State budget shortfall forces hard choices for education, others

By Melissa Dunson

mdunson@joplinglobe.com

“Conservative” may be the word in 2009 for Missouri schools, businesses and municipalities bracing to see how a projected $342 million shortfall in the state’s budget will affect them.

“We don’t know what to expect or what decisions the Legislature may make before it adopts the budget in May,” said Jim Morris, spokesman for the Missouri Department of Elementary and Secondary Education (DESE). “The message this year is be conservative.”

Legislators and state officials are guarded about potential cuts to the current as well as next year’s budgets until the Missouri General Assembly reconvenes on Wednesday. Gov.-elect Jay Nixon was not available for comment last week, but his office analyzed general revenue data and estimated the shortfall will be $342 million for the current year.

Missouri House Speaker Ron Richard, R-Joplin, said talk of withholdings this year or specific cuts to the 2009-2010 budget is “premature,” but officials agree it will be tough.

“We were right on until this financial crisis came,” said state Rep. Kevin Wilson, R-Neosho, of Missouri’s budget. “Nobody saw this coming. I think the general consensus is that we will have to make some tough decisions this year.”

Not only is the state not going to be able to grow its budget, Wilson said, but general revenue has actually shrunk.

Missouri is 4 percent behind in general revenue collections for the year compared to 2007, according to state figures. The biggest problems are a 7.6 percent decline in sales taxes and a 13.6 percent decline in corporate taxes. Tax refunds also have increased more than 20 percent this year compared with last.

“It’s pretty bad,” said Amy Blouin, executive director of the Missouri Budget Project, a nonprofit group that analyzes the state’s public policy. “The level of crisis facing the state both with its revenue and with the economy is more significant than it has been in decades. By all accounts, the most recent experience we’ve had like this was the Great Depression.”

Blouin said that with budget cuts over the last eight years, there are fewer “discretionary” funds in the budget now.

“It’s almost like every rock has been overturned to find every penny,” Blouin said. “We’re already 46th in the nation on what we spend on state and local services, so at this point, going lower is not really an option. There’s not that much further to drop.”

K-12 education

Rick Cook, Seneca R-7 superintendent, said his district has an annual budget of about $12 million, and spends nearly every penny. So, potential cuts in state funding are a major concern.

Cook said the district has already cut $1 million from its payroll in the last two years, and $500,000 from its supply lines to reduce expenses and balance its annual budget.

He has been working to get Seneca teachers’ salaries up to the conference average and is only about $500 a year from reaching that goal, but said he doesn’t know what will happen if the state withholds money or cuts appropriations.

“We’re going to continue to get teachers up there,” Cook said of reaching the average. “But, we can only do what we can do.”

C.J. Huff, Joplin R-8 superintendent, said the Missouri General Assembly “promised” to fully fund the K-12 school funding formula for seven years when it was adopted three years ago. Local legislators have indicated the state will probably fund the formula this year (2008-2009), Huff said, but that districts should not expect that next year.

“Do we all want that to continue? Yes,” Huff said of full funding. “Do we anticipate it? I don’t think so.”

Richard said he was not aware of plans to not fully fund the formula and said the Legislature will work to keep every financial promise it has made.

Morris said DESE has been asked to develop a contingency plan for what cuts it would make to its $5.3 billion annual budget if state funding is reduced. He said the hardest-hit groups would be the ones with the most state funding, including state-run schools for the blind, deaf and severely handicapped and the A+ Program.

Across the country, Huff said school districts are just now recovering from budget cuts made in the early 2000s. Any upcoming cuts would be tough, he said. The hardest hit could be staff because 80 percent of a district’s recurring expenses are personnel costs, he said.

“There’s a lot of these districts that are just getting up on their feet, and they’re getting punched in the nose again,” Huff said.

Cook said he has dropped everything he can from his budget already, so any more cuts in state funding will have to come out of payroll.

“I pray this is not as bad as people think it’s going to be,” Cook said. “We’ve cut where we could so it wouldn’t be too painful, but any further cutting will be painful.”

Huff said the fate of Missouri’s schools now rests on how long the recession lasts and how much they have in reserves. Joplin’s reserves — about 25 percent of its $80 million budget this year — will help the district get through for the time being, he said.

Higher ed

In December, the Missouri Department of Higher Education outlined what 15, 20 and 25 percent cuts would do to colleges and universities in the state. Bruce Speck, president of Missouri Southern State University, said a 15 percent cut would amount to $3.5 million and result in layoffs and academic, athletic and support programs being cut. A reduction of only $2.5 million would force the college to cut about 65 positions, he said.

Alan Marble, president of Crowder College in Neosho, has said that a 25 percent cut could prompt the college to raise tuition by 8.8 percent, eliminate eight positions and discontinue a technical education program.

The University of Missouri system could lose between $60 million and $100 million and Missouri State University in Springfield could lose between $12.3 million to $23.1 million.

Job creation

Unlike education, Spence Jackson, spokesman for the Missouri Department of Economic Development, said Wednesday that the agency has not been asked to simulate budget cuts. Local Joplin officials said the same thing.

“At this point, we haven’t heard anything specific related to economic development programs,” said Rob O’Brian, president of the Joplin Area Chamber of Commerce.

He noted that Nixon has cited job creation and retention as high priorities.

Richard said much of the state’s job-creation program will stay the same under Nixon’s leadership, including the $51 million Quality Jobs Bill that Richard authored and that Gov. Matt Blunt signed in 2007. The bill has benefited two local defense contractors, EaglePicher Technologies and LaBarge, Inc. through tax credits for creating new, well-paying jobs with health insurance.

Richard said that program should continue despite the state’s budget crunch because it only offers the credit after a revenue-producing job has been created. The program may be subject to greater accountability in the future.

The challenge, Richard said, is where to find the money to do job training.

“We may have to start training and re-training people who are out of jobs now,” Richard said. “It’s going to be one of the conversations we’ll have in the coming weeks.”

Cities, health care

Municipalities may fare better with any potential state budget cuts, but health-care clinics could take up the slack.

Leslie Jones, finance director for the city of Joplin, said most of the grant money the city receives is actually federal money sent to and distributed by the states. If the city of Joplin feels an impact, she said, it could be on the services side, particularly the local health department.

Dan Pekarek, director of the Joplin Health Department, said state cuts to the Medicaid program several years ago fueled an increase in demand at local offices such as the Community Clinic. The city supports the clinic by paying for prescription drugs for residents who qualify.

Pekarek said 35 to 40 percent of the Joplin Health Department’s total budget comes through contracts with the state health department, but much of that funding originates at the federal level.

Michelle Ducre, director of the Community Health Clinic in Joplin, said patient visits doubled after the 2005 Medicaid cuts. In 2007, the clinic saw between 2,000 and 2,200 patients. Last year, it served 3,000. Ducre attributes much of the increased traffic to the economic downturn.

“If we cut health care any further, the only areas that can be cut are seniors, people with disabilities and kids, and I can’t imagine anybody thinking that is a good idea,” Blouin said.

Staff writers Derek Spellman and Joe Hadsall contributed to this report.

Piece of the pie

Missouri funding makes up 25 percent, or $18.58 million, of the Joplin R-8 school district’s funding for 2009.

Source: Joplin R-8

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