MATTHEW E. MILLIKEN

mmilliken@heraldsun.com; 419-6684

DURHAM — The Durham school board late Thursday night unanimously voted to spend about $1.9 million on land for a future elementary school.

The board agreed to purchase a 33.2-acre site in the Hope Valley Farms subdivision for about $1.9 million. The “Pod X” location at 3901 S. Roxboro Road will be used for the so-called Elementary School F, funds for which have yet to be budgeted.

The purchase will be funded by two bonds.

Assistant Superintendent Hugh Osteen described the land as “close to houses, close to services, close to transportation. Really it’s an ideal site.”

Osteen said there had been no new developments in the search for a new high school.

Meanwhile, administrators said that the public school system has around $825,000 in cash on hand, and renewed warnings about their inability to handle cash-flow emergencies.

Two weeks ago, officials reported that the cash reserves were around $2 million, or about half of the $4.1 million the district had in June 2008. But thanks in part to the district’s reserving $1 million for the 2009-10 budget, an initial version of which was formally adopted Thursday, the financial cushion has fallen beneath seven figures.

Stephen Martin, the chairman of the school board’s administrative services committee, offered a scenario in which that development could harm the district.

“If we have a fuel spike for any reason and diesel fuel doubles, our budget will be out of whack,” he said.

Hank Hurd, the district’s chief operating officer, renewed the warning he has been sounding for months over the dangers of declining cash reserves. As tax revenues dropped precipitously during the recession last fiscal year, the county and state froze or pulled back millions of dollars that the district was relying on for its 2008-09 budget.

The system spent about $2 million in order to avoid making deep mid-year cuts as a result of those funding pullbacks. Now there’s no such backup.

Hurd said that the state cut $17.8 million and the county $5.6 million in 2009-10 funding. Some of that represents the county’s failure to shoulder some costs, not an actual reduction. The district also lost $4.3 million in miscellaneous revenue, combining for a $27.7 million cut.

“In the history of the school system, that’s the biggest cutback that we’ve had at this juncture of the year,” Hurd said.

But about $14.4 million is being offset by federal stimulus money and grants. The net loss, $10.3 million, is in line with projections Hurd and his staff made this spring.

Stimulus money has enabled the district to save the jobs of 259 teachers that would otherwise have been slashed.

The board adopted a $342.3 million operating budget and a $109.6 million capital budget, replacing the interim budget it had in place for the previous two months.