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TO:                  All Superintendents of Schools, School Board Chairs, and the State Board of Education


FROM:            J. Duke Albanese, Commissioner


DATE:             December 6, 2002


RE:                   Update: Budget Difficulties, FY’03



            As you know, the state budget for this fiscal year, FY’03, is still facing challenges.  The latest reprojection of revenues shows a new shortfall of $44.5 million for the period ending June 30, 2003.  This new shortfall comes on the heals of the $240 million problem that was addressed by Governor King and the 120th Maine Legislature during a special session just a few weeks ago. 


            Knowing that the economy continues to be tentative in producing the revenues that Maine has come to expect in recent years and recognizing that the next biennium budget, for

FY ’04-‘05, will challenge policy makers, Governor King has pledged to address as best he can, the FY ’03 problem before leaving office.  Simply put, he feels that it is the obligation of his administration to deal with FY ’03, understanding that Governor-elect Baldacci and the 121st Legislature will be challenged from the outset in building the FY’04-’05 budget. 


            Since statewide cutbacks to address the initial $240 million shortfall were not an easy task, neither is the challenge of addressing a $44.5 million additional shortfall.  Clearly, as the largest line in the state budget, education will have to be part of the solution in any further curtailments that Governor King puts forth.  At this writing, I’ve strongly advocated to the Governor and his staff that we spare further reductions in General Purpose Aid during this fiscal year.  As you well know, beginning last July school districts in Maine experienced cutbacks in General Purpose Aid.  We worked hard to keep those reductions to about $8 million in total, drawing, an additional $2 million from Debt Service monies.  In analyzing the current situation and in suggesting other areas where cuts could be made, I must report that the choices are slim and none of them are appealing.  However, I want you to know that we will work to the best of our ability to spare further reductions in regular General Purpose Aid.  Importantly though, it is evident that we will have to identify other areas in which we would reduce expected funds that come your way.


            Earlier communications to you have stressed the need for prudent management of your local FY ’03 budgets.  I know that in conversations with scores of superintendents across the state you have taken that advice to heart and have worked cooperatively with your staffs to exercise great restraint around your expenditures.  I applaud your efforts, and the results of that work will help to cushion any effects that the pending cuts may have on your districts.


            In closing, I suspect that within a week or so we will know to what degree Maine’s public schools will be participating in this next curtailment and I will advise you accordingly.  Thank you for the good work that you do, and for your individual and collective efforts to weather these difficult financial times.