Fayette BoE asked to deplete budget reserves
‘It looks like we’ll use up all the fund balance’ — Comptroller Laura Brock
The Fayette County Board of Education on May 7 got a look at the school system’s proposed budget for the 2012-2013 school year. With expected revenues of $163 million and expenditures of $178 million, the board again this year is being asked to make up the difference using the school system’s fund balance that is expected to total $15 million on June 30.
Superintendent Jeff Bearden at the outset noted that the proposed budget figures constituted an update, with the official proposal coming at the June 4 meeting. If satisfactory, the budget will be approved later next month in time for the effective date July 1.
Commenting on the proposed 2012-2013 budget and referring to the estimated revenues of $163 million and $178 million in expenses, Comptroller Laura Brock said the projected $15 million in fund balance expected on June 30 will be needed to balance the budget.
“It looks like we’ll use up all the fund balance,” Brock said, noting that more than $11 million in expenses have been eliminated for next year through measures such as cuts in the operating budget, the new 177-day school year that takes effect in July that will save $3.3 million, and the proposed reduction of staff positions through attrition that will save at least $4 million.
As for a comparison of the revenue and expenditures side of the budget for this year and next, local property taxes this year were budgeted at $81.6 million and vehicle tags at $6.4 million. For 2012-2013, vehicle tags are expected to remain at the $6.4 million level, but property taxes are forecast to shrink to $72.4 million, a decrease of more than $9 million due to the 10.39 percent decrease in the tax digest.
As for state (QBE) funding, those dollars budgeted this year totaled $79.6 million while the level next year is expected to increase to $81.4 million, due in part to increases in the teacher retirement system and step salary increases. Brock said she would report back on QBE earnings toward the end of the fiscal year in June.
The school system saved several million dollars this year by not filling staff vacancies and freezing some positions. Subsequently, the $8.6 million fund balance from June 30 last year is projected to grow to approximately $15 million at the end of next month. Bearden said he will continue to analyze vacancies during the upcoming school year.
Putting things in perspective, Bearden reported that personnel costs account for 90.8 percent of the budget.
As for what the financial situation will look like this time next year, Bearden said the 2013-2014 school year will carry over a lower fund balance and will potentially include the outsourcing of transportation, custodial and food service. The school year will likely bring significant decreases in staffing, Bearden said.
There is another aspect of budgeting that might be worth considering. The budget was balanced in the current school year by using more than half of the $26 million fund balance from last June 30. The remaining fund balance, along with cost-saving measures this year, will result in a fund balance on June 30 that totals approximately $15 million.
It will take that entire sum to balance the 2012-2013 budget.
Once that is done there will be no appreciable fund balance to draw on this time next year.
That might not matter if the housing market and tax digest rebound significantly to generate additional millions and if the falling enrollment that generates state revenues reverses course.
But if those conditions are not met, and unless dramatic cost-saving measures can be found and implemented, it will not be possible for the school system to continue to legally operate with expenditures exceeding revenues.
Levying far more in local taxes than the county government and the municipalities, school system taxes are set at the 20-mill legal maximum.
The school system at press time had not posted any budget information from the meeting on its website at www.fcboe.org though that posting is expected to occur May 9.