District begins 2012-13 planning with $7.2M deficit
School District 833 faces a $7.2 million deficit in its $157 million budget for next year school when this year's expenses and recently settled labor contracts are included in the projection.
But the deficit drops if the district takes into account positive enrollment projections and a redirection of funds from an already fully funded retirement account, according to budget information discussed at a School Board workshop last Thursday.
The board plans to use some of its cash on hand to balance the budget, while saving some undesignated funds to cover any future deficits. That's been the board's approach for the past three years.
Changing budget assumptions would drop the district's 2012-13 projected deficit from $7.2 million to $4.7 million.
In the preliminary budget presented by Aaron Bushberger, district finance director, there is a $2.5 million payment to a fund that covers retirement costs into the future.
The results of a study last summer, however, show the fund is fully vested over the next years and that payment wouldn't be needed. The district's citizens' finance advisory committee is also recommending removing the payment from the expense side of the ledger.
The finance committee is also recommending increasing an enrollment projection from zero to 1 percent based on the face that no increase was projected for this year and the actual number of students increased by 312. Higher enrollment means more state funding.
The district is left with a projected deficit of about $2 million if it redirects the funds targeted for the retirement account and uses some of its reserves.
The $2 million in cuts is just a "target" said board member Ron Kath, board liaison member to the finance committee, and can be accomplished by examining programs that aren't working.
Board member Jim Gelbmann agreed to look at ending programs that aren't working but added that more money might be needed for programs that are working well.
Board member Tracy Brunnette said a preliminary look at expenses leaves little room for "efficiencies" to be cut.
With nearly 86 percent of the district's budget going for salaries and benefits, cuts will come in the form of jobs, said Superintendent Mark Porter.
Bushberger also said the district will have to hold a referendum either this fall or in the fall of 2013, to renew an existing voter- approved referendum.
Porter, who doesn't recommend an election this fall, is also not recommending the district ask voters for more money to operate schools. "A better course" is to cut $2 million, he said.
In the budget information given to the board, Bushberger submitted a chart on the cost of increasing or reducing class sizes for next year.
Increasing classes by one student at every grade level would save $1.4 million, according to Bushberger.
While it received Bushberger's information, the board has not discussed increasing class sizes as a way of reducing the deficit.
Expenses in the projected budget have increased 6.2 percent for utilities, tuition and insurance (not including health), Bushberger said. Other purchased services have increased 8.1 percent.
Although the district got an additional $50 in per-pupil state aid last year and will get an additional $50 per student this year, there have also been "shifts" as to when the district gets its aid. It gets all its money, Bushberger said, but timing has been changed.
While some districts need to use "short-term" borrowing to cover the shift, 833 temporarily uses money from the fund that covers retirements.
The board will continue discussing the 2012-13 through