BUILDING THE DISTRICT BUDGET
We are at the point of the school year when we must develop the plans and program for the coming school year. It is hard to believe that we are already this far into the school year, but we do need to plan for next year. I would like to take some time to cover issues related to school district budget planning and development.
GENERAL DISTRICT INFORMATION
Beginning with the School Board meetings in December, we have started the discussions related to the development of the budget for 2013-2014. As part of our process, we walk through a series of questions and issues that help frame the parameters for the budgeting process. Although I will not go through all the detail, we ask the board questions about several elements related to our school system to determine priorities and overall direction.
Some of the issues on which we seek confirmation were: our strategic roadmap, expectations regarding legislative action, the extent of commitment to the district class size policy, projections on enrollment, whether or not the programs we have pursued are still desired, and their expectations for financial “health” of the district.
Throughout this process, the board has reaffirmed the strategic roadmap and is still working through some of the other elements.
FINANCIAL HEALTH OF THE DISTRICT
As part of the financial health of the district, we examine the past few years of the district financial history by looking at our current budget and projected conclusion to this year’s budget and our fund balance history.
It is interesting to note that the district has experienced reductions for most of the last decade. In one of the years, the reductions were made simply through “attrition” meaning that, as staff members retired or left the district, positions were not filled or were filled with staff members with less experience. In each of the other years, the district has made specific reductions in positions and programs.
One way to measure the financial health of the district is to examine the fund balance history. The Department of Education, auditing firms, and our local district policies have expectations in regard to the extent of general fund balance that a district ought to hold. This fund balance should be from 6 to 10% of the district’s budget. Our policy sets a goal of 6%. State and auditing recommendations are to be at 10%. Our fund balance is short of that expectation, as we are at about 3-4%.
Although we may debate the extent of fund balance that a district should preserve, it is important to have a positive fund balance. If the district ends up with a negative fund balance, we are in “statutory operating debt” which means the state can impose expectations and requirements on the district. If we have too small a fund balance, we will not be able to respond to emergency or unanticipated situations.
LOCAL POLICY IMPLICATIONS
Another set of issues that stands out in our discussions is the commitment to the policies and programs that exist. We look at this in several different ways.
First, the board has expressed support for the general goals of the district. These goals have some financial implications in regard to the activities that we have targeted, such as staff development, technology integration, and professional growth programs. To the greatest extent possible and practical, the School Board’s desire is for us to maintain these opportunities and practices. Those kinds of programs require financial commitment and support.
As much as possible, the board reaffirmed its commitment to the class size policy that is in place. We have a policy that projects an acceptable “range” for class size. We have determined that our class size goal for kindergarten, for example, is to be within 17 to 21 students. The board expressed a commitment to maintaining class size at the lowest levels that are possible within our financial constraints.
Many of the policy decisions don’t appear to have much impact on financial conditions, but they do have considerable effect. As class sizes are increased or decreased, it has an impact on the number of staff members required to fulfill the requirements. As technology is highlighted as a goal, it requires us to commit funds toward those goals. Clearly, then, the issues do have a financial effect.
Although state funding is an issue that could take considerable discussion, I will make this part fairly brief in this article. The issue for the board to determine is what expectation we have for the legislative session. The question has huge financial implications.
The question for the board was how much, if any, to expect from the legislative session. This is a general budget development session at the legislature so it is reasonable to expect that there might be some funding. Over the past four years, the state foundation aid has not changed dramatically. A change to foundation aid, however, has a significant effect on the revenues of the district. More than 80% of the district’s funds come from the state and so a change in state funding would have a considerable impact.
Democratic Governor Dayton has proposed some increases in school funding. The legislature has a majority in each house belonging to the Democratic party. For the first time in a long time, then, the Governor and majority party in the legislature are the same. The Governor’s budget, if it makes its way through the legislative process as proposed would provide about $135,000 for the ROCORI School District. Again, the question we ask the board in beginning the budget development process is what, if anything, we should expect from the legislative session.
Because of the process, we really won’t know what the legislature does until the end of the session. The unfortunate thing is that we have to make most of our plans and decisions by the end of March. It is a difficult prospect to project what the legislature will do.
These are some of the issues we, as a district, must examine and answer as we begin the budget development process. These issues, along with others that I will review next week, help to determine the broad parameters under which we develop our district budget. Next week, we will take some time to look at some other financial assumptions and the implications of our financial condition.