The budgetary effect of recently approved cost-of-living adjustments and higher insurance premium contributions for Pueblo City Schools (D60) teachers and teacher assistants keyed a lengthy discussion during a recent work session of the D60 board.

What began as a budget update from chief financial officer David Horner evolved into talk of ways to make room for the new reoccurring expenditures � from school consolidation to staff reductions to a four-day week.

Horner noted that for this year�s budget, expenditures have increased about $1 million while the total reserves have dropped to 10.8 percent from just above 12 percent � a reflection of the cost of living increases (COLAs) and higher insurance premium contributions.

When factored into this year�s budget, the COLAs and benefits will continue to siphon reserves, the board learned. After those expenses are paid, unassigned reserves will drop from $1.7 million to $504,000.

But should the board elect to institute step increases for teachers, at a price tag of $1.2 million, unassigned reserves would be in the red by $728,000.

As such, the operating reserves would have to be tapped into to cover the deficit, dropping the overall reserves to 8.6 percent.

A far cry from the 12 percent the board has directed Horner to maintain.

This reserve amount would plummet further if the board elected to fund steps for other employee groups except the teachers and pay increased insurance premiums and a 1 percent COLA for groups others than teachers and assistants.

In a worst case scenario, the reserves would fall to 7.69 percent, a level Horner has indicated is precarious and would require the borrowing of money to keep the budget solvent.

And the dilemma is just beginning.

�Realistically, this money becomes compounded next year, and the year after and the year after,� said board President Phyllis Sanchez. �So next year, you still need to find those dollars.�

That amount, Horner noted, could be as high as $5 million. �And we don�t have the savings account to pull it out of for the next time, so some sort of staff reductions, savings, have to be generated from somewhere within our budget,� Horner cautioned.

At present, salaries and benefits make up almost 85 percent of the district�s budget.

Compounding the sticky situation is ongoing concerns about the district�s aging facilities and the pressing need to upgrade and improve the structures � at a cost of hundreds of millions of dollars.

As an example, should testing for lead in the water flowing through D60 schools prove positive, and re-plumbing deemed necessary, that price tag could be as high as $1.2 million for one high school.

At that point, board member Bobby Gonzales questioned whether a four-day work week would result in any real cost savings.

�I think there�s some savings, but not a huge amount,� Horner replied.

Next came another pitch for a mill levy override, and later a bond issue, from board member Frank Latino, who reiterated the need for transparency and collaboration in addressing the budget quandary.

Noting the board will have to take �some long hard looks and make some difficult decisions,� board member R. Kenneth O�Neal touched on the idea of school closure and consolidation.

�We have three elementary schools and three middle schools within a mile and a half radius of each other, all with declining enrollment, but every year, the cost of maintenance of the building goes up.

�At some point, we�re going to end up consolidating. I don�t see it as avoidable. And it�s a conversation that people really don�t want to discuss or talk about,� O�Neal said.

Conversely, Gonzales said the discussion should instead focus on growing and expansion, as he supported Latino�s idea for a new school to be built on the North Side, �a neglected quadrant.�

While long-term planning is essential, board Vice President Barb Clementi reminded the board, �The information presented to us today is short term and is a whole other conversation about how we make work decisions that we�ve made in the last six weeks and decisions that we will be faced with over the next six weeks, in terms of additional expenses.�

And with all four bargaining groups seeking COLAs 2 percent or higher along with other benefits in new contracts, those expenses could prove to be substantial.

jpompia@chieftain.com