools are particularly worried because the state has enjoyed about 10 years of prosperity, which should have left education in good shape. However, many districts are barely holding their heads above water. Heiligman said there is a move afoot to create a rainy day fund that would protect districts � particularly those with declining enrollments � from the sort of economic upheavals they are now feeling. State Economist Tom Potiowsky said his projections show the economy in decline until the end of this year. "There is a glimmer of hope at year-end," he said. "We�re hoping for more positive growth in 2002 to 2003." Part of the state�s current budget woes stem from the state�s shift in dependence on revenues from property taxes before Measure 5 to income taxes, which have greater variance from year to year. Reach reporter Damian Mann at 776-4476, or e-mail [email protected] Mail Tribune Home | Ottaway Newspapers, Inc. | Dow Jones & Co., Inc. | Privacy | Contact Us Copyright � 2001 Mail Tribune, Inc.