As leaders of Kokomo-Center Schools (KCS), we want to inform the people of Kokomo of how KCS is responding to the recent announcement by Gov. Mitch Daniels to cut $300 million from Indiana’s public school districts’ general funds. The response will be a cooperative effort.

The governor recently announced permanent cuts after our 2010 budgets were approved. The cuts announced in December are in addition to reductions communicated in August. The August revenue reductions resulted from declining enrollment, which correlates to our struggling local economy, and a funding formula altered last June by the Legislature. The combined result of these revenue reductions for Kokomo-Center Schools equals more than $3.7 million, or about 8 percent of our general fund. The cuts reduce 2010 funding to below 2003 levels. Additional reductions are anticipated for the 2011 budget.

Zero property tax dollars support the general fund. Since 2009, all general fund revenue has originated from resources collected and distributed by the state. Therefore, the recent Chrysler and Delphi property tax delinquencies have no affect on the KCS general fund. Unlike city, town and county governmental units, schools cannot generate additional revenue through alternate taxing options, such as the Local Option Income Tax. In addition, the projected reorganization savings are less than the amount of the revenue reductions.

A school district’s general fund pays for the salaries and benefits of nearly every employee, as well as supplies, books, magazines, utility expenses, and business insurance (liability, workmen’s compensation, etc.). The only employees whose compensation does not come from the general fund are bus drivers, food service workers, grant funded positions, and a few computer technicians. Salaries and benefits for employees consume more than 91 percent of KCS general fund expenditures.

We understand our state’s financial difficulties and recognize that we must work together to weather these crises. Our schools continue to operate each year with limited revenue while costs continue to increase dramatically. Per Indiana code, we must follow strict budget requirements, adhere to requirements within collective bargaining, and spend money within the specific purposes set forth by law. The Kokomo Teachers Association and Kokomo-Center Schools have a history of working together to find solutions. We continue to do so. We continue to negotiate in good faith through open dialogue. Our current discussions remain focused on fiscal responsibility and equity to each employee group.

For these reasons, KCS is in much better shape to respond to these crises than many other Indiana school districts. Our positive position results from the historical practice of maintaining at least a one-month cash balance on hand.

Actions to increase efficiencies were already being processed as evidenced by decreases in the general fund. These decreases were the result of eliminating four administrator, three teacher, two secretarial, 2.5 custodial, one social worker and two media clerk positions, closing Memorial pool, and leasing Columbian Elementary School. Most of these decreases were possible because the first phase of reorganization (closing Columbian and Darrough Chapel elementary schools) was implemented. All of the eliminated positions were the result of not replacing employees who either retired or resigned.

While addressing the budget shortfalls, we will continue to maximize student opportunities, minimize the elimination of jobs, and utilize attrition whenever possible. However, in a budget where more than 91 percent of expenditures are salaries and benefits, some reduction in student opportunities and the elimination of some jobs is inevitable.

To deal with the revenue reductions, each budget line item is being analyzed. We have entered into an agreement with Energy Education to reduce energy expenses. We significantly have reduced supply budgets. We are examining whether the reorganization timeline can be accelerated. We continue to work with other districts to pool resources in an effort to reduce costs (for example, all Howard County school districts pooled resources in order to net each district about 15 to 20 percent savings on business insurance rates).

We plan to trim our work force further through attrition if possible, adjust our student programs, and evaluate each position in our school district. However, since the most recent cuts were announced during the middle of the school year, we have few immediate options unless laws are changed or moratoriums are enacted by the General Assembly.

The governor, state superintendent for public instruction, and the state board of education have stated that these cuts can be made without adversely affecting the quality of education and without eliminating teaching positions. Such statements do not reflect reality. Since more than 91 percent of the general fund expenditures now are employee costs, any cut in general fund revenue will impact our classrooms and student programs.

The Legislature is just beginning to weigh in on how the problem should be addressed. Collectively, we encourage and support continued efforts to increase efficiencies, but they must be realistic, timely and practical. For our part, we want to diminish any impact mandated cuts have on our ability to provide a healthy and safe learning environment that engages, supports and challenges each child in a culture of excellence and achievement.

Ideally, we will be able to continue providing the programs that have allowed:

• KCS to be the highest performing urban school district in Indiana as evidenced by 12 of our 14 schools making Adequate Yearly Progress and a graduation rate that has increased from 77 to 84 percent in the past two years;

• Sycamore Elementary School to earn Four Star School Status for the fifth consecutive year; and

• Boulevard, Bon Air, Lafayette Park, Maple Crest, Sycamore and Wallace elementary schools to earn Top Gainer Awards from the Indiana Student Achievement Institute.

While some measures are not desirable in a perfect world, the current financial circumstances require choices that we might not otherwise pursue. One such measure available to the state is to return to the well-established past practice of delaying a portion of the distribution payment to schools, and when the economy improves, reduce and eventually eliminate the delay in the distribution payment. This practice has been used multiple times in the past to survive previous recessions.

The current law allows school corporations to pay utility expenses equal to 3.5 percent of the school district’s 2005 total tuition support from the capital projects fund (CPF). One bill being proposed would increase the amount of utility expenses school districts are allowed to pay from the CPF. Another bill under consideration would allow some funds generated for use in the CPF to be used to reduce general fund shortfalls. Any of these measures would greatly reduce the negative impact on all Indiana school districts.

We appreciate the hard work of our local legislators to mitigate the serious impact of budget measures currently being undertaken. They need the assistance of other decision-makers to find solutions to very difficult financial realities. The solutions must maximize student opportunities and minimize increasing the number of jobs that have already been eliminated throughout Indiana.

• Chris Himsel is superintendent of Kokomo-Center Schools. This piece was signed by school board president Joe Dunbar and Kokomo Teachers Association president Cheryl Simmons.