The third time around was a charm. The Fayette County Board of Education at a June 7 budget work session voted unanimously to tentatively adopt a second re-worked General Fund budget proposed by Superintendent Jeff Bearden.
The $186.66 million budget has $16.4 million in expenses exceeding revenues that will be offset by using the majority of the current fund balance, and leaving a projected $8.6 million in the school system’s checkbook a year from now to help combat issues such as decreasing revenues from falling student enrollment.
Bearden on May 24 had originally proposed a budget with $189 million in expenses and $170.2 million in revenues. He said the shortfall could be offset by using the expected June 30 fund balance that totaled $19.1 million, adding that the school board should begin meeting this summer to look for significant cuts for the FY 2012-2013 school year that begins in July 2012.
While board members Terri Smith and Janet Smola supported Bearden’s May 24 proposal, the large deficit did not sit well with board members Sam Tolbert, Marion Key and Bob Todd who told Bearden to come back a week later with up to half of that deficit erased.
Bearden returned May 31 with a two-part proposal that cut more than $900,000 from the administrative portion of the budget and/or one that would cut $3.44 million by eliminating two school days and another three teacher work days. Adopting both would decrease the expenditures side of the budget to $184.7 million, leaving $5.74 million in the fund balance a year from now.
Unlike some school systems, Fayette does not maintain a reserve account accessible only by the school board and, consequently, must rely on whatever fund balance is present at the end of the fiscal year. Board members Bob Todd and Marion Key on several occasions during the past two years have called for such an account to be established when funds are available. Board members Terri Smith and Janet Smola have not shared that point of view, nor has the school system.
As for the FY 2011-2012 budget, things had changed again by the time the board met June 7, with Bearden citing a number of computational changes and additional information that essentially retained the $900,000 in administration cuts, withdrew the $3.44 million cuts to the school calendar but determined that there was another $5.5 million available from several sources that would help increase the June 30, 2012 fund balance over his numbers a week earlier.
The bottom line is that the current budget proposal, the one adopted June 7, has revenues still estimated at $170.2 million but expenditures at $186.66 million, a difference of $16.436 million. The June 30, 2012 fund balance would total $8.6 million.
What was new in the equation were several factors discovered during the previous week that led to the current year-end fund balance increasing to $25 million, thus allowing the school system to end the revenue-constricted school year on June 30, 2012 with $8.6 million in the bank, Bearden said.
Bearden in a prepared statement at the June 7 meeting told the board his new proposal called for no calendar reductions that would lead to payroll cuts, but did include the $900,000 in administrative cuts along with $3 million in “recently found” funds from money owed by the state for employee healthcare premiums already paid, $800,000 in adjustments to state revenue owed to the school district, $250,000 in additional property tax receipts and a data entry error that accounted for a duplicate entry of $1.5 million.
Pertaining to the $3 million in healthcare-related funds, Bearden said, “In January, February, March and April our benefit bill that we pay to the state was $1.689 million a month. Therefore, we projected spending the same amount for May and June. As a result of the state front-loading the benefit bills sent to school systems, we have recently found our May and June bills to be considerably less. In fact, our May benefit bill was $160,000. Once again, this is in comparison to the four previous months of almost $1.7 million. In June, our bill once again will be approximately $160,000. This will increase our projected fund balance by about $3 million.”
The other significant finding from the previous week pertained to a data entry error totaling $1.5 million.
“We found a data entry error where our school operating allocation was counted twice in the FY 2012 budget projection. The effect is $1.5 million less in total expenditures than originally projected for FY 2012,” Bearden said.
The school board accepted Bearden’s proposed budget, voting unanimously to tentatively adopt it. The final vote on adoption will come later in June.
Even after the FY 2011-2012 budget is adopted the school board, as Bearden and some on the board have said, will have to begin grappling with what is coming a year from now. It was easy enough to use nearly $16.5 million of the fund balance to balance the FY 2011-2012 budget, but that will prove a difficult trick next year even if falling revenues hold steady at $170 million in the face of what will be a fifth straight year of falling student enrollment dollars. Adding to the difficulty is that, unless expenditures decrease dramatically, the $186.6 million in expenditures, not counting the cost of healthcare increases and required teacher raises, cannot begin to be covered by the projected $8.6 million that will be left in the bank.