School board starts spending plan process
The Warren County School District is faced with another challenge made more interesting by COVID-19.
The district’s annual budget process has begun.
For the 2020-21 school year, expenditures are up more than normal and revenues are down.
Part of Director of Business Services Jim Grosch’s job is to predict whether those trends will continue or not and prepare a budget accordingly.
He presented a rough cut budget — a very preliminary document — to the school board on Monday. According to that document, the expenditures for 2021-2022 should be very close to the 2020-2021 expenditures.
And, revenues should be back up. A final budget is not due until late June.
Grosch estimates expenditures of $85.8 million and revenues of $81.1 million, for a deficit of about $4.7 million.
He said he removed COVID-related expenses when calculating the 2021-2022 budget, which has the effect of essentially keeping expenditures flat. The rough cut 2021-2022 expenditures are only about $130,000 more than the 2020-2021 spending on a budget of more than $85 million.
Revenues are down in 2020-2021 compared to 2019-2020 as earned income taxes are lower as are local services taxes. For 2021-2022, “I did, cautiously, add back some revenue which we were concerned about with COVID, such as EIT and LST taxes,” Grosch said.
In a normal year, revenues rise, though at a slower rate than expenditures. The rough cut budget includes projected revenue increases of just under $1 million for each of the next four years.
Typically, the expenditure line goes up significantly year-over-year — about $3 million a year from 2021-2022 through 2024-2025 — with salaries and benefits adding up to about $1.5 million of that.
This school year, the budget is up twice that.
Compared to expenses of just under $80 million for 2019-2020, the expenditure line for 2020-2021 is $85.6 million.
For 2019-2020, there were unexpected expenditures — especially in the area of technology — but the savings from having schools closed for more than three months outweighed those.
There were savings in salaries and professional expenses as there was no need to pay teachers to cover other classes or duties and no need for substitutes, Grosch said.
“Part of this… is attributable to the transportation contractors who helped bring PPP federal dollars in to this area,” Grosch said. “We negotiated with those contractors that applied for this to ensure they received 100 percent of contracted pay amounts, while the district received a benefit from the proceeds of this PPP as well.”
The savings meant the district brought in more than it spent and was able to put $1.27 million into its fund balance.
The fund balance currently stands at about $19 million. The rough cut budget shows that amount evaporating within four years, with projected deficits of $4 million, $6 million, $8 million, and $10 million. “We are looking at a $19 million fund balance and, although this may seem like a significant amount, it’s not significant on a year-over-year $86 million budget,” Grosch said. “Especially, when over $13 million is committed and we are facing a declining tax base in our communities and as we are unsure what the impact of COVID may have on state and federal coffers.”
The COVID-related expenses this year have not been offset by a long-term school closure.
The district’s financial seven-year plan has also been thrown for a loop. The board had set a goal of providing electronic devices to all students — but did not plan to do so quite so early.
For now, the district remains focused on the present.
“The unknowns of what COVID brings us is what the district is immediately focusing on,” Grosch said. “It really is an ‘all-hands-on-deck’ atmosphere at the district to ensure that everyone remains healthy as possible and kids get the best education we can provide.”