Board hears preliminary budget numbers

(Graphic courtesy of ISD 834)
(Graphic courtesy of ISD 834)

Figures expected to change based on impact from new legislation

Independent School District 834 officials presented the district’s preliminary 2013-2014 school year budget to the school board Thursday with the warning that the numbers will change based on education-related bills out of the recently completed legislative session.

Assistant Superintendent of Business and Administrative Services Ray Queener said the preliminary budget is created by June 30 so the district has a working budget for the year. It is updated with more current information after the total enrollment numbers come in Oct. 1.

“It is preliminary and it does not include projected changes to the revenue based upon the 2013 legislative process,” Queener said. “So it is going to change.”

Also not included in the preliminary budget by Queener are assumptions for contract settlements.

The preliminary budget summary shows a nearly $14.5 million general fund balance on June 30, with projected 2013-2014 revenue of more than $85.3 million and expenses of more than $90.9 million, leaving a more than $8.9 million general fund balance on June 30, 2014.

When food service, community service, building construction, debt service, trust fund and non-operating funds are added to the general fund budget figures, the district will see a nearly $32 million fund balance the end of this month; projected 2013-2014 revenue of more than $105.2 million, projected expenses of nearly $113 million, resulting in a more than $24.2 million fund balance by June 30, 2014.

Items of note that Queener highlighted included:

  • The non-salary budgets for things like supplies and materials and library-media allocations have decreased one percent from 2012-2013 levels which stood at $36.48 per student. Preliminary budgets stand at $36.12 per student for 2013-2014, but the new figure will be adjusted based Oct. 1 enrollment.
  • Preliminary revenue estimates are $2 million less than the 2012-13 revised budget primarily to decreases in operating levy revenue due to reductions of adjustments, a decrease in state aid due to enrollment changes and the assumption of no carry-overs.
  • Preliminary expenditures decreased by $1.6 million from the 2012-13 revised budget due to the assumption that there are no carry-overs or grants. The net revenue budget is $81.4 million while the net expenditure budget is $87.2 million.

Queener noted that expenditures exceed revenues, forcing the district to dip into their fund balance to cover costs. This was expected because spending out of the fund balance was planned as part of the budget development process. The board’s goal is to have a 5 percent fund balance. The general fund balance is expected to fall from $14.5 million to $8.9 million in the preliminary budget. The unassigned fund balance is projected to decrease from $9.4 million to $3.6 million, meaning the board’s 5 percent unassigned fund balance goal has not been met.

“We typically finish better than anticipated from the previous year and we hope to be on the positive side when the final budget is presented for the previous school year,” Queener said

Queener also presented information on the state legislative changes, but he added that local impact from legislation would be covered at a future meeting since he was still working on those numbers.

Changes implemented affecting the district’s 2013-2014 budget include a two percent budget ($1.7 million) for staff development. This has already been taken care of with pre-planning for year one of the Bridge to Excellence strategic plan, which focuses heavily on staff development to prepare for changes planned by the district.

The district’s pension adjustment has been eliminated, which Queener said was reducing revenue. He added that it doesn’t result in additional revenue, but there will no longer be revenue taken from the schools for the pension plan.

Career tech education funding is currently being worked on for the net impact to the school district, according to Queener.

“It’s gone up to $36 per pupil, $4 of that is new revenue while the other $2 is put in to adjust for the change,” he said.

The district is ahead of the curve on some of legislative requirements such as completing a long-term strategic plan and creating a new teacher evaluation process. That evaluation process will be implemented next year.

Major legislative changes, such all-day Kindergarten funding, do not go into effect until 2014-2015, according to Queener.

“In an attempt to simplify the process, the legislature had to mess with everything,” he said

The per-pupil unit weighting has changed to 1.0 for pre-K to grade six students and 1.2 for grade seven through 12, Queener said.

“The intent of the changes were to not have winners and losers and keep the changes cost neutral,” he said.

The marginal cost pupil unit has been replaced with a new decreased enrollment revenue and would be at 28 percent of the basic revenue. Also, the marginal pupil unit has now changed to an adjusted pupil unit, meaning money will go where students are.

“If a student from Mahtomedi would come here, the revenue would be ours,” Queener said “The change would not generate revenue for students in the boundaries our district. And all of this takes effect after 14-15.

“At the end of the day, we’ll deal with a slight decrease as a result of the changes. The challenge was that the old statute sunsetted,” Queener said. “When it’s calculated in comparison with the old law, there is a slight decrease in revenue.”

Total state revenue is divided in the following ways: 80 percent to the classroom, 20 percent to the staff and 10 percent for administration costs. The local affect of legislation on the school district will be presented at the June 27 board learning session and another forecast on the budget will be presented in August.

Contact Avery Cropp at [email protected]