School budget panel quiet about financial review

By Kayla Gahagan, Journal staff | Thursday, November 20, 2008

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A lot has changed since the Rapid City School District Board of Education last summer commissioned a group of community members to examine the school district's budget.

The economy has shifted, the state's House education committee will see unprecedented turnover after the recent election, and Gov. Mike Rounds has warned residents to brace for one of the worst state budgets he has ever seen.

In the meantime, the district's Financial Review Committee -- a panel of local financial and business leaders -- has been meeting and is to make recommendations to the school board in December.

Members are being mum about their talks and how shifts in the economy might have influenced their conversations.

In phone calls this week, some said it is premature to talk about the committee's plans, even to confirm that it has been meeting. Chairman Dennis Popp could not be reached Monday for comment.

Superintendent Peter Wharton said he can't speak for the committee, but said the economy will weigh heavy on the minds of school officials and board members as the committee's recommendations are presented.

"With each new day, we look at what is occurring," he said. "The landscape obviously has changed. It's all the more reason to be doing what we're doing."

Part of the committee's mission is to prevent a repeat of last year's budget crisis, which caught the community off-guard and saw last-minute proposed cuts -- including a school closure -- spark heated criticism of the board and administration.

With the invitation to community leaders to review the district's finances, board president Sheryl Kirkeby said she wanted transparency during the budget process and encouraged community input.

The Financial Review Committee members were asked to determine how the budget could be a more effective communication tool; to determine the budget capacity; make recommendations on the general fund balance, and to look at other revenue opportunities.

Business manager Dave Janak said the priorities could have changed since the committee started meeting.

"They may have determined some of those things were too big for the timeframe, or maybe decided to focus in on one of those," he said.

Wharton said the district provided requested documents, then stepped back to allow the committee to work. He said the members are looking at education funding and the economy, but said he could not be specific about discussions.

"What we're going to do is tap into their expertise," he said. "Sure, there's going to be strengths and weakness. We'll benefit from what they have to say."

Not just here

The district's budget crisis last year may have foreshadowed what many districts across the country are seeing: rising costs and shrinking revenue.

School officials cut $2.7 million from the district's 2008-2009 operating budget to avoid a deficit by 2010. The board was criticized for counting on more state money than it has historically received, but board members pointed to smaller revenues and an inadequate state funding formula among reasons for the budget problems.

The district also will be in a funding bind this coming year and more cuts are expected, board members have warned.

Rounds said the state is expecting an especially tight budget for the coming year because of the economic downturn. He has warned that state education funding might dip below the maximum-allowed increase of 3 percent or the rate of inflation. Rounds is scheduled to make his annual budget speech Dec. 2.

South Dakota is not the only state struggling. California Gov. Arnold Schwarzenegger is proposing $2.5 billion in education cuts next year, and state lawmakers in Arkansas, Alabama, Mississippi and New York are holding special budget sessions to discuss where to cut.

Despite the challenges ahead, Wharton said South Dakota is not in the same economic distress as the other states.

"It's not as pronounced in our state and community," he said. "I think we're fortunate to be in the state we're in right now."

He said school officials and board members are very sensitive to how the economy is changing.

"The reality is that we're going to have to put that into perspective and be realistic in expectations of funding," he said.

Wharton said the district anticipated budget shortfalls again this year and is being cautious in an unstable economy.

"I'm thankful we did some things the way we did," he said. "... I don't think anybody anticipated the economy doing what it did."

Contact Kayla Gahagan at 394-8410 or kayla.gahagan@rapidcityjournal.com

Committee members

Financial Review Committee members are:

Dennis Popp, former CEO of Black Hills Workshop

Patrick J. Burchill, regional president, US Bank

Sam Benne, owner, First American Title

Sandy Diegel, executive director, John T. Vucurevich Foundation

James W. Olson, partner and attorney, Wilson, Olson & Nash, a former school board member

Jeff Partridge, financial planner and owner, Partridge Financial

James F. Preston, city of Rapid City finance officer

Bruce Rampelberg, vice president, First Western Bank

Tom Timmons, former Douglas School District administrator

Verine White, Oglala Lakota College instructor

Consulting officials include:

Mark Lyons, CPA, Casey Peterson & Associates

Dave Janak, Rapid City Area School District business manager