Delaware State News

DOVER — Across the state, Barbara Grogg hears the concerns echoing.

The Delaware State Education Association president has heard from teachers about the 8-percent cuts the state has asked school districts and charter schools to make to their proposed 2009 budgets, and they aren’t happy.

"Our teachers are pretty upset about it," Ms. Grogg said Tuesday. "There’s a great deal of anxiety out there."

That’s because to slice $80 million-$85 million from public education’s $1.15 billion budget request, districts would most likely need to cut personnel — teachers — with Office of Management and Budget director Jennifer W. Davis noting that up to 1,500 educators could be affected under a preliminary estimate.

And while state budget officials and lawmakers have said they do not want to resort to layoffs to close a projected $373.7 million revenue shortfall, school districts are working with a different clock from the rest of the state agencies.

Districts are contractually obligated to inform teachers by May 15 whether their positions will be eliminated as part of an annual reduction in force (RIF), far earlier than when the final operating budget is assembled, often in late June.

"There’s no question that the May 15 date has raised the awareness of the magnitude of the loss of revenue has had and its impact on the state budget," said Sen. Nancy W. Cook, D-Kenton, who co-chairs the budget-writing Joint Finance Committee.

"I think the dialogue within the (party) caucuses and educational process going on there is creating a lot of discussion throughout (Legislative) Hall."

But that dialogue hasn’t done much to assuage the worries permeating the schools.

A former Dover High English teacher, Rep. Nancy H. Wagner said she has been flooded with e-mails and calls from teachers.

"They are very worried and are assuming the worst," said Rep. Wagner, R-Dover, who also sits on JFC. "It’s really a wake-up call that this is a severe issue."

Each year, school districts issue reduction-in-force notices to teachers, but in several cases, those teachers let go are rehired to meet student-unit-count requirements.

In a year in which districts are being asked to cut 8 percent from their upcoming budgets, Rep. Wagner and Ms. Grogg are worried that districts might make deeper cuts than actually needed.

"Because the May 15 cutoff is so early, they might be erring on the side of caution and giving RIF notices to everyone that might be affected, and then if they can absorb the cuts without laying off people, then they can go back and rehire people," Rep. Wagner said.

But that could present a huge problem down the line, Ms. Grogg said.

"It causes a great deal of stress," she said. "Hopefully, (the districts) would restore a lot of positions, but those teachers may well try to find jobs in other states, and we’d lose teachers to neighboring states."

Despite belonging to a union, there aren’t many protections for teachers in this situation, Ms. Grogg said.

There are protections with regard to how the RIF process is carried out, but there is nothing preventing school districts from reducing staff size accordingly.

Most union contracts, she said, call for the least experienced teachers to be eliminated first — "the last hired are the first to go" — but there also is consideration given to what subject a teacher covers.

With the May 15 deadline looming, Mrs. Davis said public education is the first arena in which the proposed 2009 budget cuts will be felt.

"Public education doesn’t have the luxury to wait," said Mrs. Davis, a former deputy education secretary. "It’s troubling. It’s challenging."

State revenue estimates have fallen by $373.7 million since December — $160.5 million for this year and $213.2 million for fiscal 2009.

Last month, Gov. Ruth Ann Minner implemented a hiring freeze and instructed state agencies to slash spending this year by $100 million-$150 million and to cut their 2009 requests by 8 percent.

Mrs. Davis said 8 percent in cuts would slice about $250 million out of the 2009 proposed $3.41 billion budget. Public education comprises about one-third of the proposed spending plan.

Mrs. Davis noted that the 8-percent cuts are designed to give budget officials and lawmakers a snapshot of what state government would look like if they cut their way out of the financial hole.

Legislators could look to revenue enhancements — tax or fee increases or other methods — to raise money.

During an economic downturn six years ago, the governor and legislature approved $150 million in budget cuts and a $150 million revenue package.

And while lawmakers have said they want to avoid layoffs, there is a need for other solutions to offset the revenue shortfall.

Rep. Peter C. Schwartzkopf, D-Rehoboth Beach, said he wants to see cuts in school-district administrations before cuts in the classroom.

Rep. Wagner said district superintendents could get together and decide on programs that could be eliminated across the state.

Sen. David P. Sokola, D-Newark, has proposed suspending the Delaware Student Testing Program for one year, which could save the state $10 million.

Sen. Sokola said doing away with the DSTP for a year would require a federal waiver, but Delaware’s movement toward a new exam might help that effort.

"It seems ludicrous to continue the most expensive assessment per student in the country when we’re going to replace it," Sen. Sokola said. "I’d much rather have $10 million worth of teachers than $10 million of assessments."

Delaware State News

NEW CASTLE — State budget officials announced Monday that they need to make an additional $100 million in "painful" budget cuts for this fiscal year, despite already slicing $74.7 million in the last month.

Those cuts could include programs, personnel or capital projects previously funded that haven’t begun construction.

