The Ohio Department of Education has sent word to Southwest Licking Local Schools: Balance the budget, or else.

The Ohio Department of Education has sent word to Southwest Licking Local Schools: Balance the budget, or else.

SWL treasurer Richard Jones said he has received an e-mail to notify the district that it must balance the 2012 budget in its five-year forecast or submit a plan for budget cuts. In October, prior to the passage of the levy, the district approved a five-year forecast that projected a $6.5-million deficit in 2012.

With the levy's passage in November, Jones predicted a $380,000 balance in the district's coffers at the end of the 2011-2012 school year, assuming no reduction in state funding.

Jones brought six scenarios before the school board Dec. 16, showing the effect of state funding cuts at 7.5 percent, 10 percent, 15 percent and 20 percent.

"It's not rocket science. The more they take away, the more (the deficit) is going to be," board member Brad Williams said.

Of the scenarios, Jones recommended taking a middle ground, choosing one that assumes a 15-percent decrease in state funding. Jones also modeled what the budget would be with and without the district offering all-day kindergarten. With kindergarten, the 2012 deficit is projected at about $1.4-million. Without it, it's about $980,000.

"Could we reasonably think that they would take that requirement away?" board member Cindy Zaino said.

Board member David Engle suggested keeping kindergarten in the projections.

"People in upper school management say that one of the best ways to improve your test scores is to have all-day kindergarten," he said. "My comment is, if we don't start planning, we're never going to have the money and we're never going to have the room. I still think we need to have this as part of our focused idea."

Jones' last scenario assumes a 15-percent reduction in state funding and the implementation of all of the performance-audit recommendations.

"(This) is what the financial advisory committee wanted me to provide you," Jones said.

If SWL were to make every cut recommended in the performance audit, the district would end the year with a positive balance of about $1.6-million. The problem, board members pointed out, is that many of those recommendations rely on negotiations with staff. The district has three collective-bargaining agreements, each of which expires June 30, 2011.

"I think the reality of (this scenario) is, it's probably too large," Engle said. "We won't make all those changes in one year. Do I want to make all these changes? Not especially, but I don't think we quite have a choice."

Board president Don Huber and the rest of the board asked Jones to create another forecast that spread the savings from performance-audit cuts over two years. Members said they hope to approve a new five-year forecast sometime in January.

The board will meet at 7 p.m. Jan. 13 in the district office, 927-A South St., for its organizational meeting.