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Bad Math Adds to APS Budget Woes

By Hailey Heinz
Copyright © 2010 Albuquerque Journal
Journal Staff Writer

          One reason for the Albuquerque school district's budget crisis: Officials miscalculated the amount of money needed for employee salaries and benefits during the past two years.
        Superintendent Winston Brooks announced last week that the district must cut $43 million from next year's budget, likely requiring hundreds of layoffs.
        About $24 million of the required cuts is due to a reduction in state funding.
        The remaining, however, is to make up for nearly $20 million in underestimated employee salary and benefit costs over the past two years.
        "It was some very smart people who made an honest error and did it the same way the following year," Dupuy Bateman, the district's chief financial officer said Tuesday.
        For the past two years, the district has been tapping its reserves to cover those costs. If it continues that practice, the reserves will be near zero by the end of next fiscal year.
        The district currently has $15 million in reserves, which Brooks wants to keep intact.
        Bateman said that for the past two fiscal years APS failed to take into account all costs related to covering health care for its 14,000 employees. It underestimated the costs by about $8 million a year.
        "The district did not budget adequately for benefits," Bateman said. "In the process they used to calculate it, they just missed."
        The other $4 million is due to an error in calculating the upcoming budget. Most of that was because APS counted on all employees kicking into the retirement fund. In reality, the district must contribute the entire amount for those making less than $20,000 annually. Discussions were ongoing Tuesday as district officials tried to decide what cuts to make. One possibility is laying off as many as 700 teachers, educational assistants and administrative staff, although the number of layoffs is fluid as administrators fine-tune the plan.
        One school board member is skeptical about the need to sock away $15 million in reserves at once.
        "I've got real issues with how conservative the district is with the reserve funds," said board member Robert Lucero. "If now is not an emergency time to use that money, then I don't know what is."
        Brooks said the problems that led to employee benefit miscalculations have been fixed.
        "It's already been changed," he said. "We made the adjustments on benefits, so we now should be square on that. And we are not going to make a practice of taking money out of the reserves unless there is a huge emergency that comes up."
        Under state law, the district cannot keep more than 5 percent of its budget in reserve. But Bateman said maintaining a reserve is important for the district's bond rating because lenders would like to see reserves as close to 5 percent as possible.
        After next year's budget is balanced, Bateman said $15 million will be about 2.4 percent of the total.
        But Lucero said cash reserves are not as important as Brooks and Bateman make them out to be.
        "This district has had reserves as low as around $2 million," he said. "I've heard the doom and gloom about how it's going to affect our bond rating, but it didn't in years past."
        Other budget reductions under consideration are cutting stipends and overtime.
        Bateman met with officials from the state education department Monday to go over the numbers and discuss the district's budget situation.
        As APS wrestles with its operating budget crisis, some in the community have questioned how it can afford to build a $40 million West Side athletic stadium.
        However, that project and other capital improvements are funded from a separate pot of money. It would be illegal to use bond money to supplement operating costs such as teacher salaries.
        Similarly, the district cannot legally pull funds from school technology bond money, such as the $17 million for interactive white boards to be installed in half of APS' classrooms.
        This is not the first time APS has had budget miscues.
        Last spring, APS "found" $16 million that had been sitting in the wrong fund, and was able to use it for operating costs and the reserves.

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