P'burg budget woes magnify School district faces $10.1 million shortfall for 2008-09 under state's new funding plan. Wednesday, January 16, 2008 • By ANDREA EILENBERGER • The Express-Times PHILLIPSBURG | The Phillipsburg School District is bracing for a projected $10.1 million shortfall in the 2008-09 budget under Gov. Jon S. Corzine's new school funding plan. School officials warn that could mean serious cuts, a major tax hike or a combination of both. They are in the process of making all spending plans as lean as possible to narrow the financial gap, but some acknowledge that employee reductions are bound to be a consideration. "Unfortunately, I don't think we'll be able to avoid staff reductions," said Thomas McGuire, school board vice president and chairman of the board's budget and finance committee. He said they will avoid that if possible. Salaries and benefits comprise about 75 percent of the budget. In 2008-09, district Business Administrator Bill Poch estimated the district will pay about $48.7 million in salaries and benefits, an increase of about $2.6 million over 2007-08. The budget and finance committee will meet next week to discuss the spending plans recently submitted by principals and budget managers for technology, buildings and grounds, and athletics. Between 10 and 15 percent of each budget is expected to be chopped, officials said. Then they hope to have a clearer picture of the financial situation. They will have to make difficult decisions while trying to maintain educational quality, McGuire said. "I think everything's open and going to be looked at," he said. School board member Bernie Brotzman, who chairs the board's facilities and technologies committees, agreed with McGuire. Brotzman believes board members need to think creatively and see if there are ways to consolidate jobs. As far as trimming costs, he said, some projects will have to be modified or stalled. Acting Superintendent George Chando said it is premature to speculate where cuts might come from. Trimming will be done after thorough review. Phillipsburg is projected to receive a 2 percent increase -- the lowest possible -- next year. Funding levels in following years will be flat and eventually reduced, increasing the projected shortfall each year, Poch said. Corzine's plan, which dissolves the court-required "Abbott" status of the Phillipsburg district and 30 other poor districts, must still pass constitutional muster. Advocates for urban districts strongly oppose the law. "If they are truly trying to get rid of the Abbott status, then some of the programs that are mandated by Abbott may not have to exist," McGuire said. That's just one question surrounding the new formula, he said. Last year, Phillipsburg received about 70 percent of its $61 million budget from the state. For its 2008-09 budget, the Phillipsburg district is already facing a $2.2 million gap; that's what the district appropriated from last year's surplus to cover a shortfall in state funding. They will also see increases in salaries and fixed costs, such as utilities. The state doesn't permit districts to increase the tax levy more than 4 percent over the previous year, but they can apply for several exemptions to bypass that cap. Poch distributed a chart Monday that shows Phillipsburg's local tax levy for 2007-08 is about $6.5 million. For 2008-09, it shows the proposed "Local Fair Share" jumping 52.1 percent to $9.9 million. The chart, which Poch got from the Education Law Center, is sourced to the state Department of Education. Poch believes the state is indicating Phillipsburg has the capacity to raise taxes by that amount. The 2007-08 tax rate is $1.19 per $100 of assessed value, Poch said. A resident with a home assessed at $90,000 would pay $1,071 in Phillipsburg school taxes. Reporter Andrea Eilenberger can be reached at 610-258-7171 or by e-mail at aeilenberger@express-times.com.