The Richmond Register

August 9, 2013

Board breathes ‘sigh of relief’ after annual finance report

District will end year with same $5.67 million balance

By Crystal Wylie
Register News Writer

MADISON COUNTY — After chief finance officer Debbie Frazier delivered the annual finance report Thursday night, Madison County School Board chair Mona Isaacs asked if anyone else want to “just breathe a real big sigh of relief and give Debbie Frazier a big hand?”

For some time, the board has been able to maintain a $5.6 million unreserved balance each year, despite drops in state funding and rising costs.

However, in January, the budget projected a $2.84 million draw from that fund. That amount was whittled down to $1.63 million by May.

But after a number of unexpected “blessings” and expenditure cuts this year, Frazier told the board, the budget year will end with the same $5.67 million unreserved balance as maintained in the past.

On top of retaining the full balance, Frazier also reported that funds are being committed to two financial obligations that had been looming over the board for some time.

No buses were purchased in 2012-13, but 10 buses should be purchased each year to keep up the fleet, according to Frazier, and $950,000 has been set aside for the purchase of 10 buses this year.

The district also had been waiting on a final amount to be paid to the Kentucky School Boards Insurance Trust, or KSBIT.

Madison County, along with 174 other districts, must pay a settlement to KSBIT because the long-time school district insurer is dissolving.

That news broke in mid-January, and Madison County was given an estimate at around $1.1 million early on. But the most recent estimate totaled more than $1.2 million.

Although districts are given the option to make payments in yearly installments, Frazier said the board could budget $1.26 million from the general fund to pay the full amount.

“We would be able to make that payment and have it behind us. We wouldn’t be bonding it and we wouldn’t be paying interest on it,” she said.

Board member John Lackey expressed interest in challenging the amount of the settlement.

Frazier said the “committed funds” can always be “uncommitted” if the board chose to use the money for other purposes.  

Additionally, the district maintains about $6 million in capital outlay funds – state money originally slated to offset the cost of construction, renovations or emergencies. However, this money can be set aside for general fund use if the district does not need it for capital projects. The district receives roughly $1 million each year and has been saving that since 2007.

Although the board has permission to transfer this year’s $1 million into the general fund, Frazier said she “didn’t feel there was a need to do that” and proposed to keep the money for future capital projects.

She noted several areas in which the district received more revenues than was budgeted.

For example, the district received nearly $70,000 more for franchise taxes, and the total was $229,000 more than what was received last year. But this is an area that is “cyclical” and hard to predict, Frazier said.

Delinquent tax receipts were up $55,000 and motor vehicle taxes came in $14,000 over budget.

Utility taxes “significantly” exceeded the budget by $634,000. But the total amount of almost $5.7 million includes a one-time receipt of $664,000 as a result of a state audit.

Frazier said omitted property tax receipts also were “significantly” over budget.

The district received $267,000 this year, when in the recent past, omitted taxes only accounted for $70,000 one year and $150,000 another.

The district usually budgets only $75,000 because “it’s very safe,” Frazier said. “This is an area where the state has told us we can’t count on anything. This is all the result of audits. So we never know from one year to the next what we will get in omitted taxes.”

The district will receive $38.4 million in state SEEK funding, which is down $800,000 from the previous year.

The board can expect this amount to decrease again next year because the base amount received per students is dropping. The increase in property value assessments in the county also will contribute to a decrease in SEEK funding, she said.

According to the SEEK formula, “when assessments go up, SEEK goes down,” Frazier said.

Another area in which the district received “significant proceeds from in the last couple of years” is Medicaid reimbursements. Historically, Medicaid reimbursements accounted for only $40,000 to $70,000, she said. While the past two years, the amount has been around $300,000.

Frazier said this was a result of some audits and because the federal government released some proceeds to the state. However, this is not the amount the district should expect to receive annually in the future.

“It has increased (this year), but it’s just one of those things that make you kind of wonder when, with all the federal declines, when this is going to go,” she said.

Compared to what was actually budgeted, the district’s total receipts exceeded the budget by $981,000.

“Our revenues this past year were just really exceptional. A lot of this happened after we did the budget amendments in May,” Frazier said.

Another “positive surprise” was a refund check from the Kentucky School Board Association, with which the district carries its unemployment insurance. Historically, the district received refunds at the end of the year, but for several years, the district has had to pay KSBA.

“This was the first time we have gotten a refund based on our prior year’s experience,” Frazier said.

The “plant operations and maintenance” line item was more than $380,000 under budget, she said. The district took advantage of some “residual construction funds,” money left over prior construction projects, to pay for safety vestibules for several schools this summer. And while roofing projects are usually paid out of the general fund, the district used some Facilities Support Program of Kentucky (FSPK) funds set aside for capital projects.

The $6.4 million budgeted for “student transportation” expenditures went over budget by just $575.

“There were a lot of people that put a whole lot of hard work into this (budget),” Frazier said. “It was an effort of the entire district.”

“I know there has been a lot of money that people have not spent this past year. It does not go unnoticed … After the way we thought last year was going to end up, we’re really $1 million better off than we were. That is huge,” Isaacs said.

“I would be remiss if I didn’t point out – it is good stewardship – but we had many blessings. We were very fortunate in some areas. But, we have no reason to expect them every year,” Frazier said.

“I know, but I’m really grateful to have a blessing this year,” Isaacs said.

“Absolutely – it couldn’t have happened at a better time,” Frazier replied.

Board member Mary Renfro said she was glad Frazier went through the financial report so thoroughly, “so we can really absorb what you were saying.”

See Sunday’s Richmond Register for a second story about Thursday night’s school board meeting.

Crystal Wylie can be reached at cwylie@richmondregister.com or 623-1669, Ext. 6696.