VALPARAISO | The Valparaiso Community Schools administration looked into the future at Tuesday's School Board meeting and saw -- financial uncertainty.

David White, district finance officer, outlined projected impacts of state mandated property tax caps on the district.

To provide property tax relief enacted by the last General Assembly, the state will assume full responsibility for districts' general funds, which pay operating costs such as salaries, benefits, utilities and supplies.

General funds, which had been funded locally through property taxes, will be funded starting next year through the sales tax increase that went into effect in April.

However, shortfalls to districts' general fund support from the state have been estimated by the Legislative Service Agency, White told the board. For Valparaiso, those shortfalls, minus help from funds set aside by the state, are estimated at $151,000 for 2009 and $850,000 for 2010. For 2011, Valparaiso has estimated its shortfall at $1.7 million if no help money is set aside by the state. That has not been done yet, but it may, White said.

In then trying to compensate for the state shortfall locally, the district might logically spread the burden across the remaining funds, White said. But debt service obligations must be paid in full, he said, and cannot be reduced along with other funds. And because debt service is now almost 50 percent of the locally raised levy, moving its share to capital projects, transportation or bus replacement would place a hard burden on those funds, White said.

In one scenario White outlined, the capital projects fund could be reduced $1.3 million from a budgeted $6.2 million in 2011, severely limiting maintenance projects.

Every school corporation and municipality will be affected by the changes, White said.

Board President James Bernard noted that if sales tax revenues fall in an economic downturn, the state may not be able to offer the added help funds to offset shortfalls.