Possible $72M Deficit for Cobb Schools

Developing four years of budget projections in October is “cruel and unusual punishment of your CFO,” Chief Financial Officer Mike Addison joked at Wednesday’s Board of Education work session.   

Despite lacking state and local revenue information, Addison offered an initial prediction for fiscal 2013 of a $72.2 million shortfall in an $890 million budget. That prediction includes the transfer of $20.4 million from the SPLOST II contingency fund.

Addison said a $34 million reduction in reserve revenues from fiscal 2011, which ended June 30, caused the largest hole in the budget forecast. He also predicted a $4.4 million decrease in local revenues from fiscal 2012 to fiscal 2013 and an approximately $40 million increase in expenditures. They include:

• Increase in health insurance for classified employees, $11.7 million.
• Annual step increase for certified employees, $10.1 million.
• Restoration of two furlough days, $5.7 million.
• Increase in Teacher Retirement System rate from 10.28 percent to 11.41 percent, $5.9 million.
• Restoration of half-year annual step increases for teachers, $4.9 million.

Addison, however, said the district could save $3.5 million in charter school payments mainly from the closing of . The board .

Addison said his “very early projections … will definitely change in the coming months as we obtain new information.”

“We have some hard decisions before us because with these deficits we know that we’re going to have some really big cuts somewhere,” board member Lynnda Crowder-Eagle of West Cobb’s Post 1 said. “We’ll have to start looking in that direction to see where we’re going to have to make those.”

In March, Addison predicted a budget shortfall of up to $50 million for fiscal 2012, which began July 1. By April, the , thanks to property values decreasing less than expected and higher state revenue collections.

In 2010, the district cut 734 positions to close a $137 million budget deficit.

Addison said 90 percent of the district’s budget covers the costs of 14,049 employees.

Board member Scott Sweeney of East Cobb’s Post 6 said it’s better to inform people early about possible bad news than to deliver bad news late.

“It’s an important part of establishing realistic expectations,” Sweeney told Patch after the meeting. “Certainly our hope is that we will see improvement with these forecasts, and we will not have more information until we hear from the state legislators and from our local tax digest.”

Addison, in his fourth year as CFO, said this was the earliest he provided a budget forecast to the board. Last year he supplied his first one in January, and in 2010 he delivered his initial projection in March or April, he said.

Addison also is predicting shortfalls of $83 million in fiscal 2014, $70 million in fiscal 2015 and $53 million in fiscal 2016.

“If we make cuts in FY 2013, then that will carry over to subsequent years,” Addison said, explaining that the future deficits will shrink if the fiscal 2013 budget is cut.