Superintendent submits budget message

Posted July 4, 2013 at 12:00 pm

At the June 27 special meeting of the El Dorado Springs R-II School Board, Superintendent Mark Koca submitted a comprehensive budget message which tells where the school district has been and where it is going. It gives the reader a good understanding of the operation of the nearly $12 million business that educates our children.

FY14 Budget Message

El Dorado Springs R-II School District

In compliance with Missouri Public School Law, section 67.010, as set forth by the Department of Elementary and Secondary Education (DESE), and the Missouri State Board of Education, the following Budget Document has been developed by the superintendent, in cooperation with administration, staff, and the El Dorado Springs R-II Board of Education.

RECAP FY 13

El Dorado Springs R-2 Schools continues to be in relatively good financial shape. FY 13 will end with the district having approximately $4.6 million in reserves collectively in all funds. Unrestricted fund balance will remain steady at 34% or increase slightly. Local tax revenues were down sharply last year with collection only at 91.53% of the calculated amount.

Enrollment increased slightly over FY 12 to about 1,260 students and the projected Weighted Average Daily Attendance will be around 1,205 with approximately a 94% overall attendance rate. Is should be noted that DESE will no longer use the overall average attendance rate as an indicator for accreditation, but will instead base the attendance target on 90% of students reaching the 90% attendance mark.

Staffing was flat for FY 13, but teacher turnover continues to be a slight problem. Nineteen new certified staff members came on board for the FY 13 school year. Three certified staff members retired this year. Teacher base salaries rose by $400 to $29,600. The district continues to fund the Career Ladder Program at 50% at a cost of $99,000.

The district was fortunate to receive only a very small increase in employee health insurance for FY 13 after seeing a reduction the previous year. FY 13 insurance rate was $342 per member per month.

Returns on investments were down by $40,000 as the new bank bids’ interest rate lowered from 1.7% to .7%

During the last two years, the district has refinanced two different General Obligation Bonds to lower the interest rates, save taxpayer dollars, and pay off the Bonds early. These refinancing’s have made available some “no tax increase” levy amounts that will support future bond issues.

The largest capital project for FY 13 was the resurfacing of the track and other stadium improvements, paving, bleachers, sidewalks, etc. The district took out a lease on this project for $331,500 payable over a 6-year period. Other improvements included the repair of drains in the HS lobby, sidewalks at the softball field, west of the Middle School and the playground area, and the installation of new scoreboard at both the football field and HS gym. The scoreboard project ($72,000) was funded by pledges from local business for a 5-year period during which the project will be paid off. The district paid the entire amount up front.

The City of El Dorado Springs completed a floodwater containment basin on the northeast side of district property during the spring to protect the downtown area from flooding. This was done at no cost to the district and involved a great deal of brush clearing and dirt work.

The district engaged in the purchasing of real property during the last fiscal year. Initially, a house on Twyman Street and 2.5 acres adjacent to our football complex was purchased for a cost of $65,000. The acreage was much desired by the district, but the residence was not. Later an offer was made to trade the residence for another residence on Park Street which the district took advantage of. This property will be demolished to create access into the acreage and a second entrance into the bus parking lot.

The district engaged the services of an architect to do pre-planning leading up to a bond issue. These services cost the district a total of $80,000. The district placed a bond issue on the April ballot for $7.5 million in new construction, but the issue was defeated with only 49% of the ballots cast being for the issue. The Board had placed the bond issue on the August, 2013 ballot to try again for the same project.

The district scored 11 of 14 on the Annual Performance Review this year which is acceptable and a point better than last year, but not at the level the district should be. It should be noted that DESE has set forth new accreditation standards that will go into effect during the upcoming year. Each district in Missouri will be re-accredited during the summer of 2015 based on the Annual Performance Reviews. The district is making plans to adjust to the new accreditation standards.

Looking Ahead to FY 14

In past years, the foundation formula, the manner in which we receive state aid, was adopted in 1993. Beginning with the 2006-07 school year, a new foundation formula was instituted in a seven year phase in plan, requiring the “old” foundation formula to be phased out as the “new” formula is phased in. For the 2013-14 school year, state aid will be received at a rate of 100% “new” formula monies. The “new” foundation formula is calculated utilizing the district’s weighted average daily attendance combined with the district’s student population of at-risk students, student economic status, and the district’s portion of gaming monies known at the Classroom Trust Fund. Due to the State’s economic constraints, the FY12 budget will be calculated with an estimated receipt of 93.5% of the Basic Foundation Formula. The Department of Elementary and Secondary Education (DESE) has advised Missouri school districts to consider receiving 92-94.5% of the Basic Foundation Formula. For the FY13 year, El Dorado Springs R-II Schools will take a moderately conservative approach of 1 % less than DESE projection.

The District’s FY12 budget has been developed with the consideration of levying the tax rate ceiling.

