Facing a possible general fund deficit of up to $4 million next year, Duneland School administrators on Monday warned the public to prepare for program and staff cuts as they called for a change in the way that public education is funded in Indiana.

Duneland Superintendent Dirk Baer said school officials are reviewing “all options” for offsetting a loss estimated at about 8 percent of the total general fund budget, and that they expect to make an announcement concerning the reductions within four to six weeks. “There’s nothing that’s not on the table,” he said.

When asked if the cuts will likely include staff layoffs, Baer said “absolutely,” adding that the severity of the budget cuts cannot be offset without making personnel reductions.

“We cannot operate in the red. That’s not acceptable,” Baer said during a somber budget discussion at the end of Monday’s school board meeting.

The school board this year approved a 2010 general fund budget of about $39 million based on state funding and enrollment estimates. It was already known that state revenues will come in at about a half million less, but Baer said Monday that the latest estimates put the funding shortfall considerably higher, in the range of $3 million to $4 million.

Baer and Duneland Assistant Superintendent Dave Pruis attributed the cause of the shortfall to several factors -- among them, the county’s late property tax collections, which have resulted in a loss of interest earnings for the school system, and a redistribution of excise taxes, which no longer can be used for school operating expenses. But both stressed the root of the problem is the state’s method of funding public schools, a method, they said, that’s convoluted, understood by only a few, and full of inequities.

As an example, Pruis said the Gary schools are projected to get $11,535 in per pupil instructional costs under the state funding formula, which includes regular instruction, special education, vocational education, Prime Time, and Title I funding. Meanwhile, Duneland is projected to get considerably less in per pupil funding, at $6,088.

The statewide average is projected at $6,995. Along with Gary, other area school systems faring better than the state average include Michigan City, $7,947; Lake Station, $8,213; Whiting, $9,325; and East Chicago, $10,158. Along with Duneland, other area schools expected to get less than the state average are Portage, $6,428; East Porter, $6,035; and Valparaiso, $6,000.

Baer said the bottom line is that in the last few years, the state funding formula has resulted in a large disparity for public schools, pointing out that the funding difference between the Valparaiso and Gary schools is a whopping $5,500 per pupil.

“There are tremendous inequities in how schools are funded,” Baer said, noting that some school districts have considered a lawsuit against the state over the formula.

The disparity in state funding for area charter schools also exists, although charter school funding is expected to increase over the next two years. Currently, funding for Duneland students in charter schools stands at $6,088, but is expected to increase to $7,163 for new charter schools that open in 2010 and for $7,225 in 2011, under the figures presented by Pruis.

Adding to the problem is that the state figures are based only on estimates, since school officials don’t know the exact numbers of students when they prepare their budgets. Further, Pruis said that because of the delays in the tax bills in Porter County this year, the Duneland Schools didn’t receive its approved 2009 budget until the end of October, adding to the budget uncertainty for 2010.

Pruis cited several other state changes in education funding, including the elimination of property tax appeals for additional funding to staff and maintain new school buildings. “They just wiped it out,” he said of the appeals.

Baer said the expectation is that state funding for schools could worsen in 2011. He noted that the state recently announced $150 million cuts in funding for state colleges and universities and said the fear is the state will look at K-12 education next for cuts.

Beginning in 2009, state revenues fully fund school general funds, a move that has resulted in lower property tax rates. But the state funding for school operating expenses is directly tied to the economy, coming in part from the state sales tax. In November, state revenues were $144 million lower than projected.

Baer said that in addition to the gloomy sales tax revenues due to the sagging economy, the county’s late property tax bills have caused a loss of additional revenue that Duneland used to enjoy when property taxes were distributed more on time.

He said Duneland’s annual interest earnings have fallen from around $700,000 a year to just $50,000 or so.

Pruis did, however, note that there is “cause for celebration” since Porter County is expected to get back on track in 2010 with on-time tax billing.

Baer said that after Duneland announces the budget cuts in the coming weeks, it will be up to the public to weigh in and say if the cuts are acceptable or not.

He took note of a recent referendum in the Hamilton Southeastern school corporation, in which voters overwhelmingly allowed an additional $5.5 million a year in property taxes for school operations. Whether such a referendum would be sought in Duneland remains to be seen; Baer said he won’t rule out any option, but did say that one answer may lie in convincing state lawmakers of the need to change the state funding formula.

He urged citizens to contact lawmakers with their concerns about the funding disparities, especially for school systems such as Duneland that are still growing in enrollment.

“That’s what the public can do right now,” he said.

Posted 12/15/2009