BOARD OF EDUCATION ANNUAL RETREAT
Session 1
On Saturday, August 1, board members and Ms Simpson met for a day long special session to address topics of concern and interest of the board.
The first session, Finance and Budgeting was conducted by financial advisors, Carl Dietz and Matt Fisher of First National Capitol Markets.
Following is a summary of the topics discussed and information shared.
History and Current Budget:
-General Fund Expenditures over the past 3 years have increased 2.5% annually which demonstrates “sound financial management” according to the financial advisors.
-On average, 75% of the district funding comes from local property taxes.
-During the past 3 years, there has been a 4.25% decrease in valuation and projections for the next few years indicate a continued decrease in valuation. As the valuation decreases, the levy will need to be increased, even if expenditures do not increase.
-The only aid that the district is receiving from the state is Allocated Income Tax.
-Total Tax Request has decreased since the bond was paid off and as the cash reserves were spent down.
-Over the past six years, collections of assessed taxes have averaged 91% which is lower than the 94-95% average of other school districts.
-The General Fund budget in 2018-2019 was $7.2 million; expenses were $5,181,790.00. The decreased budget in 2019-2020 was $6.6 million; estimated total expenses for this school year (as of August 1) are $5,160,000.00. Projected Expenses for 2020-2021 is $5.33 million and for 2021-2022 is $5.45 million.
The district has been “doing a good job” maximizing their budget authority.
Current Cash Position:
-General Fund Cash Balance-it is recommended that a balance of three months of expenditures be carried in the Cash Reserves. The district’s monthly expenses average $430,000.00. A $1.3 million balance would meet the requirement. A projected $1 million balance at the end of this fiscal year falls short of the recommended balance. The board was encouraged to make building the Cash Reserve a priority and to implement a steady increase in tax asking to accomplish this.
-Depreciation Fund Cash Balance-this fund provides a means for addressing capital improvement needs. The district has “done a nice job of building reserves in this fund”. As of August 1, the fund balance was $914,060.00
-Building Fund Cash Balance-Growing this fund will be critical for addressing future facility needs. A 2 cent levy currently exists to build this fund. The balance of this fund as of August 1 was $185,450.00. A recommendation to increase the annual taxation in this fund was made.
AFR Spending Comparison:
-Per Pupil Cost: Even though payroll is “not out of line”, Loup City is the fourth highest spender in the 14 district cost group. This district currently spends $15,326 per pupil, about $1280 more than the group average. This may be due to not only the number of faculty, but their placement on the pay scale because of degree and years experience (+$98,500 over array avg), transportation costs (+$28,800 over array avg) along with the additional cost of operating and maintaining two campuses (+$57,900 over array avg). These comparisons were taken from the 2018-2019 fiscal year. Board members briefly discussed utilization of staff and a future reduction in staff numbers due to anticipated retirement.
Facility Planning and Capital Improvement Schedule
- The board was urged to prioritize capital projects and then establish funding timelines. These timelines will dictate what dollars need to be directed to various funds to pay for the prioritized projects. The members of the board held a brainstorming session later during the retreat to begin this process.
2020 - 2021 Budget and Tax Asking
-Future Valuations: discussion on the effects of the projected valuation decrease and necessary levy increase to meet the current and future district budget needs.
-Future Expenditures: a look at projections of future expenditures based on a 2.5% annual increase.
-Future Levy Considerations: If the valuation declines by 2.5% annually, in the next five years there will need to be a levy increase of over 10 cents to generate the same money the district operates on now.
-Cash Reserve balance, currently at $1 million, needs to be increased to cover 3 months expenditures which are currently $1.3 million dollars.
Ms Simpson, Ms Woollen, and members of the board’s budget committee under the guidance of the financial advisors have been spending a great deal of time working on the budget for the next school year, taking into consideration the history of the school district’s finances, the future needs of the district and the recommendations outlined during the Finance and Budget workshop. This budget was presented at the annual budget hearing on September 8th.