Posted: 7/2/03

School budget uncertainty looms

Cliff Buchan
News Editor

Thanks to a sizeable budget adjustment, ISD 831 budget and spending plan for the 2003-2004 school year is on the books.

From a financial standpoint, all should be fine in the district this fiscal year, said Larry Martini, director of business affairs.

But as the district enters its new fiscal year this week, Martini is already casting a wary eye on what is yet to come for the school district in the 2004-2005 fiscal year. All may not be as rosy a year from now, Martini warns.

In June, the school board took action to ratify the districtís budget for the fiscal year that commenced on July 1.

The district is proposing general fund expenditures of $58.78 million in this fiscal year with general fund revenues of $58.80 million.

When all funds are factored in (Community Education, debt service, food service, etc), the district will see total expenditures of $69.69 million in this fiscal year. Revenues for the fiscal year are calculated at $69.63 million.

ìWe are comfortable for next year, but itís going to be tight,î Martini said last week, looking at the budget for 2003-2004.

The budget approval last month came on the heels of a May decision that trimmed some $800,000 in district spending for the new fiscal year. A reduction in the number of new school buses the district will buy this year made up a sizeable chunk of the reduction.

But with the big cut in spending, Martini is looking carefully to the future. While the numbers are in line and the district is more than on track in ridding itself of statutory operating debt, other factors may come into play yet this fiscal year.

ìWe did not anticipate skyrocketing utility costs,î Martini said of the recent announcements that utility costs will make large increases in the months ahead.

The big worry

But for Martini and other school officials, the big worry is the 2004-2005 fiscal year.

ìWe are very nervous about what 04-05 will bring,î the district official said.

Utility costs for the year out are just part of the concerns, he said.

For the 2004-2005 year, school officials know the legislature will again meet and the possibility remains for additional adjustments in state aid payments.

While classroom funding has not seen a direct cut in state aid, Martini said the level of increase from the state is falling short of meeting the additional costs of running schools.

Also a factor in the financial future is contract negotiations. The district must soon begin negotiating a new teacher contract and pacts with other employee groups for the 2004-2005 period.

Contract settlements will play a major part in defining the districtís financial plank, he said.

ìHow does all this play out and where does it put us?î Martini asked.

Based on early assumptions, the district could be looking at a $2 million budget shortfall based on current revenue forecasts. If those assumptions hold and the district has no hope for other revenues, more sizeable budget cuts may be required next winter, Martini said.

Budget adjustments will be made as needed, Martini said. By November, an additional budget recommendation may be made, he said, but with subsequent moves addressed over time.

More on 03-04

As part of its $58.78 million general fund expenditure budget, the district will utilize $37 million for salaries and wages.

Employee benefits command $10.4 million of the general fund while purchased services require $5.7 million. Supplies and materials are a $2.65 million cost and capital expenditures occupy $2.47 million of the general fund spending.

Martini said the district continues to make progress to moving free of statutory operating debt. The current plan shows a June 30, 2003 unreserved fund balance of a negative $2.79.

By June 30 of 2004, the negative balance is projected to improve to $1.98 million. By June 30, 2005, the unreserved fund balance is projected at $1.1 million which would move the district out of statutory operating debt status.

In other funds for 03-04:

ïFood service is projecting revenues of $3.3 million and spending of $3.2 million.

ïCommunity education is projecting revenue of $2.7 million and spending of $2.8 million.

ïDebt service will have revenue of $4.3 million and expenditures of $4.4 million.

ïThe Trust & Agency fund will have revenue of $385,000 and spending of $430,845.

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