The first draft of next year's $143 million Rapid City school district budget has been approved by the board of education.

"The budget is balanced without using fund balance," budget manager Dave Janak said in an interview earlier this week. "That's huge."

The budget, which includes a $78.6 million general fund, is a 5 percent reduction from last year's budget. The reduction includes almost $3 million worth of cuts made at a special March meeting, making it the second year that administrators and board members went through the budget line by line and debated the merit of salaries, programs and expenses.

Of the cuts, $2.9 million was saved through retirements and attrition of almost 42 staff members, and another $900,000 was saved in program cuts.

Janak said that no one except administrator Jim Ghents was laid off from the district this year, which hasn't been the case in other cash-strapped districts.

"The horror stories we hear from other districts - we haven't had to do that," Janak said. "That's gratifying."

But the proposed budget is only a place to start, Janak said. A public hearing will be held at the regular board meeting June 4. A final budget must be passed by the last meeting in September.

Negotiations for employees have not been completed. Employee raises, which would have to be approved by the board, are not included in the proposed budget. That money would have to come out of reserves, Janak said.

Another change could come in the form of federal stimulus money. The district is eligible for more than $7 million during the next 18 months. The money is designated for Title I and special education programs.

Board president Sheryl Kirkeby asked why that money is not reflected in the proposed budget. Janak said it's about timing.

"There are a lot of components where we're still waiting on guidance," he said.

If the district does apply and receives any of the money, it will be included in the final budget, he said.

In the meantime, administrators are creating spending plans - but have been warned that the funds are much like one-time money.

"Anything we use that money for, we need to think about sustainability," Janak said.

Kirkeby asked why the Central High School addition and renovation estimates were not included in the proposal. Support services director Mike Kenton said estimates should be to the district by June 23, and Janak said the cost would then be added to the capital outlay fund in the final budget.

The district also heard from a contracted health-insurance benefits consultant Thursday night who offered a recommendation on changes to the district's insurance programs. The district is currently self-insured, meaning it collects premiums and pays its own claims.

The district bid out group term life insurance, group dental, group medical and pharmacy benefit managers, and received more than 50 bids.

By implementing some of the changes, the district could possibly save more than $110,000 the first year. Janak said the district would probably be able to hold premiums for next year, even with health care costs expected to increase 8 percent. The proposed budget reflects that. The board only discussed insurance changes but did not vote on it.

Tax levies will be down slightly this year, Janak said.

Homeowners of a $100,000 home will pay about $6 less in property taxes, if the home is assessed the same as last year. Most assessments increase however, he said.

Contact Kayla Gahagan at 394-8410 or kayla.gahagan@rapidcityjournal.com

What does the proposed 2009-2010 budget look like?

- General fund - used for general operations of the K-12 program and is the largest fund in the budget: $78.6 million

- Capital Outlay - used for construction, maintenance, curriculum, debt service, technology purchases: $17.1 million

- Special education - used to supplement services provided to K-12 special education students: $16.2 million

- Post secondary - Used for all needs at Western Dakota Technical Institute: $11.8 million

- Food service - Used for food services operations: $4.1 million

- Pension - used for pension expenses: $900,000

- Health insurance - used to pay health insurance claims: estimated at $13 million