By Jennifer Mrozowski
Enquirer staff writer

A day after the Cincinnati school district acknowledged overspending its 2003-04 budget by $22 million, the district treasurer's office proposed bumping up the 2004-05 budget by another $15 million.

District officials are expected to present a $469.5 million budget to the school board today.

That budget is 8 percent more than was budgeted for 2003-04, and $11.4 million more than was actually spent.

Some board members expressed concern Tuesday over the projected increase in costs.

"We have to get the spending under control," said board member Sally Warner, adding that the district spent tens of millions more in 2003-04 than the year before.

"I believe that's unacceptable. The superintendent is ultimately responsible for the running of the district and this is his budget."

According to a memo to board members obtained by the Enquirer, the budget is being revised based on information that spending last year was over budget and also to incorporate negotiated salary increases that weren't anticipated during the budgeting process.

Avis Sharpe, the district's assistant treasurer, wrote the memo.

"Like other Ohio city school districts, Cincinnati Public Schools is feeling the fiscal pressure of declining state revenues, unfunded mandates, rising utility costs and contractual obligations," said district spokeswoman Janet Walsh.

"The size of the budget has been a concern of Superintendent (Alton) Frailey since his arrival. He has been made aware of the overage (of 2003-04 budget) and the additional cost projected for '04-05, and he will take proactive and corrective action."

Walsh could not elaborate on that action, and Frailey could not be reached for comment. Treasurer Michael Geoghegan would not comment late Tuesday, reserving comments for today's board meeting.

The district will use cash reserves to pay for the $22 million in over-budget spending in 2003-04. The memo did not detail how much further into the $98 million in district reserves the 2004-05 spending would take the district.

Following are some of the increases over the July budget proposal that Sharpe cited in her memo:

• $1 million for utilities. The district's preliminary 2004-05 budget projected $7.9 million for utilities, but district officials learned actual spending for 2003-04 for utilities was $8.7 million. The district now proposes $8.9 million for utilities, which includes an allowance for utility rate increases.

• $8.4 million for salaries. The district's initial 2004-05 budget, in part, did not anticipate some of the raises from teacher and other contract negotiations with non-teaching employees this year. The projected increase is requested to adjust the average salaries.

• $3.2 million for out-of-district tuition payments, or payments to other agencies and districts that educate Cincinnati school district students. The 2004-05 budget originally proposed $11.8 million for out-of-district tuition payments, but the district found it spent $13 million in 2003-04. The new budget proposes spending $15 million, which includes expected growth in this area.

• $3.3 million for payments to retirees for a portion of their unused sick leave. The initial budget proposed $4.8 million but the revised budget proposes spending $8.1 million.

The district also decreased the proposed budget in other areas by $2.8 million. Decreases were in areas such as leadership development and general services.

District officials said they overspent last year's budget because of unforeseen costs, including retroactive pay to teachers after contract negotiations, unanticipated payments to charter schools and unbudgeted lead abatement.

District officials said many of the overruns resulted from one-time expenses.

Of the $98 million left in reserves, Geoghegan said about $15 million oare already encumbered, meaning the money has already been charged for items, such as textbooks or contracted services.

In Ohio, districts generate cash reserves from tax levies, state aid and other funding sources. Because school district levies don't include inflationary growth, districts deplete their reserves every few years.

Spending then begins to exceed revenues and deplete reserves, then districts return to taxpayers for more money. When a levy passes, districts build up their reserves and start the depletion process again.

Geoghegan has said he anticipated spending $30 million to $35 million of the district's reserves this year, before the revised budget request.

Board member Melanie Bates blamed Geoghegan for not updating board members on the costs overruns from 2003-04 and the projected increases for this year.

"I'm going to be pretty interested to see how the budget process can get so far along before this is revealed," she said. "The betrayal of trust isn't simply that we went over budget, but also in finding out about it at this stage of the game."

Bates blamed much of the cost increases on the teacher contract negotiation, which she voted against in the spring. She said the treasurer's office never provided a full cost analysis for all items the contract.

Geoghegan has disputed that. He has distributed information saying that the teacher contract would cost $80 million over three years.

Board member Harriet Russell said the budget is necessary to pay for programs to help meet federal requirements for student achievement.

"This is a reasonable budget if we are going to comply with the (federal) No Child Left Behind Act and to keep the promises made to voters in previous years, such as reducing class size," she said.

But Russell acknowledged that budget cuts need to be made. She said those are unlikely to happen before the 2005-06 budget because of contractual obligations.

E-mail jmrozowski@enquirer.com