Finances will be tight, warned Superintendent Mark Leach, in his address Monday to the R-2 Board of Education.

R-2 BOARD President Chris Lenauer jokes Monday with retired Hermann Superintendent Mark Leech (right) prior to a closed session. Leech was interviewed in the closed meeting and hired as a consultant to assist R-2 Superin­-tendent Mark Leach. Teresa Ragan, principal at the middle school, is also pictured.

R-2 DIRECTOR of Technology Susan Pashia prepares a group of new HP laptop computers on Friday to be used by OMS eighth-graders.

Board members voted 5-1 to adopt an unbalanced $18,097,545 budget for the fiscal 2008-09 school year which began July 1 and ends June 30, 2009. But, said Leach, at least $700,000 of the anticipated $864,347 in deficit spending may never actually be spent. David Lottmann voted against approving the budget.

“Revenues are very conservative and expenditures are estimated high,” said Leach in his financial address to the board.

The budget includes $300,000 for site work at a proposed bus barn and maintenance building on the school campus on Highway 19 North. Another $400,000 is penciled in for continuation of roof replacements at the high school. If economic woes continue, said Leach, those projects could be shelved for this budget year.

Phase 3 of the OHS roofing project could be scaled back with a smaller portion of the project undertaken or the district could wait a year before beginning another section, he said. The bus barn project has been on hold since June. Leach told the board that architectural designs for the proposed structure were around 80-percent complete. Board members had discussed, but have not yet, forming a committee to review their options for the project. Tom Baugh, a retired superintendent from Hallsville employed earlier this month as a consultant, will likely be used to help the board prepare a proposal for continuing the project.

“This budget is very tight,” Leach told the board on Monday. “There’s not a lot of fluff.”

Immediate concerns which the district can not control include fuel oil and transportation fuel costs. He noted that while the budget is not balanced, proposed roof renovations and the building project for the bus barn were expenses the district would not need to make this budget year.

Leach said the district’s anticipated revenues were listed as $17,233,198. Earlier in the meeting, the board approved an operating tax levy of $3.85 per $100 of assessed valuation. That figure, noted Leach, remains unchanged from prior years. He opened a public hearing on the levy by noting the district’s bonding agent had specified the district could not take money out of operations and debt service for capital projects due to ballot language included in the 2005 bond election.

The levy, as approved 6-0, includes $3.10 for operations, eight cents for capital projects, and 67 cents for debt service. No public comments were made during the five-minute hearing.

As approved, the budget includes anticipation of only a five-percent increase in revenues. Raises averaging two percent will be awarded. Leach noted that fund balances and investments are expected to continue to decrease and district enrollment is down 45 students from the start of last year. “That could have an impact on our future revenue,” said Leach noting state financing is based on three-year averages and the district’s average daily attendance. An official count date is scheduled Sept. 24.

“We really, really have to watch the budget this year,” said Leach.

Chris Lenauer, president of the board, added, “That’s is something we will look at monthly.”

The board tabled action on a proposal to transfer funds from operations to capital projects. Leach told the board this “does not need to be addressed at this time.” Nancy Landwehr, the district’s financial officer, added, “There’s plenty of money in capital projects.”

Earlier she told the board that the collection rate on local taxes are figured at only a 90-percent factor. The actual collection rate is typically in the 92 to 93-percent range, she said.

Board members approved continuing and expanding the FlexSystem Claim Card program for medical needs. The district will spend an additional $1,267 in administrative fees but last year realized a savings of $9,275 in FICA taxes from the program. The board also approved a $1,500 stipend for each of the district’s two literacy coaches since their involvement in the program is not eligible for state funding in the Career Ladder program.

A director’s position was added to the Parents As Teachers Program with a salary of $10.90 per hour. The person selected for the post will not work more than 500 hours during the 2008-09 school year.