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March 4, 2016

Budget Update - District Operating Fund Balance

The District finances were in a healthy state coming into the 2015-16 school year.  As a result of the McCleary ruling, the District has received over $15.0M of increased funding from the state over the past two years, primarily for full-day kindergarten, K-3 class size reduction, transportation, and MSOC (Materials, Supplies, and Operating Costs) needs. This increased funding has been challenging to spend, as we struggle with classroom space issues. We have been adding teachers as space allows and also have added specialist positions to take advantage of funding related to elementary class size formulas.

We also added classified staff, including secretaries, maintenance workers, and para-educators.  We have made some increases to non-staff related budgets such as IT and Maintenance. The Maintenance Department has been able to make improvements in a number of areas over the past few years, including flooring replacement, painting, and upgrades to gymnasiums, athletic fields and playgrounds.  

During this same time, the District has been budgeting in a manner that keeps ongoing revenue available to address a significant anticipated increase in operating costs for school year 2016-17.  The District 2015-16 budget was developed to keep some of the increased revenue, sometimes referred to as “budget capacity,” on hand to fund new school operating costs, and still have funds accessible to address costs related to negotiating a new teacher contract later this spring.

A byproduct of trying to keep enough ongoing revenue available for a large expected cost increase in 2016-17 is that some of the unspent funds end up increasing the District fund balance. The District fund balance ended last year at $31.2M.
The District does try to mitigate the fund balance increase by using the increased funding for one time type costs.  For example, funding has been used to purchase portables and furnishings, purchase new buses and replace other vehicles, catch up on computer replacement, replace outdated furniture, adopt new curriculum, provide TPEP Teachscape training, and provide summer staff development opportunities associated with new curriculum or other areas. Because these expenditures are not ongoing operating costs, the funding remains available in 2016-17 for operating new schools, addressing staff related costs/compensation, and other needs.

Updated projections for school year 2015-16 put District general fund revenues at $194.8M as compared to expenditures of $181.5M. Some of that $13.3M difference in revenues and expenditures will be transferred to the capital and transportation funds. Some of the difference is restricted to various programs, but a good portion of the difference or budget capacity, along with fund balance, will be used to offset significant cost increases for 2016-17.

Vic Roberts
Director of Business Operations

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