Rockwood Now Anticipating $4.7 Million Deficit for Next Fiscal Year

Editor's Note: An earlier version of this article incorrectly overstated the budget deficit facing Rockwood. Patch regrets the error and any confusion it may have caused. 

After at least three years without any red ink, the Rockwood School District is moving ahead with a proposed budget plan that will produce an $4.7 million deficit.

The plan included $4.6 million worth of items that would have been included in the $38.4 million Prop S bond issue, had it passed. District CFO Tim Rooney presented the recommendations to the board at a meeting Thursday night and said they represented the district’s most critical needs.

“We had a tough task,” he said. “We were really looking at what, if it would fail, would cause the most disruption.”

The move was not a formal adoption of the fiscal year 2013-14 budget, which will occur later this summer, but provides guidance to district staff so they can begin coordinating the upcoming projects. 

The deficit is the result of a process that started back in December, when the district predicted its expenditures would exceed revenues by a similar amount, around $11 million. A round of cost cutting and additional adjustments narrowed that to $4.7 million.

Thursday night's update detailed $5.6 million in recommendations covering four categories (maintenance, technology, professional development and equipment) that mostly fit under the broader umbrella of “capital” expenses.

It includes major repairs to buildings, such as the roof and infrastructure at Ellisville Elementary, to replacing outdated equipment, such as trucks and student computers.

The district will drawn down the money to cover the $4.7 million budget shortfall from its fund reserves, which is anticipated to stand at $50 million by the end of the 2012-13 fiscal year and is about $18 million more than required by district policy.  

After Rooney’s presentation was complete, he explained that the reason he recommended such heavy deficit spending stemmed from the board’s healthy fund reserves.

“We think we will end the year with $18 million above our 18 percent fund reserve policy and that is why we think we can do some of these projects,” he said.

He said that the deficit is driven in part by a sluggish economic recovery that is keeping revenues stagnant while expenses grow. Another major factor is the fact that the district’s operating budget is carrying part of the load that would normally be borne by funding mechanism such as bonds.

“At some point, we need to find some solution to how we fund our capital budget,” he said. “That will hopefully take some of the pressure off.”

After the presentation, the board discussed it briefly before giving Rooney the informal go-ahead. Board member Jeffrey Morrell was absent. Board member Keith Kinder said he agreed with going forward in light of the district’s previous budgetary decisions.

“We are deficit spending, but we have not been doing that for at least the last three years,” he said. “We have been building balances.”

Pointing to the downpour outside, Board President Bill Brown added that the reserve was built up for precisely this kind of “rainy day” situation.