District’s budget projections don't result in ‘finding’ or ‘losing’ any money



Why is it that you can't do a better job of projecting what your budget will be in a coming school year? The district seems to find money after the fact and use it the way it wants. Meanwhile, parents have had to raise funds for things the school district should be paying for.

The district's fiscal year is July 1 through June 30, with the budget for the next fiscal year developed in March, April and May. Final action on the next school year budget is taken by the Board of Education in June. There are reasons for this timeline: state law requires the district to adopt a budget by the end of June; there are contract and state-required deadline notifications in the event of layoffs; and student enrollment and course selections may result in staff changes.

High or low budget estimates of revenue or expenditures means that the district could end up having additional funds or expenses that had not been anticipated. However, district officials and the Board have limited discretion in how they can use its revenue. For example, state law does not allow the district to use monies that are levied for capital expenses to be used for staff. Because of this and a number of additional restrictions on local authority, any additional unanticipated revenue from one source must often be used only toward expenses in a specified area.

It is difficult to make revenue projections at the time the district determines its budget. The state of Minnesota provides 80 percent of the revenue needed to operate the school district. However, the Legislature is still in session at the time the district is setting its budget for the coming year. Decisions that impact school funding may not be made until after the district's budget is set.

Other unpredictable factors might also result in additional or fewer dollars than projected. For example, the district makes a best estimate of the number of students who will enroll from one year to the next. Staff at the district update enrollment projections twice each year-once before school starts in the fall and once in November or December. This number is very important since most of the funding for operating our schools is directly tied to the number and age of students who come to our schools. However, projecting the number of students who will attend our schools is not an exact science. If more students enroll than

expected, we have additional funds with which to work. This means that money can be used to add teachers or buy additional materials for students.

The enrollment of fewer students results in less money. During this current school year, we had fewer students than projected so we had less money to spend. We made the budget balance by reducing costs where we could, and by using a portion of the general fund reserve to cover contracted costs.

Determining the cost of utilities (e.g., lighting and heating) a full year in advance may also result in more or less funding, which could be utilized for other things. The district also makes a best estimate of its insurance costs. It is only after we bid contracts or see the rates after our utilization is calculated that we know if our estimate was high or low. In the spring, the district negotiates contracts for its required insurances, including employee health insurance. Before making

a budget projection for insurance costs, staff members review industry trends and district utilization of insurance to get the best indication of potential increases or decreases. However, the final costs are not known until the fall, after the required budget work is complete.

When we have a favorable insurance rate renewal for any of our insurance programs, the budget is adjusted in the fall. Any funds not expended for insurance are added to the general fund reserve, and is then available for use for other costs associated with running the district. This spring, the district negotiated a lower premium on health insurance for district employees. We had budgeted for a 16 percent health insurance increase, but thanks to the work of Cathy Moen and others, our health insurance renewal rate was no higher than the year before. The revenue we saved will be placed in the general fund reserve account to help us balance the district's cash flow and if necessary, to respond to any Legislative action that will be taken this spring.

The district does not "find" or "lose" money when expenses end up being less or more than projected. In fact, with the caliber and experience of our finance department, staffed with people like Lynne Ritzer, Kathy Tuenge, Donna Peterson, Sue Brochman, Ann Evenson and Ray Queener, the districts' budgets are regularly within 1 percent or less of targets overall. The district is very careful in how it spends any of its revenue. Parents have been wonderful during this difficult economic time. Most understand the priorities of the district and are willing to help in areas the district is not financially able to at this point in time. For example, playgrounds are an important part of our schools.

However, we have only been able to repair that which we have, not replace them with newer equipment. Several parent groups have come forward to raise funds to improve the playgrounds at all of our elementary schools. They are doing this at a time when the district is using its revenue to help students by keeping as many of their teachers as possible in the classrooms.

Questions can be e-mailed to macyk@stillwater.k12.mn.us or sent on a postcard to Kathleen Macy, Stillwater Area Public Schools, and 1875 S. Greeley St., Stillwater, MN 55082. "Talk of the District" is also a cable television program that is filmed twice a month and shown several times a week. Contact your local cable access center to find out the days/times it airs in your area.

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