Posted: 6/19/02

ISD 831 debt is shrinking

Cliff Buchan
News Editor

ISD 831ís financial health will improve significantly in the second fiscal year if projections in the school budget for 2002-2003 hold true. A new budget approved Monday night by the school board makes deep inroads in the districtís statutory operating debt status.

And the debt status could make even more positive gains in the fiscal year ahead based on a report this week from Larry Martini, director of business affairs for the district.

Now in its first full year of statutory operating debt status, Martini reported Monday the district will reduce its current $3.78 million negative unreserved fund balance to $2.79 million by June 30, 2003. Under the districtís plan to eliminate the debt status, the district should emerge from the official status by June 30, 2005.

Under the current five-year projections, the district will show a positive unreserved fund balance in the 2006-2007 fiscal year.

The debt status is a major part of the budget for next year which calls for total expenditures of $57.73 million. The district is projecting total revenue of $58.75 million in 2002-2003.

But there are even more positive signs below the water line for the budget and the district debt picture, Martini told the board.

If the current budget holds to pattern, the unrestricted fund balance is projected at $2.64 million for June 30, 2003. Thatís $150,000 below the $2.79 million negative balance called out in the districtís formal plan.

In his report Monday, Martini said the budget is built ìconservativelyî on actual pupil counts from the 2001-2002 school year. A gain in enrollment this fall will translate into more state aid revenue for the district, he said.

Other positives

The budget also could see other positive turns.

The district recently negotiated a more favorable rate for medical insurance coverage for employees. The district anticipated a 28 percent increase in expenditures for the coverage, but has reduced that amount to 24 percent.

The higher estimate is shown in the proposed budget. The 4 percent difference will mean $120,000 in reduced expenditures in the next fiscal year.

The district can also expect an additional $190,000 in state aid not shown in the budget proposal. The funds include $20,000 from a new ìinterest lostî levy and a ìsafe schoolsî levy of $170,000.

The income estimates were not available when the budget was built and approved by the boardís finance committee this spring. Martini said the new financial data will be part of budget updates that will be considered by the board in November and next March.

The school board voted 6-0 on Monday to approve the new budget. Member Clyde Boyer, who has resigned from the board effective June 30, was absent.

The improved financial picture is due in large part to the districtís approval of the excess operating tax levy last fall. The voter-approved levy will net some $650 per pupil in local support.

When all funds are factored, Martini said state aid increases amount to a 2.8 percent increase in revenue in the 2002-2003 fiscal year.

With the local levy in hand, Martini said the district is in a position to attack the statutory operating debt. The district is also keeping its voter pledge by adding back programs and replacing staff that were lost during the budget cuts for the 2001-2002 school year.

Martini said local taxpayers will see a break in a significantly lower health and safety levy in the year ahead. The health and safety levy has been reduced to $1.5 million from $4 million in the 2001-2002 school year.

He said the district obligation for lease of facilities will also decline significantly. The district lease of portable classrooms is up on June 30. While the district will spend some $100,000 to remove portable classrooms from Forest View, Southwest and the Central Learning Center, the tax levy against local property for the lease payments will end.

In reviewing the budget, Martini said the district was maintaining its commitment of spending funds on direct service to students. He estimated the direct service to students total at 74.5 percent of the district budget. Just over 59 percent is spent on all forms of instruction with 15.4 percent used for instructional and pupil support services.

The district spends 25.5 percent of its budget on administrative, support, sites and buildings and other operating programs.

Mondayís school board action followed a state mandate to approve the new budget by July 1.

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