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BUDGET DEVELOPMENT

Last week, I started to write about the budget development process as we begin our shift from the current year to next school year.  I would like to return to that topic with some additional detail and comment.

 

REVIEW

In December, we started the process of putting together information and plans for the 2013-14 budget.  There are many elements and parts to our budget development process and it takes us most of the spring.  As we looked at last week, the process really begins with the School Board looking at an overview of the district and setting some broad parameters.  These “assumptions” help to guide our process.

The assumptions include thoughts about district enrollment, application of policy, strategic initiatives, preliminary thoughts on negotiations expectations, legislative action, fund balance expectations, and many other issues.  Critical elements focus on enrollment, negotiations and legislative elements.

Last week, we reviewed several elements like our policies, our fund balance and financial status, and potential legislative action.  Although there is potential for legislative support for schools, our assumption (at this point in time) is that we will not count on any increase in funding.  Although this is a more conservative approach to the process, it is generally better not to expect increased state funding and later learn that it will happen than it is to count on the funding and then realize it won’t happen!

 

ENROLLMENT

An important piece to consider is that we are still a district facing some measure of declining enrollment.  Our drop in enrollment has slowed considerably but we still have less students from one year to the next.

Enrollment is critical to consider because the vast majority of our funding is based on student enrollment.  A drop in enrollment means a loss of funding for the school district while an increase in enrollment means an increase in state funding.

We are a fairly “stable” district at this point in time, but we still project that we will have between 10 and 20 students less next year than this year.  Part of that is a conservative “estimate” because of the funding implications, but part of it is because our upper grades of students are still slightly larger than the lower grades of students.  In short form, this means we graduate more students than the number that enter the district.

 

OTHER ASSUMPTIONS

Because we have been in situation requiring reductions for much of the last decade, one of the most basic premises is that the reductions put in place in previous years will continue.  Some of these are more subtle, but they do have impact. 

For example, a reduction adopted a number of years ago was to close the district during the week of Independence Day in July.  We also have, for staff, a restriction on out of state travel unless it is specifically authorized by the school board.  There are a number of situations like this that we have to expect will continue. These reductions have been in place, but we have to assume the savings from them (and thus the reduction) will continue.

As a district, the initiatives we undertake often have some financial implications as well.  Investment in technology continues to be a priority for the district, but supporting technology does have financial implications.  Staff development efforts, program decisions, and other initiatives place a priority on the allocation of resources—and, thus, have an impact on budget development.

 

TARGET FIGURE

After looking at all of the broad parameters and implications, the expectations of the board can be translated into financial terms.  We know there are priority allocations and many of the issues have specific dollar amounts associated with them. 

We can calculate, for example, an anticipated loss of ten or twenty students. There is a significant difference, based on state funding formula, for the district if we think we will have the same enrollment or would be down twenty students.  At about $5500 per student (and then weighted for grade level), the difference can be $50,000 or $100,000.

As we examined all of the assumptions expressed by the school board, we have determined that there is a need to make reductions amounting to about $544,000.  This figure is somewhat conservative in that many of the items are likely to be the “worst case” but, at the same time, we are better off as a district to assume a worst case than to expect more than we might realize.

The scope of budget adjustments, and our financial history which has required us to make a decade’s worth of reductions, are causing us to examine all parts of our operations and systems.  To do so, we will consider ideas to either raise revenue or reduce expenditures. As with previous years, we will have to place many different ideas on the table for examination, consideration and discussion over the next several months.

 

TIMELINES IN THE PROCESS

We are required to have a budget in place by the end of June. Schools cannot begin a new fiscal year (starting July 1) without having adopted an operating budget. One implication of this is that regardless of whether we know the outcome of the legislative session, we must have a budget in place.

Even though we have the spring to work on budget issues in order to get the financial plan in place, there are other timelines we must meet in the process.  Teachers or classified staff who would be affected by any kind of reductions or loss of position must be notified by April 1.  Employees in all job classifications are entitled to be notified of assignments by the end of May. 

 

IDEAS TO CONSIDER

Our list of topics to consider will be quite extensive and includes both “big” items and “smaller” steps that can be implemented.  Some of the bigger value items under consideration also have significant implications for the entire school district.  Some of the smaller items, as we look at them, are probably ideas we should implement regardless of the financial situation because they are simply good, efficient procedures.  As we go through the process, we are looking at all of those issues.

In order to determine the best options and direction for the district, we need to consider a wide array of ideas.  Last year, we invested quite a bit of time examining ideas and bringing ideas to the discussion table.  We will use that list of ideas as part of our discussion as well as consider any new ideas brought forward. 

 

FINAL THOUGHTS

There is certainly a lot more to discuss and review about the budget development process. While we go through the process of developing the budget and considering many different ideas, I also want to express that we, as a district, are open to ideas, suggestions, and thoughts about how to meet this financial challenge!  Community residents, staff members, or anyone with thoughts about the budget development process may offer those ideas and considerations to us for inclusion in the discussions. 

As I have noted, we will have budget discussions on-going through the remainder of the spring.  I will continue to include descriptions and background on a number of those concepts.