Metro Nashville Public Schools is now facing a projected $38 million budget shortfall for the 2010-2011 fiscal year, an increase from the $35 million  school officials had forecast two weeks ago.
An obligation to pay higher employee insurance rates than originally projected has added another $1.2 million to shortfall projections, while accommodations for an additional 300 charter school students next year is expected to cost the district another $2.6 million. Those figures weren’t at the district’s disposal when administrators evaluated the budget outlook earlier this month.
“We are still very early in the process,” said Chris Henson, the district’s chief financial officer. “We’re still in January, so things will continue to change as more information is made known.”
While Steve Glover, who chairs the school board’s Budget and Finance Committee, has warned his colleagues to “be prepared for drastic reductions if no new funding is identified,” Director of Schools Jesse Register has vowed to avoid eliminating in-class teaching positions.
The district’s budget dilemma comes as sales tax revenue for the current budget is $7.5 million short of projections. With the updated $1.2 million bump revealed Tuesday, the district now has to account for a $7.2 million increase in employee insurance costs. In addition, the district must fork out an additional $12.4 million in pension funds.
Meanwhile, the original shortfall projection hadn’t figured in the district’s newest charter school — New Vision Academy — and other charter schools that are set expand, requiring MNPS to account financially for a student population more broadly dispersed.
“Not enough (charter) students are coming out of schools in the different grade levels to warrant a decrease in the number of teaching positions,” Henson said. “So, the district is left with the same costs that it had before.”
Making matters worse, another $12.4 million in reserve funds used during last year’s budget crisis will come out of this year’s budget.
Historically, the district has tapped into its undesignated reserve funds — set aside as rainy day funds dollars — during budget shortfalls. But Tennessee state law requires all districts to keep reserves above 3 percent of their budgets. The MNPS reserve funds have gotten so low that using them is off limits.
The school board is scheduled to go before the Metro Council’s Budget and Finance Committee Thursday, Feb. 18.