The Baldwin County Board of Education is looking for ways to trim an already lean budget after State Superintendent of Education Joseph Morton said cuts for state public schools will continue.

“The state superintendent and officials have told us to predict proration and additional funding cuts from the state,” Jean McCutchen, Baldwin County School Systems director of business and finance, told the BOE Tuesday.

Budget cuts by proration occur when projected tax revenues come in under their full amount.

According to cost projections from the school system, 3 percent proration would mean a loss of roughly $3.6 million for the operating budget.

McCutchen said the school system needs to keep expenditures at a flat rate to coincide with local funds. Local funds include sales tax collected in Baldwin County and property tax.

“I have already been contacted by Mr. Horton with Riviera Utilities, and he said our utility costs are going to increase by 10 percent,” McCutchen said.

David Horton, Riviera Utilities spokesperson, said that while their energy rates are not changing, they are having to pass on an energy cost adjustment to their customers.

“The Alabama Municipal Electric Authority, who we get our power from, passed the costs to the distributor because the cost of coal and gas and other energy sources are increasing. They passed it to us, and Riviera has been absorbing it for a couple of months, but we are a business and we have to operate and keep alive,” Horton said. “We cannot take the loss.”

Horton said Riviera called the school as a courtesy so they would know it was coming and could prepare.

“We did not want them to be shocked, and it could only last four or five months, but over the next several months it will be there,” Horton said.

The Baldwin County School system is no stranger to budgeting woes. For months, they have been preparing for the delayed revenue collection from the two-month delay in the completion of property tax bills for Baldwin County residents. The school system currently has slightly more than a month’s operation budget avaliable. 

“We know that taxes are going to decrease in some parts of the county, but we also know that they are going to increase in other parts of Baldwin County including the Eastern Shore, Interstate 10 corridor, Highway 59 corridor, Spanish Fort and Daphne,” McCutchen said. “Developed property is not eligible for Homestead exemptions, and those commercial properties will be responsible for their entire bill.”

McCutchen said the taxes received this year would be the foundation for the years to come.

“Local revenues are coming in very slowly, but they are going to come in,” McCutchen said. “We have finally received and exceeded our property tax budget. We met our budget. We hoped revenue would exceed $51-52 million, but appeals and reductions did not let it come in as high as we would have liked. We needed to exceed our budget, and it did.”

McCutchen said she has been in contact with the bank every few days to check that there are no problems with the system’s line of credit to get a temporary loan for November, December and January to cover payroll and debt services during the property tax collection delays.

“The bank has assured me of their stability and that we are going to get the green light, but because of the national credit crisis, we are in the approval process and have to go through additional checks including what we are going to use the money for and how soon we are going to repay the loan,” McCutchen said.

McCutchen said the budget for fiscal year 2009 was based on keeping the general fund balance at a one-month operating budget assuming that costs are contained and local revenues come in as they are expected.

“If we have additional expenditures and a 3 percent proration rate and nothing else happens, our fund balance would go down to around $ 14 million or 76 percent of the system’s monthly operating budget,” McCutchen said. “Remember in 2010 we already know there is going to be another $7.7 million deficit, and you can see the situation.”

According to McCutchen, Superintendent Faron Hollinger has already asked the staff to look for ways to further reduce costs whether it be in operations, energy management or looking at staff again.

“If the state declares proration and cuts funds for the ‘09 fiscal year, those funds are going to disappear now. We have to have an action in place and hit the ground running in January if they make the cuts,” McCutchen said.

McCutchen said the funding strategy for the school system this year and the next critically depends on the passage of Amendment 1 on Nov. 4.

“Passage of Amendment 1 will the budget of schools during economic downturns and guarantee that essential instructional functions will not be interrupted and jobs will not be lost,” McCutchen said.

Amendment 1, or the more commonly known “Rainy Day Fund” if passed would increase the original 2002 borrowing limit of $248 million to $427 million, lengthen the repayment time frame to six years for the Education Trust Fund and 10 years for the General Fund, allow the General Fund to draw up to the equivalent of 10 percent of the previous year’s General Fund budget to meet proration, establish a General Fund Rainy Day Account to protect General Fund services such as law enforcement and health care and give the governor ultimate authority to withdraw money from the Alabama Trust Fund to avoid proration.