At times, Warren County School District Superintendent Brandon Hufnagel's hour-long State of the District address Monday night sounded a lot like a State of the Budget address.
And the state of the budget is not rosy.
After making deep cuts to balance the budget for the second consecutive year, the district fell short of projected revenue and had to institute a spending freeze in January.
"It was clear that our projected revenues were not coming in as budgeted," Hufnagel said Monday. "For example, the forestry money was budgeted at over $600,000 based upon averages of receipts in past years, but the amount received was approximately $300,000."
The anticipated drawdown of the district's fund balance is more than $3 million, from $4.2 million to about $1 million. "I still have great concern about the status of our fund balance. I hope that some of the spending reduction measures put into place will increase our expected fund balance," Hufnagel said. "We should have a final number in October when all accounts are reconciled. I am eagerly awaiting the audit for last year to see the status of our revenues and expenditures."
Many of the cuts made over the last two years are permanent - generally personnel cuts - so they will help with future budgets. "Even though we had a large deficit last year and a lot of cuts were made to overcome that deficit, we are not completely out of the woods financially," Hufnagel said. "It is important to remember that in the past two budget cycles we have lost almost $5 million worth of state funding and our local tax revenues have decreased by over $2 million. These decreases have impacted the way we function as a school district."
"Without increased state dollars to education, we could face another deficit," he said. "I believe that we can overcome these deficits and once again place the district in the strong financial position that it has held historically."
"Our future financial outlook is positive," Hufnagel said. "We know that the restructuring of the physical plant of the district will save the district over $2 million a year once all the projects are complete. We look to these savings to help stabilize the financial picture and to allow the district to grow again in the future."
Hufnagel announced plans to change the baseline for the district's budget. In the past, the district has typically based budget expenditures on the previous year's budget.
"The budgeting process will be revised this year to a zero-based philosophy to ensure that the budget will be developed by determining actual needs to support instruction," he said. "This practice should help us become for fiscally responsible and allow for spending to be dictated by student needs."