By Crystal Wylie
Register News Writer
Additional personnel costs in Madison County School’s 2014-15 draft budget, mostly related to full-day kindergarten, will require slightly more than $1 million from the district’s contingency fund.
The school board Thursday approved 5-0 a first draft of a budget that would reduce the district’s $5.67 million unreserved balance to $4.65 million.
“There’s lots of (expense) additions in here, but really, with no corresponding increase in the revenue side,” said Debbie Frazier, the district’s chief finance officer.
A better understanding the 2014-15 draft budget can be obtained by looking at modifications in revenues and expenditures in the 2013-14 working budget.
2013-14 working budget
Frazier anticipates the district will receive an additional $700,000 in state funds on top of what was forecast in the current-year budget, for a total of $38.7 million.
These funds, called Supporting Education Excellence in Kentucky (SEEK) are based largely on a district’s Average Daily Attendance (ADA) and local property assessments. School funding from the local tax base is generated through real and personal property taxes. With the SEEK formula, the more revenue produced locally, the less a district receives from the state.
As Frazier has said on several occasions, “when property assessments go up, SEEK money goes down,” and vice versa.
However, “our property assessments were probably the lowest I have ever seen since I’ve been here,” Frazier said Thursday.
Additionally, when the board looked at the current-year budget in September, the number of students enrolled appeared to have increased. But the final enrollment tally and ADA “far exceeded projections” with 191 more students, Frazier said.
The decrease in property values coupled with the increase in student enrollment caused a spike in SEEK money.
And if Gov. Steve Beshear’s budget proposal is approved, which allocates $188.9 million in SEEK funding over two years, Frazier said Madison County Schools could gain $1 million in 2014-15 revenues.
However, the governor’s proposal also includes a 2-percent salary increase for teachers and classified personnel in the first year, which would essentially absorb the $1 million in additional revenue, Frazier said. Beshear’s plan includes a 1-percent salary increase for personnel in the second year as well.
Frazier reminded the board that $38.7 million was still an estimate, and that the final receipt will not be affirmed until April.
The amount budgeted from federal Medicaid reimbursements also was adjusted.
“Medicaid is the gift that just keeps on giving,” Frazier said. The item had been $125,000 in the current-year budget, but is now projected to be nearly $250,000. Although revenue generated from property taxes will continue to be collected through April, Frazier said the $17.4 million budgeted for the current year is “right on target.”
Omitted property taxes and revenue from state audits was $30,000 over budget. However, this revenue source is unpredictable, Frazier said, so only $75,000 is again anticipated for the new-year budget.
“We never know what we’re going to get; there’s really no guarantee of getting anything,” she said.
In total, the receipt budget was increased by $975,000, she said. This additional revenue will cover most of the $984,908 spent on 10 new buses in the fall; $950,000 had already been set aside for this purchase in 2014-15.
“We ought to be able to comfortably pay for those buses out of current-year funds,” said Frazier, and end the 2013-14 year with a $5.67 million unreserved balance, as maintained in the past.
She recommended the untapped set-aside funds of $950,000 be used to purchase 10 more buses. That is the number of buses that should be purchased each year to keep up the fleet, she has said on several occasions. No buses were purchased in 2012-13.
2014-15 draft budget
The draft budget is “our first formal look at where we are for next year,” said Frazier, and is “the first of three budgets.” It is revisited in May and again in September.
Frazier made no changes to the amount budgeted for property tax revenues, which remains at $17.35 million. The amount could increase if in August, the board chose to adopt a property tax rate that generated a 4 percent increase in revenue.
The board voted against an increase in 2012. However, it voted in favor of an increase in 2013 to generate nearly $1 million, which Superintendent Elmer Thomas promised would be used to help fund all-day kindergarten.
Later in the meeting Thursday, board member John Lackey asked Frazier to further explain SEEK funding. He also asked how the property tax rate, set by the school board, affects the formula.
Frazier said the SEEK formula is “based on the assumption” that boards will set a tax rate to generate the maximum revenue increase of 4 percent.
So if one year, a district does not set a higher property rate, yet it generates more funds through higher property assessments, it will still lose SEEK funds, she said. “The district is really losing on both ends there. When you don’t take the 4 percent, you can never recoup that.”
Expenditures reflect several personnel changes in the 2014-15 budget, mostly related to the implementation of full-day kindergarten.
Not including employee benefits or other instruction expenses, there is a more than $1 million jump in personnel expenses from $32.6 million in the current-year to $33.7 million in the 2014-15 draft budget.
This includes the addition of 13 kindergarten teachers and 15 para-educators, along with two instructional para-educators, if needed, and part-time teacher at the Mayfield kindergarten academy.
The academy will require a part-time custodian. And with double the number of kindergarteners, six additional bus drivers may be needed at a cost of around $94,000, Frazier said.
The budget also reflects the customary 0.5 percent salary expenditure increase, around $250,000, in teacher’s step raises (for years of service) and rank changes (for educational attainment), but no across-the-board pay increase for staff.
Pending legislation on the percentage of classified staff retirement for which the district is responsible may generate a savings of $110,000. Already approved by the Kentucky Retirement Systems board, the percentage of 18.89 could decrease to 17.67 if approved by the General Assembly, Frazier said.
But while the district will pay less for classified staff retirement, it will pay more than double the amount for certified staff retirement.
The certified retirement rate is 1.5 percent this year, but will be 2.25 percent next year, which will be an additional cost of $280,000, Frazier said. In 2015-16, the rate will rise to 3 percent.
The instruction supplies budget will increase by $195,000. Last year, districts were permitted to reduce supply allocations to each school. But with the anticipated increase in SEEK funds, said Frazier, the short reprieve may be over.
Further discussion is needed on how the district will continue to fund the nursing program, she added. In May, the board voted to hire 11 nurses to staff its schools, but chose a funding option that would draw $204,300 from the general fund and $250,000 in federal Title 1 funds.
However, some of those federal funds had been carried forward and will not be available in the coming years.
Title 1 funds are “drying up,” Frazier warned in May.
The district would need to dip further into the general fund to maintain the nursing program, she said.
Crystal Wylie can be reached at firstname.lastname@example.org or 623-1669, Ext. 6696.