SAD 34 budget bailout goes to voters

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BELFAST – SAD 34 residents vote Tuesday on a measure that seeks authority for the district to spend $550,000 on hand and borrow another $240,000 to close the gap in a shortfall in the budget year that ends June 30.

Board members from the district’s six communities – Belfast, Belmont, Morrill, Northport, Searsmont and Swanville – and administrators say an affirmative vote is only logical.

If the referendum fails, they say, the district will run out of money by June 15 and schools will close early.

The June 11 payroll won’t be met in full, and lawsuits from unions representing teachers and staff are likely to follow. Defending the district against those lawsuits will be expensive, board members and administrators say, leaving SAD 34 in a deeper hole.

But for many in the community, examining the referendum is like tugging at a loose thread on a sweater, unraveling much more than the district’s solvency over the next two months.

The reasons for the shortfall have been explained many times.

After voters approved the budget at the polls last June, Superintendent Bob Young, according to a subsequent investigation, added new staff and teaching positions, paid one teacher at a principal salary level, paid substitutes at higher rates than called for by the district’s pay scale, and failed to anticipate the impact of higher costs for health insurance benefits.

A spike in energy costs further exacerbated the situation.

And to make matters even worse, the $19.6 million budget relied on a $25,000 contingency account, which was soon dry.

In December, Young revealed the growing shortfall, projected then at $600,000. He also presented a plan for cutting expenses – including eliminating some jobs – but the board failed to act. By January, Young was out on a medical leave, which continues.

In February, the board crafted a plan to bail out the district by borrowing $834,326. That plan went before voters on March 14, and was soundly defeated in each of the district’s towns.

The board then cut about $50,000 from the current budget, which meant about 10 people lost their jobs last month.

The board crafted another bailout plan, this one using $550,000 from a state Medicaid overpayment and $240,000 the district would borrow from a bank at about 4.5 percent interest. By law, the borrowed money would have to be paid back within 13 months, which means it will affect the next two years’ budgets.

Using the Medicaid overpayment will also affect future budgets by about $300,000, as the district will get less money from the program to balance out the extra money paid to SAD 34 last year.

At public hearings on both plans, board members heard complaints in two themes:

. Why hasn’t Young, whom an investigation found largely responsible for the shortfall, been terminated?

. What will be done to rein in spending in the coming years?

On the first issue, the board has delivered a letter to Young, expressing its “concern” over his handling of the budget, and requesting he present a plan to show how such problems will be avoided.

The board also has had several closed-door sessions with its attorney on the matter.

Board members have said privately that terminating Young is possible, according to the attorney, but that steps must be taken first.

On the second issue, the board voted last week to set the 2006-07 budget at $22.5 million, an increase of about 8.5 percent. That budget means cutting about 40 positions.

Some board members held out for a more austere budget, but teachers, principals and parents have consistently told the board the cuts will decimate existing programs.

Much of the budget increase comes from teachers receiving “step” or longevity raises, and higher costs for health insurance benefits borne by the district, not the faculty and staff.

The 2006-07 budget goes before voters on June 13.

In recent years, voters have defeated at the polls the “additional local share” portion of the budget proposal. That portion is what is raised through local property taxes beyond what the state provides, and beyond what the state says is needed to fund local education.

The message being sent, it seems, is that residents believe in education but want to pay less for it.

When the budget fails at the polls, district-wide meetings have been held, attended by about 100 people – many of whom work for the district – and the proposed budget has been reconsidered and passed.

Ironically, voters approved the entire budget at the polls last year.

Throughout the painful process of trying to right its ship, SAD 34 officials have not heard much criticism about the education it provides. In fact, even those who voted against the first bail-out plan concede the district is educationally sound.

But voters seem to want to see accountability and a plan for fiscal restraint, at least until the district gets back on its feet.

Despite the urgency, as board members see it, of the district’s need for the bail-out plan to pass, Tuesday’s vote also will be a referendum on the board’s and administration’s management of the school system.