DODDS-Europe facing a major budget shortfall
KAISERSLAUTERN, Germany — The weak U.S. dollar has put Defense Department schools overseas in one of the biggest financial binds in years, causing a budgetary shortfall that could require additional help from the Pentagon.
The Department of Defense Educational Activity’s spokesman said the financial situation is worse than past years because the dollar has plummeted, but officials are positive they can overcome the deficit by “realigning funds.”
“We’re confident we’ll get the relief we need,” DODEA spokesman Frank O’Gara said Tuesday by telephone from Arlington, Va. But the school system, which operates on a $1.5 billion budget worldwide, is not sure where the money is going to come from.
Claudia Shaw, DODEA’s chief financial officer, said it will be a month or more before they have an idea where they’re going to move the money from. If officials can’t make up the loss internally, she said the last resort would be to go to the Office of the Secretary of Defense and request additional money.
The system’s top administrators refused to release the size of the budget shortfall. O’Gara said they will not reveal how big it is because “we don’t want to alarm” parents and teachers, when officials believe the shortfall will be resolved.
Both officials downplayed the significance of the deficit as something the school system goes through every year, but O’Gara acknowledged the situation is particularly “acute” in Europe because of the strong euro.
Funding for Defense Department schools became an issue earlier this month when Army Gen. John Craddock testified before a House subcommittee that soldiers are leaving their spouses and children in the States because the schools do not have enough money and the facilities are too old.
Craddock, who heads U.S. European Command, did not offer any statistics but said he was “pretty sure, anecdotally, it’s happening.”
The budgetary situation in Europe is not pretty.
Mike Long, the Department of Defense Dependents Schools-Europe top resource official, also would not release the budgetary shortfall in Europe, but said it is one of the worst he has seen in his 20-plus years with the military school system.
About 95 percent of Europe’s $606 million budget is fixed, with most of it going to salaries. But the weak dollar has dramatically driven payroll expenses such as housing and cost-of-living allowances for employees living overseas. DODDS-Europe projects it will spend more than $55 million in fiscal 2008 on cost-of-living allowances — known as “post allowance” — to teachers and staff. In 2002, when the dollar was strong, that number was zero.
“That’s unbelievable,” Long said.
Housing allowances also have skyrocketed to unprecedented levels because teachers and staff live in homes out on the economy and pay rent in euros. This year, the total figure is expected to nearly reach $102 million, up from $85.8 million just two years ago.
To make up for the shortfall, European school officials have already had to make some cuts. Schools across the continent have cut field trips for students, and temporary duty trips for staff and teachers. Supplies, including everything from paper to textbooks, have been sliced in half, Long said. Instead of spending a targeted $200 per student this year, schools are shelling out only $100. Last year, schools cut the supply budget by 40 percent.
“It’s never been like this,” Long said.
That’s not all. Defense Department schools also pay for students, who are stationed in areas where there are no military schools, to attend private schools. Due to the closure of London Central High School in London, DODDS is paying about $40,000 per student to attend private school in the area, Long said.
Despite the historic financial situation in Europe, Long said he isn’t worried.
He, too, said the shortfall can be made up by shifting money and getting help from Washington, if absolutely needed. He added that while the school system is paying higher costs for the allowances and such things as contracts, officials have not had to cut extracurricular activities, sports or many academic programs. Standardized test scores for students in military schools continually are above average.
While the sizable shortfall could get worse if the dollar continues to slide, officials hope they can make up the deficit by tightening the budgetary belt and emphasizing frugality.
“We’re working toward some resolution,” O’Gara said.
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