School system taps reserves to meet payroll

Published 11:32 pm Friday, October 31, 2008

The 25 percent shortfall from the state’s Education Trust Fund did not stop payday arriving for the employees of the Butler County School System on Friday.

“We were able to make payroll today,” Superintendent Mike Looney said on Friday afternoon.

“We were able to cover the state’s shortfall.”

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State Superintendent Joe Morton sent letters Tuesday informing the state’s 131 superintendents the Education Trust Fund’s cash flow would only cover 75 percent of October’s allocation for payroll.

School districts were advised to dip into their reserve funds or borrow the remaining 25 percent to pay their employees today. For Butler County, this meant taking $500,000 out of reserve funds.

According to Looney, Morton has indicated funds will be in place for the schools by Friday, November 7.

“Obviously, we are concerned. Is this an indicator of what we are going to face the rest of the fiscal year?” Looney said.

As the specter of proration rears its ugly head, the superintendent said the system would be looking at ways to tighten its belt and cut expenses without cutting any teacher positions.

“We have to make decisions about hiring personnel well before a budget even gets approved; it does make things difficult,” Looney said.

“We know proration is coming, but we want to limit the impact it has on our teachers, and most importantly, our students.”

State Finance Director Jim Main said a decision about declaring proration won’t happen for at least two more months. Main said the passage of Amendment 1 would help the situation.

Looney said the current shortfall situation is a “good reminder” for voters to consider supporting Amendment 1 next Tuesday.

“I know it’s going to be a struggle, but we really need this to pass to lessen the sting of proration,” he said.

The passage of Amendment 1 will change how much money the state can borrow from oil found reserves. Currently, it is six percent of the 2002 budget. Passage of Amendment 1 would update it to six percent of the 2006 budget.

While most school systems in the state had enough in their reserves to cover the shortfall, Craig Pouncey, assistant state superintendent, said a few systems were forced to get loans.