For the past decade, the expenditures of the Stillwater Area School District have exceeded its revenues and have brought the unassigned fund balance below 5 percent of the annual budget, or roughly $5 million. This fund represents the reserve of money that is carried over into the next fiscal year by the school district, and when presented with the end-of-year budget for the 2013-2014 school year, the district discovered just how low the balance had sunk.
“We are looking at an unassigned fund balance of 4.5 percent,” said Kirsten Hoheisel, director of finance.
The 4.5 percent carryover to the current financial year is better than previously projected. During meetings in May, the board was presented with a fund balance just over $3.4 million (about 3.4 percent) with the projection that the fund balance would increase after the final budget was completed.
According to the current school district policy regarding the unassigned fund balance, the school board will “strive” to maintain a minimum unassigned general fund balance of 5 percent of the annual projected expenditures. Spurred on by the dip below that goal, the school board is considering changes to the district’s policies to prevent it from happening again.
On Aug. 7 the school board heard the first reading of a policy that would require the school district to maintain the 5 percent unassigned fund balance.
“The change to the policy will strike out ‘strive to’ and make the policy a more definitive, ‘will maintain’ a 5 percent unassigned fund balance,” Hoheisel said. “It won’t be as wishy-washy anymore. This is what we need to maintain to give us some stability.”
Should the fund balance ever fall below the 5 percent goal in the future, a new section in the policy give the superintendent clear direction.
According to meeting materials, the new policy would require the superintendent to recommend a list of actions for the school board to take in order to maintain the fund balance. Recommendations could include not implementing new programming, adjusting allocations for non-capital supplies, examining expenditure programing that has been historically lower than budgeted, reviewing the transfer of funds and adjusting district staffing.
“The policy is not different than what we have been previously doing,” Hoheisel said. “Now we have put it in writing and given the policy some teeth.”
Board Member George Hoeppner sits on the Policy Working Group and was part of writing the policy change.
“We looked at similar policies around the East Metro area,” Hoeppner said. “The change was included in other district’s policies, but not in Stillwater’s.”
The advantage to this policy, Hoheisel believes, is that the policy will give some stability to the budget and her financial team that balances the budget.
“It doesn’t allow for variation,” Hoheisel said. “Before this policy, we could go from 5 percent one year to 3 percent the next. Even going up to 7 percent wouldn’t be good, because we could use that money for programs.”
The policy will also allow for the financial team to know what will come in the future, in terms of clear financial goals.
Action on the policy change is expected during the Aug. 28 meeting.
Contact Alicia Lebens at [email protected]