“The state legislature did hurt education this year,” pointed out Snowflake Unified School District Business Manager Mark Ollerton as the district’s budget was discussed at the May 14 governing board meeting.
“The district received its final calculation in February 2015 for the District Additional Assistance reductions (cuts) for the year, which totaled ($698,657). Just as a note for next year, the state legislature increased this cut to nearly $1 million,” Ollerton wrote in a May 8 memo to the board and Superintendent Hollis Merrell.
In this year’s budget there is $1,131,000 in unrestricted capital, but the state cut out $698,000 and next year will cut even steeper, probably down to approximately $100,000, according to Ollerton.
During the public hearing on the 2015 budget revision, Ollerton explained that in July 2014, the governing board adopted the fiscal year 2015 expenditure budget, but the budget is adopted while the books are still open for the prior fiscal year. The law has provisions that will allow districts to revise their current year expenditure budgets.
The revision the governing board was presented with represents the first budget revision for the year, said Ollerton.
He explained the three main reasons for the budget revision, including:
* Capital changes. This budget revision reflects a transfer of $231,947 of budget capacity from the Maintenance & Operations (M&O) budget to the unrestricted capital budget. Ollerton said that this is done for two purposes, to reduce prepay insurance credits and to extend the capital budget in preparation for the government cuts issued for fiscal year 2016.
* Reconciliation. The district underwent an Average Daily Membership (ADM) audit this fiscal year, and was refunded $5,143. The district received $42,160 in Student Success funding, which was just a forecast number in the beginning of the budget season. The district learned the actual number by December. This is a one-time budget item.
Unrestricted capital is used to buy education programs, software, computers, workbooks–everything that goes into a classroom, and it is used to maintain the facilities, explained Ollerton.
“We have quite a bit of money in prepaid insurance,” said Ollerton. “It’s like having a savings account.” He noted that they budget for 100 percent of the insurance premium, and so they have money there that can be moved into capital.
“Instead of paying the complete premium, we will underpay and let the credit we have with the insurance company pull it,” he said. “This allows us to extend the capital budget going forward, and will help us next year. We buy time.”
Ollerton explained that the ADM audit at the beginning of the school year goes back three years and looks at what was reported for enrollment. “What’s scary about that is it’s inevitable every district will owe the state money,” he said, though he noted that the district did not owe the state any money, they added $5,142 into the budget.
* Line item changes. There are line item changes to the budget that are not anticipated at the beginning of the year that are changed to reflect actual expenditures, such as phone bills may be greater than originally budgeted, so budget capacity needs to be moved to cover the additional expense.
Ollerton said that there were multiple changes in the budget that are reconciled like a balance sheet.
The district received $42,160 in Student Success Funding, an initiative by Governor Jan Brewer, but under Governor Doug Ducey’s budget they used that money to fund charter schools, so public schools will not get that money next year.
Ollerton said that if enrollment drops a certain degree, the district might consider closing schools, like other districts in the state have had to do.
“We know next year we’ll be OK,” said Merrell. “In the following years we might have to start looking at options,” noting that every year the legislature changes things.
The district will have $100,000 to operate the entire district when it has used the prepaid insurance money, explained Ollerton. “When that’s gone, if the state doesn’t change things there will be some serious decisions for our district,” he said.
“Mark (Ollerton) has a good plan to buy us some time, but it will be impossible for us to operate like we are currently,” said Merrell, referring to the district using the insurance money that has been saved.