The decision was reached after Delaware Economic and Financial Advisory Council determined that state revenue estimates, which already plummeted $326.4 million last month, fell another $47.3 million.

Revenues declined $34.6 million this year and $12.7 million in fiscal 2009, although 2008’s figure was cushioned by the cuts budget officials and the General Assembly made last week.

""This is the first round, and intrinsically from here, the cuts become more painful," Office of Management and Budget director Jennifer W. Davis said.

"Tougher choices will need to be made. We need approximately $63 million more in cuts just to get the cash balance (for 2008) to zero. We’re actually in a negative cash position right now."

Mrs. Davis said the state is targeting another $100 million to hopefully finish the fiscal year with a positive cash balance to provide funds for fiscal 2009, and keeping in mind that there are two more DEFAC meetings in which revenues could continue to change.

Although she didn’t give specifics, Mrs. Davis said those cuts could start getting into services to residents.

"It’s tough 10 months into the fiscal year to cut $100 million," she said. "We’re really into deep budget cuts now."

The $74.7 million the state has cut in the past month came from reverting appropriated capital funds, state agency cuts and delaying projects and programs such as the 2-1-1 phone number to route callers to health and human services referrals.

One area where Mrs. Davis said budget officials and lawmakers could look to slice spending is capital projects — school and road construction, building renovations and other expenditures — that have been appropriated in previous years but haven’t been spent.

She didn’t rule out tapping the state’s rainy day fund or spending above its self-imposed 98-percent limit, but noted that the state constitution requires an unexpected situation and an emergency to use the rainy day fund.

Mrs. Davis said there will be more "grueling" state agency cuts in the next several weeks, and they will require the cooperation of the General Assembly and Gov. Ruth Ann Minner.

Rep. Deborah D. Hudson, R-Wilmington, who sits on DEFAC, had several ideas to produce some cash for the state.

"I’d put a ‘for sale’ sign on the front of the state’s two golf courses," Rep. Hudson said of Deerfield Golf and Tennis Club in Newark and Garrisons Lake Golf Club near Smyrna.

"I would also repeal the prevailing wage, which could save $27-$100 million a year on state construction projects … We need to really look hard before we talk about raising taxes."

Rep. Hudson thinks the state can cut its budget, noting that the state has seen 8 percent in cumulative growth in government the last three years.

For 2008, the estimated abandoned-property revenue dropped by $29 million to $340 million, but DEFAC revenue subcommittee chair Dr. Kenneth Lewis said it could have been worse if not for legislation the General Assembly passed.

Last week, lawmakers approved legislation that reverted $41.1 million in appropriated funds back to Delaware’s general fund, $24 million of which was abandoned-property revenue that normally is funneled to the Transportation Trust Fund.

"We’ve said (abandoned property) is volatile and can drop $50 million between (DEFAC) meetings," Dr. Lewis said. "We’re taking a hit in abandoned property, and it’s a big hit."

Net personal income tax and corporate income tax declined by $5 million each, while realty transfer tax decreased by $2 million in 2008.

Overall, state revenue estimates have fallen by $373.7 million since December — $160.5 million this year and $213.2 million in fiscal 2009.

In a statement, Gov. Minner said she would continue to consult with her budget officials to balance the current fiscal year and "develop a responsible budget" for 2009.

"As I have said many times, all options are on the table, but I will work to minimize the impact of our decisions on our schools," Gov. Minner said.

After last month’s DEFAC meeting, Gov. Minner implemented a hiring freeze and instructed state agencies to slash spending this year by $100 million-$150 million and to cut their 2009 requests by 8 percent.

"We know 8-percent cuts generate about $250 million, but we also know they have significant implications for public education, health and social services and across the board," Mrs. Davis said.

"I think it’s critical that taxpayers realize what is before the state … simply doing budget cuts will result in loss of services."

Mrs. Davis noted that public education and health and social services comprise about 61 percent of the governor’s proposed $3.41 billion operating budget.

But she also pointed out that there are options with how to proceed with the anticipated cuts, including slashing other agencies more heavily. The final say will rest with the General Assembly.

Sen. Nancy W. Cook, D-Kenton, said there are going to have to be serious discussions among lawmakers, especially those who serve on the two money committees, the Joint Finance Committee, which crafts the operating budget, and Joint Bond Bill, which writes the capital budget.

"If you have the philosophy that there won’t be layoffs, when you reach the point of that amount of money, you’re looking at cutting programs," said Sen. Cook, a JFC co-chair.

"It’s very easy to say we can cut our way out of this, but I don’t know if we can live with what that means."

Sen. Cook shied away from suggesting that layoffs could be in order, but noted that any programs that might be cut likely have personnel associated with them.

"I’m not sure (state workers) should be worried, but they should recognize that we are in tough economic times," Sen. Cook said. "However, I have been here through six economic downturns and we have never turned to layoffs.

"It doesn’t help because then you have to pay unemployment, and those people then aren’t paying personal income tax."