DR. RUSSELL BROCK, new R-2 superintendent of schools, has an animated conversation Thursday with OMS Principal Teresa Ragan and OHS Principal Kurt Keller following the Board of Education meeting. Brock, formerly superintendent of the Fayette, Mo., school system, assumes his new duties today. He and his wife, Sheree, recently relocated to a home south of Owensville.

Mark Leech, a consultant to the R-2 Board of Education and retired administrator from Hermann, presented the 2009-10 budget projections in a rare Thursday night meeting as the board met to close out the books on 2008-09.

Leech gave the board a thorough overview of the year just completed and painted a picture of what was ahead. The district could expect what he called a “negative increase” in local personal property assessments of only 1.5 to 2 percent for a reassessment year which typically would mean a 5 to 8 percent increase in local tax revenues. Although the state’s Foundation Formula is expected to be fully funded, it will be done using federal stimulus fund. “How this will play out in succeeding years is very much a concern,” he noted.

The good news is the district’s fund balances at the close of this fiscal year are listed at 24.31 percent or $10,415,267. Of that figure $5,692,166 is dedicated to debt service and a 7-percent transfer from General to Capital Projects shows $952,230 in the Capital fund. The Operations fund shows a balance at year’s end of $3,770,871, Leech reported. The Teacher’s Fund ends in a zero balance as budgeted.

He noted the district has built up its Capital fund to use for maintenance issues and will take the transfer as allowed by law. Once state funding figures become clearer next month, he said, the district can better review “major repair issues” and stressed “We don’t want to deplete Operations.”

Leech told the board that the district received $486,088 more funding in 2008-09 than was projected. The increase came from reimbursed transportation costs which had been “underbudgeted” and additional money from the state’s Foundation Formula.

He noted, however, that the state’s Proposition “C” sales tax distribution was “way under” and that anticipated revenue in the budget was “a lot higher than what it turned out to be.” Leech noted the district received $83,558 less in sales tax revenue than originally anticipated.

He cited $49,527 less income from the Classroom Trust Fund as another example of lower than anticipated revenue.

For 2008-09, the district’s books show it under-spent by $810,513 but Leech quick­­ly noted they had budgeted to build the bus barn in the fiscal year which ended Tuesday. The one area the district was able to save some money was in transportation costs due to a decrease in diesel fuel costs. The bus barn not being built with 2008-09 funds, he said, “accounts for a major portion of why the budget was down.”

The district is also currently seeking bids for replacement of exterior doors at the middle school and high school. More roofing work remains to be completed at the high school and additional sealing may be needed on brick work at OHS following a recent inspection of the facility.

Income from state assessed railroad and utility taxes was down $53,333, according to the revived budget figures presented by Leech. That document was approved by the board as the district closed out its books.

The revised budget was later adopted as the district’s budget to open the 2009-10 fiscal year which begins today (Wednesday). Leech explained that Missouri  public schools will not know until after July 14 how much American Recovery and Investment Act (ARRA) funds will bring into their budgets. Leech warned that these federal stimulus funds are primarily earmarked for increases in special education services, Title 1 programs and technology. The district expects to receive $990,325 over the next two years.

Leech cautioned the board to “spend this money wisely in order that we don’t make financial commitments after these funds are exhausted that would be difficult for the district to absorb.”

Specifically, he warned, the district should “avoid using (ARRA money) for employment” since the district can not commit to have those funds after two years.

The 2009-10 budget was designed with an anticipated savings of $479,477 less in salaries due to early retirement incentives taken by staff earlier this spring. The district will operate using seven less teachers this year due to a decline in enrollment. That decline also translates into less money from the Foundation Formula which is based on averages of enrollment, Leech noted in his report.

Leech also warned the district to expect to see the decline in state sales tax revenues to continue throughout the coming school year.

One budget area the district was able to point to as holding its own was in food service. Leech said the district came out $19,995 to the good with another $2,000 in revenue expected from reimbursements for summer school meals. He cited bulk buying as a cost-saving to the district. “I thought it was really good,” said Leech. “I’m really glad it came out positive.”

Another good piece of news was the district’s health insurance premium will cost $7,709 less this year under a plan approved Thursday. “Typically,” said Leech, “saving money on insurance is pretty rare.”

The plan was presented to the district’s liaison committee and approved.

Leech’s report concluded: “While we will end the 2010 fiscal year with modest balances, throughout the year we will anxiously watching economic forecasts for FY 2010. If the national economy remains in a recession we will have a difficult time finding the resources to fund our existing programs at a satisfactory level.”

Later in the meeting when it came time for action on approving the salary schedule, Board President Chris Lenauer offered an introductory comment as an apparent effort to see if there was  willingness to add a small increase to the base pay. An agenda provided to the board and the public read: “There is no increase to any salary scheduled. However, we are recommending all eligible employees receive the annual step increase.”

A slight increase in district spending of $151,581 for the step was noted.

“Teachers don’t live lavish lifestyles,” said Lenauer. “This does go toward their retirement.” There was a long delay without any motions made. “We’re not in any rush. It’s not football season,” joked Lenauer in an effort to break the tension with a reference to the board’s normal Monday night sessions. Board members took a moment to read through a handout Leech presented them. “We’ve been talking about this for several months,” Leech reminded them. “We discussed this two or three months ago,” added Gary Pohlmann, vice president of the board.

“So moved,” said David Lottmann. Linda Baehr made the second and the motion was approved on a 7-0 vote.