A Kansas Supreme Court decision demanding that state lawmakers enact a new school funding formula by June 30 has Shawnee Mission School District officials bracing for the worst.

At the district’s board meeting Monday, Superintendent Jim Hinson said the district already expects it will have to cut $4 million from other programs in the school year beginning in July just to keep up with anticipated increases in personnel salaries and its share of benefit costs, barring an influx of new revenue. Any additional revenue cuts required by the Legislature, such as those in response to the court decision, would only compound the problem.

“The likelihood that we will lose millions of dollars we are currently receiving is pretty high,” Hinson said. “What we’re working on internally right now is a situation where our budget is bleak.”

The Supreme Court on Feb. 11 upheld an appellate court’s decision that the block grant school funding system lawmakers passed last year failed to address constitutional inequality between school districts, shorting poor districts by $54 million.

It gave the Legislature until June 30 to implement a new formula that addressed the problems or the court would order all school districts in Kansas closed.

Hinson acknowledged that he conditionally supported the block grant plan when it was proposed last year because it provided revenue increases not possible under the old funding formula. He said the district’s “best case” scenario was that it would receive the same level of funding next year as it received this year and would only have to make cuts to cover the incremental increases.

But additional large cuts would likely force the district to re-evaluate programs, services and even a recent decision to shrink class sizes.

“If they are going to comply with the court then we need to know sooner rather than later so we know how to budget for 2016-2017,” he told reporters after the meeting.

The uncertainty is also affecting the district’s attempt to get a better handle on cities providing tax subsidies to developers that ultimately siphon dollars away from the school district.

The board on Monday held the first reading for a set of guidelines that would help the board evaluate future requests for tax increment financing. Tax increment financing, or TIF, allows a city to divert some or all increases in property or sales taxes within a certain area to help offset the costs of a development in that area. They usually last 20 years.

State law gives counties and school districts the right to veto TIFs as they stand to lose that added revenue until the tax subsidy expires.

Shawnee Mission officials last year considered and ultimately declined to stop two TIFs proposed for projects in Overland Park and Prairie Village. During those discussions, the board warned that its patience for this type of public financing was wearing thin.

The policy itself calls for the board to evaluate each TIF proposal for whether it would create long-term harm to the district’s tax base. It would also favor proposals that lessen the TIF’s effect on the district, have built-in endings, rely on diverting sales taxes rather than property taxes, affect only a portion of the property tax, or agree that excess tax revenue collected is used to retire the TIF early.

It also says the district would impose “greater scrutiny” on TIF projects involving residential areas because they often generate additional students for the district but no added revenue to pay for them.

Fred Logan Jr., a Prairie Village attorney advising the district, said none of the guidelines was mandatory but board members were being responsible to have a written policy.

“By having a policy, you are not saying that TIFs are bad,” Logan said. “In fact, you state your commitment to economic development and your commitment to community collaboration. It does nothing more than help you through the process.”

But the policy has made city governments nervous. Board member Patty Mach said she had received emails from several city councils questioning the policy.

During the board meeting’s forum for the public to speak, officials from Merriam and Prairie Village warned the board that its actions could chase developers to other parts of the area.

“We believe that (the policy) will not only change the manner in which the district approaches TIF but it also has the ability to undo several decades of successful collaboration that we’ve had in northeast Johnson County,” said Chris Engel, assistant city administrator for Merriam.

Hinson said it’s unknown when the board will ultimately approve the policy as it must wait to see if the Legislature makes any changes to TIFs and school funding in general.