The North Little Rock School Board agreed Tuesday to put $20 million into middle school renovations and to maintain its earlier commitment to cut $8.3 million in operating costs by 2017-18 to help finance the district's construction program.
The board consensus on the two matters gives district leaders the necessary direction they asked for to begin developing the 2015-16 budget in the 9,000-student district.
The district is in the midst of what started as a $265.5 million building program to reduce its 21 campuses to 13 schools, nearly all of which will be built anew or extensively remodeled. The district is paying for the construction with the proceeds from a 7.4-mill property tax increase, with savings from its operating budget and with state aid. The district's application for state aid was partially denied, reducing the available revenue to about $225 million.
The 2015-16 budget is expected to begin a three-year phaseout of more than 70 employee positions as the district consolidates existing schools into a smaller number of new and larger buildings and makes other adjustments to finance construction obligations.
Substantially more jobs, programs and services are likely to have to be cut, Chief Financial Officer Denise Drennan cautioned. As the district finishes the building program it must simultaneously adjust to the loss of $7.6 million in annual state desegregation aid. That special aid ends after the 2017-18 school year. The board Tuesday did not delve into the possible desegregation aid cuts.
Board member Scott Teague said he favored spending $20 million on the renovation of the combined Lakewood Middle and former North Little Rock High School - East Campus. The campuses on Lakeview Road will become the district's only middle school once Ridgeroad Middle School is converted into an elementary school.
"Ten million just doesn't cut it," Teague said about the middle school construction needs, noting that voters who supported the 7.4-mill property tax increase were told to expect a largely rebuilt school. The district had planned to rebuild most of the campus, but then the district's application for state funding for the project was denied.
Teague pointed to district figures showing that the number of staff cuts would increase from 64 to 73 positions over three years if the district increased its spending from $10 million to $20 million on the middle school. The district would issue bonds for $10 million and rely on other funds -- including state desegregation aid earmarked for construction -- for the remaining $10 million.
"If you cut nine extra positions and you can get an extra $10 million borrowed at historically low rates, then it would be fiduciarily irresponsible not to do that," Teague said.
Superintendent Kelly Rodgers said that the $20 million would be a sufficient amount to make the middle school -- including its cafeteria, technology systems and security -- comparable to the district's newly constructed and extensively renovated elementary schools and high school.
Board member Luke King said he wanted to continue to cut a total of $8.3 million from operating costs to help offset construction expenses, even though lower-than-anticipated interest rates will result in the district saving $1.5 million to $1.8 million in debt payments on the construction bonds.
The savings on debt payments could be used to offset the district's $8.3 million commitment, $5.9 million of which is still to be realized, Scott Beardsley of First Security/Beardsley Public Finance, the district's financial adviser, told the board. About $2.9 million of the $5.9 million in cuts will be made in the 2015-16 school year, when the district downsizes the number of schools along with principals, secretaries, food service workers and others at the vacated schools.
"We did state that we would work hard to find those operational savings, and I want to make sure we continue to do what we said," King said. "That will allow us to get as much bang for our buck at the middle school. While we can't do everything we wanted, we can do a lot of positive things and fill in that last piece for the whole district."
In response to the potential cuts in staff and/or school programs and services, board member Darrell Montgomery said he wished it would be easier.
"I think that before the millage election we were thinking, 'We will build the buildings and they will come,' and perhaps they will. But take away some of the elective courses, and [students] will leave," Montgomery said. "To achieve those operational savings, wow, that is going to be hard."
Rodgers, the superintendent, said the sale of two or three vacated school properties and demolition of others will help offset expenses. The district will have nine vacant campuses next school year.
Metro on 12/17/2014