by Alicia Lebens
The picture of what the next school year’s budget will look like is still unclear after the preliminary budget presentation at the May 22 Stillwater Area School Board meeting. With contract negotiations unfinished with five of the district’s seven bargaining group, including the large teachers’ group, the 2013-2014 school budget has yet to be revised to reflect the actual financial situation of the school district, and it leaves a lot of guesswork to the district’s financial team.
“We are basing estimates on estimates because that updated revised budget for 2013-2014 has not occurred,” finance director Kristen Hoheisel said.
The preliminary budget for 2014-2015 is based on the current goals of the school board, the approved budget adjustments, laws and regulations, and on the enrollment projections for the next year.
“This budget is based on all the things we have been talking about since February,” Hoheisel said. In the fall, the school board will reevaluate its budget needs based on the Oct. 1 student enrollment.
“We will look to see how close we were to our projections in the spring, and go from there,” Hoheisel said.
In the spring of the following year, this revised budget is updated to reflect the actual costs and revenues from that school year, and any changes to the budget that were needed, such as emergency purchases, legislative funding and adjustments to staff pay.
“A budget is a living system,” Hoheisel said. “It is a working document at all times, and it can change daily.”
What makes the budget process for the 2014-2015 school year especially difficult is that the 2013-2014 updated revised budget has not been finished and approved by the school board. That’s because teachers’ have been working all year without a contract. The contracts expired in June last year, and without final contracts in place, the budget that would have been completed in spring 2014 could not be finished. The numbers that the district’s financial staff are working with are the last set of numbers approved by the board — way back in October 2013.
“We stopped the budget process in the fall mainly because of contracts still being open, and that takes up about 80 percent of our budget,” Hoheisel said. “In the absence of that, we did not do the updated revised budget, and in any given year we would want to work with the most up-to-date numbers.”
In the 2014-15 preliminary budget, the financial staff used the parameters set by the school board for the outstanding contracts in the place of actual contract numbers.
“There are parameters in place that are based on the last set of information in place from closed session contract negotiations, and was included in the preliminary budget,” Hoheisel said. “Any new funding from the Legislature has not been included yet, and changes are still being included.”
Some of the changes yet to happen to the budget include a decrease in federal Title I funding, and an increase in some state funding.
In the budget overview, the district’s general fund revenue is expected increase by approximately $6.3 million because of the 2013 voter levy and an increase in state eduction aid. Expenditures from the general fund are also expected to increase due to contract costs, benefit rate increases, Bridge to Excellence programs and an increase in standard operating costs.
“Just the cost of doing business, utilities and other fixed costs, are going up,” Hoheisel said.
Unless there are adjustments to expenditures, the budget will also not meet the target goal of 5 percent of a year’s general fund expenses in the unassigned fund balance.
“The unassigned fund balance is currently projected at 1.6 percent for 2014-2015, and with adjustments to fiscal year 2013-14 that add an additional 1.8 percent, the resulting anticipated unassigned fund balance will be 3.4 percent,” Hoheisel said. “Because we do not have an updated revised budget from the 2013-2014 school year, the numbers in our fund balance are based on old information from November or December. If everything was updated in the spring, it would be closer to the 3.4 percent.”
The unassigned fund balance is projected to decrease from $4.7 million to $3.4 million, or about 1.3 percent. The board had originally set the goal to increase this fund balance to 5 percent, or about $5 million.
The school board votes to accept the draft preliminary budget during its June 12 meeting.
Contact Alicia Lebens at [email protected]