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The Lansing Board of Education passed a $25,275,503 budget Monday for the 2010-2012 school year.  The new budget is 3.68% higher than last year, and is expected to raise the tax levy by 1.9% and the tax rate by 3.34%.  School officials estimate that will mean an additional $62 this year for every $100,000 of assessed property value.  The board considered options with higher and lower tax levy rises, but chose a middle choice to balance the dramatic loss of revenue the district faces with already stressed taxpayers.

"I recommend the 1.9% option," said Superintendent Stephen Grimm.  "I think that's what does the best for our taxpayers right now.  We plan forward, but we have to act now.  Our taxpayers are stressed.   I think regardless of what the next two years look like, right now we need to be good to them.  They've been good to us and we want them to be there with us in the future when we know it's going to get worse."

Grimm recommended minimal cuts for this year, warning that next year cuts will have to be much deeper.  His three year plan projects using about a third of reserve funds each year for three years to mitigate tax rises and cuts.  This plan was to start last year, but the district spent conservatively enough that the board didn't have to dip deeply into reserves for this year's budget.  Grimm says that put Lansing a year ahead of districts that are really in trouble this year.

In our region alone some districts are facing major tax increases this year.  Spencer Van Etten may raise their levy as much as 11%, and Candor could go as high as 9%.  That makes Lansing's 1.9% levy rise look pretty good by comparison.  But Grimm warns that won't be possible after this year.  And 1.42% of the 3.34% tax rate rise is attributed to the AES Cayuga power plant valuation that has been negotiated downward.  County officials predict that the renegotiated value of the plant will be accepted by the Industrial Development Agency (IDA) in a vote next week.

Business Administrator Mary June King softened the blow somewhat by saying that the estimates for revenues and expenditures are conservative.  Indeed the appropriated fund balance, the amount underspent on this year's budget, could reach $1.1 million this year.

"Be aware that the decision you make tonight is probably 99% certain a worst case scenario decision.  It will be better when we come to establishing the real tax rate in the summer."

Most board members went along with Grimm's combination of planning, bleeding out reserves, and evaluating.  Grimm has told the board that his hope is that the state will back off school aid cuts after school districts begin failing financially this coming year.  But reversing a move that reduced a $13 billion state deficit by about $10 billion seems an unlikely move by a Governor who has been building his political capital on a platform of getting state finances under control and keeping them there.  Grimm has said all along that for at least the last three years the district has been spending responsibly and taxing respectfully, doing what it can to reduce expenses while taking the time to create a long range plan that will guide and inform future budget decisions.

"I don't think we're spending frivolously," said Board President Anne Drake.  "That's for sure."

Board member David Dittman has advocated making cuts to compounding costs sooner, not later.  Unfortunately that means salaries and benefits, but Dittman has argued that cutting non-compounding costs like teaching materials or closing facilities like the swimming pool does not address the root problem.

"We've been using reserves and finding money and doing everything you can possibly do," Dittman said.  "It's almost like magic.  But the rabbit in the hat is gone for next year.  People have to understand that, because I think there are people out there who think that you're just going to keep dipping your hand into the hat and keep coming up with some way to take this deficit that we're funding with our savings, and it's going to go away.  It is not going away."

The plan Grimm has presented takes the district painfully, but not fatally, through the next three years.  After that reserves are largely depleted, and drastic cuts and tax rises hit.  

"It's coming down here and to some 750 other school districts in the state," King said.  "Most of the business administrators in the region shared emails today and one of the questions the initiator asked at the end was 'how many years can you survive'?  The vast majority of us responded that we're projecting anywhere from two to three to four years, business as usual."

Some districts are facing that this year, so Lansing is better off than some.  But Dittman said the only way to avoid that fate is to make the compounding cuts now and not wait while they continue to compound over the next few years.

"I don't think you can trust the state," he said.  "I've been saying this for three years.  We saw it coming.  When the first financial crisis came around I said that stimulus money is a one time shot.  Now you have the budget gap at 2.8 million, 2.7 million...  because we didn't address the issue back then.  It's just compounding and if you don't come up with a way to get your costs in line with your revenue increases you're going to go out of business."

Most board members preferred the wait and see approach.  But even so most of them acknowledged that there is a limited amount of time for sale.

"The key that we've got to keep in mind is that we're buying time," said Board Vice president Glenn Swanson.  "The plan where we form a committee and work through the implications -- to engage people -- I think it does take time to do that and get our stakeholders engaged, rather than making swift cuts.  I don't think the community prefers swift cuts."

Dittman continued to underscore the challenge the district and all school districts will ultimately face, the tug between maintaining excellence in education, decreasing revenues, and more and more stress on property taxpayers.

"Are we going to go out of business before we force everybody in the economy out of business, or are we going to force everybody in the economy out of business and then go out of business?" he asked.  "At some point in time people are not going to be able to pay those taxes.  I think it's very important that all stakeholders understand that our ability to continue to do this is very limited.  It's limited to just one more year.  Somehow that cost has to come inline.  It won't come from the state and it won't come from the taxpayers, because these tax rates are extremely high."

The board passed the budget 6-1 with Dittman voting no.  They also endorsed Grimm's recommendation to set the levy increase to 1.9%.  Voters will decide on whether to accept the budget on May 17th.

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