School board to address preliminary budget

Discipline policy, community education pact with Mahtomedi also on agenda

By ERIK SANDIN – Stillwater Gazette

With the 2011-2012 school year three weeks gone, the Independent School District 834 Board turn their attention Thursday to approving the district’s preliminary 2012-2013 budget to meet a June 30 deadline.

The preliminary budget before the board includes a decrease in the general fund’s fund balance due to the intentional use of that fund balance to bridge a gap from revenues and expenditures due to flat or declining state funding.

In addition, a summary report on the projected 2012-13 budget said the district might have to borrow in spring 2013 due to cash flow issues resulting from delayed state aid payments.

The district’s projected current fund balance is more than $37.1 million. That figure is made up of more than $17.5 million in total operating funds and more than $19.6 million in non-operating funds, according to figures provided by Assistant Superintendent of Business and Finance Ray Queener.

Operating funds include the general, food service and community service funds. Non-operating funds include building construction, debt service and trust funds.

Queener said is his report that projected 2012-13 revenue is more than $106.2 million, split between more than $93.1 million operating funds and slightly more than $13 million in non-operating funds. He adds that the district is looking at more than $110.6 million in 2012-13 projected expenditures, split between more than $97.8 million in the operating funds and more than $12.7 million in non-operating funds.

The report shows that the district’s projected fund balance falls to more than $32.7 million by this time next year.

In a brief summary, Queener’s report reminds the board that significant property tax reform implemented by the state legislature makes the state responsible for a larger percentage of district revenues.

"The percentage of district revenues that come from local property taxes has been increasing since 2002-03 dues to shifts back to property tax from state aid," the report said.

The summary notes that the bulk of projected general fund expenditures, 77 percent, are personnel salaries and benefits. Heating, electricity, insurance and telecommunications costs make up 14 percent of the district budget and supplies, materials, capital and other expenditures total 18 percent of the budget.

"Historically, the district’s budget managers monitor expenditures closely and typically come in under budget," the summary said. "This allows schools to carry over unspent funds for future expenditures which will increase the fund balance."

Of other assumptions district officials made when developing the 2012-13 preliminary budget, payment delays and tax shifts, including 2011 state legislation that increased payment delays to school districts play a major role.

The report notes that the aid payment delays and accounting shifts impact the district’s cash flow but do not have a "significant impact on the overall budget."

Another cash flow issue facing the district is a large property tax revenue shift in 2010-11 that requires school districts to recognize nearly 50 percent of revenue received in May for the 2011-12 school year. "This allows the state to postpone state aid payments until the following fiscal year (2012-13). This tax shift is planned to continue unless revised as part of legislative actions," the summary said.

"Finally, per legislation, when the state has cash flow problems, payments to school districts can be delayed for the current fiscal year," the summary adds. "This, again, is a significant cash flow problem for school districts and requires districts to short-term borrow or issue aid anticipation certificates, both of which have interest costs attached. For 2012-13, District 834 may have a need to borrow during the spring of 2013."

Other budget assumptions include:

n A projected enrollment decline for 2012-13. The district revises enrollment projections based on actual enrollment Oct. 1 and other changes affecting enrollment each fall.

n Approved contracts with employee bargaining units and the district’s move to self-funding health insurance.

n General education revenue. "This is the largest component of state aids," the report notes. "It is developed by actual number of students and formula allowances set by the legislature. The revenue projections are based on the projected Oct. 1 enrollment with assumptions for ‘in-out’ migration."

n School allocations based on enrollment projections. Elementary school staff allocations are based on sections and secondary school staff allocations are distributed at 97.5 percent of enrollment projections. Secondary school staffing is then adjusted based on actual Oct. 1 enrollment numbers.

n Special education revenue calculations are based on the general education revenue estimate. The report said the district is conservative when developing the special education expenditure budget.

Other issues the board considers tonight include:

n Resolutions calling for the election of three school board members in the November general election and a candidate filing period of July 31 to 5 p.m. Aug. 14. The proposed filing fee is $2.

n A policy on the use of video surveillance on school buses. Director of Operations Dennis Bloom presents information on the policy. Current state law requires conspicuously placed signs telling bus riders that their conversations and actions might be recorded.

n Possible approval of a joint powers agreement with ISD 832 in Mahtomedi for shared Community Education services with ISD 834. Queener said after researching opportunities for sharing Community Education services between the two districts, ISD 834 staff recommends the board approve the JPA with Mahtomedi.

The ISD School Board meets for a 5:30 p.m. learning session at the Stillwater Public Library and a 7:15 p.m. business meeting the Stillwater City Hall council chambers.