Chapter 165, RSMo, provides that all school monies must be accounted for within a framework of funds: Incidental Fund, Teachers Fund, Debt Service Fund and Capital Projects Fund. The District currently maintains revenues and expenditures through the following funds:

• Fund I – General (Incidental) Fund: All of the District’s basic services are included in the Incidental Fund, which general focus is on (1) how cash and other financial assets that can readily be converted to cash flow in and out, and (2) the balances left at year-end that are available for spending.

Fund II – Special (Teacher) Fund: The Special (Teachers) Revenue Fund is used to account for revenue sources legally restricted to expenditures for the purpose of teacher salaries and benefits, and tuition payments to other school districts.

Fund III – Debt Service: The Debt Service fund is used to account for all revenue and expenditures relating to voter approved general obligation bond propositions generally in the form of new construction and renovation.

• Fund IV – Capital Projects: This fund is used to account for all facility acquisition and construction, all lease-purchase payments of principal and interest, and all other capital outlay expenditures with the exception of certain expenditures for classroom instructional capital outlay as allowed under Section 165.011, RSMo.

For the 2014 fiscal year, El Dorado Springs R-II School District will operate under an estimated $3.66 tax levy: $3.16 Operating Levy and $0.49 Debt Service Levy. Fund placement requires 75% of Formula Money, and 75% of 1⁄2 Proposition C monies be placed in Fund II. All (100%) of the State Transportation monies are to be placed in Fund 1.

Senate Bill 291 passed in the 2009 legislative session states the following provision in Section 163.043.5: For the 2010-11 school year and for each subsequent year, all proceeds a school district receives from the classroom trust fund in excess of the amount the district received from the classroom trust fund in the 2009-10 school year shall be placed to the credit of the district’s teachers’ and incidental funds. For FY14, 100% of the District’s Classroom Trust Fund monies will be place in the Incidental Fund.

Local tax revenue is calculated on the estimated total assessed valuation (AV) of $81,679,033 with the tax rate of $3.66 per AV. Conservatively, revenues are projected on a 83 percent and 12 percent collection for current and delinquent taxes, $2,519,019 and $364,196 respectively. Prop C and other miscellaneous taxes should add an additional $1,856,472 The total local receipts are estimated at $4,739,687 or approximately 40.88 percent of the total district revenues. Receipts from non-current and other revenue sources are estimated at $2500 or less than 1%.

County receipts are generated from fines, forfeitures, railroads and utilities. It is estimated that $169,753 or 1.46% of the projected revenues will come from this source.

State revenues, most of which come through the State Formula, should total approximately $4,934,923, about 42.57 percent. Other sources of state revenue come from Classroom Trust Fund, Transportation; Early Childhood Special Education; Vocational Education Reimbursements; and State Food Service.

The federal receipts for the current budget year are estimated at $1,691.603, or about 14.59 percent of total revenues. The majority of these monies are generated for reimbursement of Title Programs, Early Childhood Education, and food service.

As of July 1, 2013, all funds supported an estimated balance of $4,645,228. The 2013-14 budget currently represents total projected revenues of $11,592,967 and expenditures of $12,098,241. These figures project a year ending Fund 1 and Fund 2 negative balance of $505,274, or 26.82% reserve.

This will be a very difficult budget year for R-2 Schools. Major impacts on the FY 14 budget include:

• Reduced collection rate in local taxes.(-$152,000)

• 33.6% increase in employee health insurance rates. (-$242,000)

• Reinstatement of the 1% required Professional Development spending (-$47,000).

• Added Administrative position (-75,000)

The district recognizes that deficit spending to this degree is not sustainable, but is hedging on improved economy, better collection rates and better insurance rates in the future. If these do not come to fruition, severe cuts will need to be made in the FY15 budget.

Capital projects for the upcoming year will include demolition of the residence on Park Street and the creation of new bus lot access, beginning the cleanup on the property adjacent to the football stadium, and major repairs to the press box. These projects are much more limited in scope as compared to last year in recognition of a much more difficult budget year.

The district will be running the $7.5 million bond issue again in August, but with the required 2/3 majority required it is a long shot for passage. It is anticipated that the district will keep chipping away at this issue until passed.

Teacher turnover continues to be a problem—17 new teachers and 2 new administrators will be joining the staff this year. It should be noted that three other administrators are within a couple years of possible retirement. The FY 14 budget includes annual steps being granted on the salary schedule and the board picked up the full increase in employee health insurance for next year. No increase in base salaries was made.

The addition of an Assistant Superintendent for Curriculum and Instruction is anticipated to make a strong impact on the instructional delivery system at El Dorado Springs R-2, and should be an asset as the District makes the move to the Common Core standards.

El Dorado Springs continues to be a good place to work and a good school for our students to attend.

For the 2013-14 school year, the adoption of this proposed budget will set an approved spending plan for the operation of the district and the day-to-day fiscal transactions. As need arises, budget amendments may be needed.