The Harlan County Board of Education is joining with other school boards from across the state in an effort to keep rainy day contingency funds from being used to balance the state’s budget.

A preliminary state budget revenue forecast in October showed the state was predicted to have a $161 million shortfall for the current fiscal year, which does not end until next June 30. Early estimates for the 2010-12 budget looks even worse for the state government.

Harlan County Board of Education Chairman Gary Farmer said school districts all across the state must have a balanced budget and the state should be no different.

“The contingency fund is what as a board is required by law to keep on hand,” said Farmer. “We are required by law to keep this on hand. This district years ago and several others have dipped below and there are consequences, penalties and sanctions. I think most of the boards probably agree with this board. We feel like the state legislative system should abide by those same rules.”

Farmer said if the school boards don’t operate then cutbacks are made, the budget is reviewed and is balanced before it can operate.

Farmer said if the board did not have a contingency plan for the district if something happened like a furnace going down then the board would have to ask the state for the funds to fix the problem. He said the problem is the amount of time the district would have to wait before it would or if it would get the funds.

Lisa Gross, spokeswoman for the Kentucky Department of Education, said the state law requires districts to maintain at least 2 percent of their annual budgets as contingency funds but encourages districts to maintain 5 percent.

To balance the state’s 2009 budget, Gov. Steve Beshear and the General Assembly took actions which included additional cuts to state agencies, modest increases in cigarette and alcohol taxes and using part of the state’s rainy day funds instead of using stimulus funds like most states.

This has now allowed the state to be able to use the stimulus funds for the new 2010-12 budget. Kentucky plans to use $358 million in stimulus funding to help with an estimated $1 billion shortfall.

“Kentucky has acted wisely and prudently in downsizing government, while working to maintain funding for key priorities,” said Beshear in a recent press release. “As a result, we have hundreds of millions of dollars in stimulus funds to use this year and next. We will need those funds as Kentucky, like all states, continues to grapple with a stubborn economic recession.”

House Speaker Greg Stumbo said recently in a report that tapping district contingency funds would not be necessary during the current fiscal year, but given the dismal budget outlook the move “is on the table” when the 2010-12 budget is reviewed.

Gross said all local school districts combined carried a balance of $751 million into the new fiscal school year which began July 1.

“This system, until the past two years, kept near 5 percent contingency. said Farmer. “We were above what we were supposed to be, but due to different funding cuts that have been hitting us hard, it is hard for us to stay at 2 percent or actually any district in eastern Kentucky with decreased enrollment to stay at 2 percent, much less if they take that from us.”

Farmer said eventually the state is going to have to face the hard facts and make the important cuts they have to make. Farmer went on to say this is why they have signed this resolution and will be sending it to the state officials.

Other items approved on the boards consent agenda included:

n The payment of claims in the aggregate amount of $1,263,825.78.

n The Enhancing Education Through Technology Grant.

n The 21st Century Community Learning Center Grant application for Evarts Elementary School.

n The 21st Century Community Learning Center Grant application for Harlan County High School.

n A pay request from Rio Grande Fence for $18,304.12 for work completed at Harlan County High School.

n Invoices to Fence Catalog Inc. totaling $56,525.03 for materials on the fencing project at Harlan County High School.

n The Worker's Compensation Insurance quote from Public Entity Insurance at a cost of $68,563 for the year beginning Jan. 1, 2010.

The Harlan County School Board’s next regularly scheduled meeting will take place on Dec. 10 at 6:30 p.m. at Harlan County High School.

(The Associated Press contributed to this report)