The Troy City Schools Board of Education on Monday approved its FYE12 budget and authorized the use of more than $1 million in reserve funds to meet expense needs.

“The general fund operating reserves will be $7.3 million this September,” said Mickey Daughtry, CFO for the system told board members during a work session on Monday. “At the end of September next year we’re projecting the fund to be $5.6 million or 4.4 months of operating reserves …

“The drop in federal funding, the drop in student count … all of this contributes to it.”

Daughtry said the decline in student enrollment – the district has lost 286 students since 2005 – means the district loses nearly $13,000 per month in revenue allocations of the local 1-cent sales tax, which is prorated between the city schools and Pike County Schools based on enrollment. “That’s about $156,000 per year, which is salary and fringe (benefits) for three entry-level teachers in a year’s time,” Daughtry said.

That, combined with the loss of nearly $2 million in federal funding, is a double-hit for the district’s revenue.

The FYE12 budget includes $10.4 million in state funding; more than $2 million, or 11 percent, in federal funding; and $5.4 million, or 30 percent in local funding. Total expenses are $23.6 million, including $5.2 million in debt and capital expenses. Expenses include 118.74 teaching units funded by the state and slightly more than 36 units funded through local sources.

The budget approves per-student spending of $8,632; by comparison, the national per-student average was $10,297 in FYE08.

“It will be next spring before the full effects of tax shortfalls are felt,” said Roxie Kitchens, board president.

The budget includes $4 million in capital expenditures, which are funded by the $15 million in bond revenue generated this year during a refinancing project.

As part of its work on Monday, the board also approved a capital expenditure plan for that $15 million.

“We had to look at how to allocate that money within three years and the administrators and building principals and I sat down and looked at not just how we could renovate, but what we could do to grow the system,” said Lee Hicks, superintendent.

The plan presented by Hicks includes significant work at all three primary campuses. The first phase would include the construction of 20 new classrooms and creation of a new road for traffic flow at Troy Elementary School and the Hank Jones Early Childhood Education Center. These classrooms would be used primarily for the creation of a pre-kindergarten program, which Hicks said would build off the success of the HIPPY program while also providing a private pay program. “We’re losing students to other schools in the pre-K program,” he said, adding that the program would allow TCS to truly prepare these youngsters for kindergarten.

At Charles Henderson High School, the plan calls for the construction of a new multi-purpose center, which would function as a cafetorium, providing cafeteria services for students during the day and a place for meetings and productions. “The current cafeteria is on its last legs, so to speak,” Hicks said. The plan calls for the renovation of the existing cafeteria space into a new media center and, if possible, the construction of an on-site softball field

Charles Henderson Middle School would be the beneficiary of the greatest investment, with the construction of new permanent classrooms, a new cafeteria, a new roof and upgraded HVAC as well as cosmetic renovations throughout. “This would be a whole new look to the middle school, not just a couple of walls,” Hicks said.

The plans are still in the preliminary stages, Hicks said.

In other business on Monday, the board:

• Approved the hiring of Courtney Smith as a special education aide at TES and gave Hicks the authority to hire special education aides as needed without prior board approval moving forward. The technology support position remains open.

• Approved the allocation of more than $12,000 to two non-profit organizations, including the Boys and Girls Club of Pike County. The system is required to allocate 20 percent of it’s at-risk funding to non-profits that provide prevention counseling and services.

• Approved a policy requiring the board to maintain a minimum of three months operating expenses in its reserve fund at all times. However, the policy does allow board members to dip below that threshold with a majority vote and a budget amendment.

• Approved bids for two new service trucks, at a cost of slightly more than $24,000 each.

• Heard a report on the testing schedule for this school year.