“This is one of the darkest times in our school district,” Sunman-Dearborn Community School Corp. superintendent Dr. Jeff Hendrix told about 40 Sunman Elementary School faculty and staff members Jan. 21.

The gathering was one of several scheduled meetings the superintendent is holding at various schools to discuss the corporation’s $2.7 million general fund deficit and how the budget process works.

He told attendees to imagine having several pockets in a shirt with each one representing a different fund as an individual entity. Usually, it is not possible to take money out of one pocket and put it in another, but in certain instances it can be done. That’s basically how the school budget works.

Operating expenses, including 98 percent of salaries, fringe benefits, supplies, utilities and insurance, are paid out of the General Fund, he explained. The Pre-school Fund, which provides special education services for 3- to 4-year-olds, is also incorporated into the General Fund, and both are controlled by the state Legislature.

Five other funds – Capital Projects, Debt Service, Transportation, Bus Replacement and Pension – are locally funded.

The Rainy Day Fund is one that “school corporations can choose to create. We didn’t have one when I got here, but the board agreed to start this .... We can pick two or three funds, and if there’s a cash balance in them .... it can transfer over to the Rainy Day Fund.”

How can money be left over? The budget process “is a guessing game. For example, you project out 18 months for capital projects. We do estimates, get quotes and try to figure out how much it’s going to cost .... If you have a nice good year and the prices go down, you have money left over.”

However, he stressed, “The thing about the Rainy Day Fund is once you use those dollars, they’re gone.”

SES teacher Sue Sandman asked, “What would you use the .... fund for? Isn’t it ‘raining’ now?”

The leader announced, “The board has to pass a resolution, and we plan to do that. We created it .... to spend down the deficit.”

Another budgeting problem is that the January payment from the state is usually delayed until December when school corporations receive two payments. To make up that money, “we borrow from the bond bank in January .... Taxpayers pay the interest for 11 months on those borrowed dollars, but the state pays no interest.”

How did SDCSC get in a deficit? “When the state took over the General Fund, we lost the ability to go to local taxpayers.” In addition, “we are losing revenue because of declining enrollment.”

The superintendent revealed that the largest percent of General Fund dollars goes toward salaries and benefits and that number is increasing each year: in 2007, these items made up 86 percent; 2008, 93 percent; 2009, 93 percent; and 2010 is projected to make up 100 percent in just salaries and benefits. “You can see quickly when salaries and benefits of most employees continue to get higher than what you’re going to get from the state, you’re going to be in a deficit.”

He added, “Every chance we get, we’re trying to reduce our costs .... you guys are already mad at me because I took away your space heaters, microwaves, coffee makers .... we’ve gone into hallways and reduced the lighting there. We asked you to turn off your lights when you leave your rooms .... We’re no longer paying for subs for custodial staff. We’re trying all kinds of things and as we continue to lose people through attrition or retirement, we’ll look at that.

“My job was to come out here and hopefully educate you on these funds .... (but) we need your ideas on how we can try to reduce the deficits to our General Fund.”

Teacher Gerri Caudill asked, “What about all the money circulating from the gambling boats? They’re sitting on millions of dollars.” Hendrix responded, “I’m working on that.”

Teacher Rahe Ann Bergman suggested when the East Central High School principal retires, one of the assistant principals could take over his duties, and they could make do with one less assistant.

“We’re all in this together .... (and) we need to look at all the facts .... and decide what we are going to do collectively to get out of this hole,” Hendrix noted. In the near future, he will also be holding meetings in various parts of the district to explain the situation to community members. “We’ll be more than happy to sit down with anyone who wants to look at our finances or talk to us,” he commented.