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Feeling the Pinch

With school closures off the table, district faces new hurdles in cutting costs

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Some 40 people filled a fraction of the 170 chairs set up for a meeting Thursday evening at the Boise School District administration building, where district officials backpedaled on an earlier decision to possibly close four schools in an effort to deal with scant school funding.

The district announced in January that Washington, Monroe and Pierce Park elementaries and Hillside Junior High were slated for closure to cut costs and save revenue. In response, "Neighborhood Schools Work" signs began popping up in yards and concerned parents lobbied the district to save the schools. So early last month, the district met with representatives from each school slated for closure to consider other options for these schools, which the district identifies as having low enrollment numbers and high maintenance costs.

Several of those concerned parents attended last week's meeting, where the district reiterated its stance. "It should be clear we have no plans to close schools," said district Superintendent Stan Olson. Meeting leaders announced that the decision to close schools was tabled indefinitely. When pinned down, however, they admitted that "indefinitely" could mean three to five years.

Rather than rehashing public outrage over the closures that smacked the unaware community four months ago, Olson and other district officials spent much of the meeting discussing why funding sources are harder to come by. "We must develop a community base to understand conditions-past, present and future-that impact not only schools, but the district itself," Olson said.

Parents from the four once-doomed schools said the consensus reached with last week's meeting was a step in the right direction. Some, like Washington Elementary parent Pete Radice, said the district "made a big mistake, but the worst is behind us and we hope to move forward."

All 50 Boise public schools are included in the district's working 10-year draft plan to renovate buildings and continue operations. The district will present the draft plan to the Boise School Board by June, said district spokesman Dan Hollar. The board won't decide at that time whether to initiate what could be a $150 million bond vote, but Hollar said a bond to help the district recoup costs could be put before Boise voters by spring 2006.

There is a downside to a public bond when it comes to state lottery funds. District Accounting Director Nancy Landon said that out of the $13 million the lottery brought into the state for schools last year, $5 million was skimmed off the top for the "bond levy equalization support program"-a legislative initiative passed several years ago that re-appropriated the use of the lottery funding to pay a percentage of interest costs for district bonds that have passed since 2002. Landon warned that in five years, lottery funding would simply pay interest from districts' bonds instead of funding schools' facility needs.

"It is incompliant with the law," Landon said. "Lawmakers made a deal with taxpayers and voters in the state that lottery money would be used to fund schools. Half of (the lottery money) was supposed to go to public schools and that's not what's going on. It's going to public schools, but they're not distributing it the way they said they would."

The problem now is finding the funding for schools facing bigger budgets from less funding and increased operation costs. The budget for the upcoming school year could top $183 million-over $4 million short of the district's projected income.

This gap was created when the Legislature doled out a meager 2.3 percent increase for school funding, which Landon said would just cover the cost of new school children coming to Idaho. The sunset of the temporary penny sales tax increase this spring will result in a loss of an additional $180 million to schools, Olson said.

The district will use its reserve fund to buffer the budget shortfall, and officials said within three years, they hope to make the budget flush with revenue. Projected savings will come from incremental staff cuts over time, mostly from natural attrition due to employees retiring or leaving the district voluntarily, Olson said. Currently, salaries and employee benefits consume more than 80 percent of the school's budget.

Radice and other parents are irate with how state funding is distributed to schools. Specifically, Idaho has the second highest population of school-aged children, yet ranks 47th nationally in school funding, according to a number of National Education Association studies.

The state uses a formula to average allowances from the general fund, and the district must give back a portion of its property tax allotment before the state doles out any money, Landon said. It's those property tax sources that are causing much of the dilemma about the budget shortfall. Over the last six years, state funding decreased from 21 percent to a mere 7 percent, while the district's dependence on local revenue-which includes property taxes-rose from 79 percent to 93 percent.

"Any tax relief or exemptions reduce the portion of revenue from property tax and what revenue schools get," Landon said.

The local property tax base has taken several notable hits. First, most of downtown Boise is classified as an "urban renewal district" by Capitol City Development Corporation, which means that any taxes collected there are used by the taxation district for development projects. Further, the district cannot access money from those or any new properties being built in that area for a 20-year period.

Further stretching the budget, the Idaho Legislature recently passed a bill capping Micron's Boise property value at $800 million, while the value of the land at one time was assessed at $1.5 billion. By the previous standard, the company would have paid about 15 percent of the district's budget; now it's responsible for about 6 percent, Landon said. On top of that, Micron has applied for the second of a two-year exemption of $250 million on the value of the company inside the physical buildings. It received one year of the exemption last year.

"Are they the bad guy?" Olson asked. "I don't think so, but it does make problems for us and other tax-reliant agencies in the area."

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