KUSD Board approves preliminary budget
At the February 14, 2012, joint standing committee meeting, the 2012/2013 initial budget assumptions and process was presented. That report outlined the rationale for administration’s initial revenue and expenditure additions or subtractions to the budget. The budget assumptions, including the proposed reductions, were approved by the board on February 28, 2012.
The superintendent’s Leadership Council and Budget Council have met on many occasions to review and evaluate the submitted budget assumptions and district contractual obligations. These discussions became the basis of the budget assumption priorities that administration presented to the board for preliminary approval at this regular board meeting.
The presentation by Tina Schmitz, chief financial officer, included a budget timeline, enrollment projections and assumptions used in developing the budget. Usually, the district’s Audit, Budget and Finance Committee gets a first look at the budget, then it is discussed and voted on before it goes to the full board. This time, it was the other way around due to the numbers not being ready to present at the committee level first.
Board member Jo Ann Taube made a motion to defer the approval of the budget, and board member Carl Bryan agreed with her at first. Taube and Bryan said that they had questions, holes, and that they were confused about the budget assumptions. However, several other board members, including superintendent of schools, Michele Hancock, gave Taube reasons why this would not be a good idea. Hancock spoke of the detriment to the morale of the Finance Department. “Changing the process in the department could lower their morale. They might think that the board didn’t think that they were producing quality work.” Schmitz wanted to stay on the calendar presented.
Hancock stated that she supported the budget because it supports the district’s transformation plan. Hancock stated, “We have put strategies in place to support larger class sizes in an effective way.”
The budget is based on the fact that the initial enrollment projections indicate a decrease of 100 students. From these numbers, the state determines the revenue limits for each district. A rolling three-year average full-time equivalent is used in the calculation of the revenue limit, which equates to 128.
There is $3.6 million dollar additional revenue built into the budget. This consists of $6.6 million in general state aid, a reduction in the general fund levy of $4.86 million (based on July 1 estimated revenue limits), a $809,000 increase in non-referendum debt which represent higher principal payments in 2013 offset by lower interest, a $1.13 one-time per pupil aid adjustment (the State Biennial Budget Adjustment), and a $25,000 increase in student and facility fees.
The staffing changes from the 2011/2012 budget to the 2012/2013 projections represent a total of 213 less staff. The make-up of that reduction is 8 less in administrative, supervisory and technical, including school administrators, 8 less in education support professionals, 179 less teachers, an increase of 8 in miscellaneous (financial analyst positions, a grant specialist), 16 less secretaries, and 10 less service personnel. The total is 2,447 for 2011/2012 vs. 2,234 for 2012/2013 (a total reduction of 213).
Schmitz made it a point that the district is not going to make the same mistake it made several years in a row, and that was of making decisions too early to rehire from the fund balance. “This year, we are being very conservative and cautious.”
Taube was also about elementary class sizes. Teresa Osborne-Short, director of human resources, stated that 36 teachers have been recalled. Fifty-five jobs have been posted on the KUSD website. Most are bi-lingual, English as a second language, hard-to-fill positions. There are 118 teachers on recall. Forty positions are likely to be filled, depending on the budget. Board member Bob Nuzzo wanted to make sure that the forty positions that have not yet been filled were budgeted for. Schmitz said that they were. Later on in the meeting, she wanted to clarify that again. “Only if funds are available,” she reiterated.
Annie Fredriksson, coordinator of instructional technology and library media, was called to the front to answer questions about the 37 positions which were let go, and the re-hire of twenty positions. “Yes, they are 12-month positions, and they had a slight increase in pay,” Fredriksson said. “But, the whole technical support process has changed. We have completely restructured ow we do our work.”
Kristopher Keckler, executive director of information systems, data management and evaluation, gave support to Fredriksson’s comments. “These people are handling things. There has been a tremendous increase in the amount of work being done.” Fredriksson commented that “usually, we have to wait until fall. But, we have everything working now. We are ready for fall. We will be ready day one.” Hancock commented, “These twenty are highly technically skilled.”
Schmitz also made the comment that the fund balance is at a “dangerously low amount right now.” Nuzzo also wanted to know what the reserve fund balance was right now. Schmitz replied that, at the end of 2012, it is projected to be at $11 million. Before the district ran into all of its financial problems, it was at $23 million, then dropped down to $16 million. It should be at $40 million. “We’re a long way away,” he said. Schmitz stated that the bond rating has increased with the projected increase in our fund balance. Nuzzo said, “They have seen that our house is in order, our plan is in order. From February until now, we have seen a consistent picture. You have done an excellent job,” he said to Schmitz. Settling the CDO case has also increased the district’s bond rating.
Also included in the budget is a $1.87 increase in salaries and benefits (5% increase for teachers), and $567,800 in other expenses, such as a 2-5% increase in other employee benefits, such as life insurance. The salaries and benefits increase is due to an estimated increase of 1% to 1.9% on the current 11.8% rate in the Wisconsin Retirement System (WRS) expense, an estimated $1 million increase in unemployment expense, increasing the substitute budget by $300,000, incentive payouts of $250,000, a reduction in health insurance expenses of $730,000, the reduction of two additional custodial positions ($150,000), an increase in $17,500 in community support hours, an additional HR specialist hired in July, 2012 ($110,000), additional support for special education ($231,000), and an increase in library media clerical hours of $92,000.
The other expenses represent a $395,000 increase to the athletics budget, a $150,000 increase to the facilities budget, $9,000 for additional expense for offsite Advanced Placement testing, $10,000 to replace paper testing for the talent development on-line testing software, and a one-time expense of $3,800 for classroom supplies for the infant lab.
All of these assumptions represent $2.438 million in additional expenses since February, totaling a $1,265 million increase to the budget.
Board member Rebecca Stevens questioned Schmitz about the $28 million total shortfall, and the fact that the district had come up with $25 million in savings. There was a $3 million shortfall in February. Stevens wanted to know about that. Schmitz replied that the $3 million gap no longer exists. The $28 million was based on early estimates. There are new numbers now.
At the July 10 Audit Budget Finance Committee meeting, increased fees for the 2012/2013 school year were approved. These were a 3% increase in certain fees. The fees had not been raised since 2009. Also, a 5% increase in building use fees, and a 3% increase in recreation.
Even though the Wisconsin Education Association (WEA) projected a 10% premium increase in health insurance premiums back in February, the bid didn’t go up because they have also proposed taking over the administration of the Health Reimbursement Account.
The district experienced a loss in revenue of nearly $13 million last year due to the decrease of $554 per student in revenue. This year, the state biennial budget includes an increase of $50 per student. Last year, the per pupil revenue was $9,585, and this year it is estimated to be $9,857.
There is also a 3.96% decrease in the tax levy (approximately $4 million) projected for fiscal year 2013. The overall revenue limit increased slightly and with general aid taking up a larger portion of that limit, it reduces the amount in which the district is able to levy. The preliminary budget includes taking advantage of levying to the maximum by law for the general fund.
The proposed budget assumptions continue to support all of the current instructional programs of the district, taking into consideration the beliefs, parameters, and objectives of the Transformation Design Plan. Budget development is a dynamic and continuous process until the board formally adopts the budget on or before November 1st.
Administration will be incorporating these budget assumptions into the district’s preliminary 2012/2013 budget to be presented at the public hearing on the budget, which is scheduled for September 12, 2012. As always, the budget is developed and implemented with the ultimate goal of meeting the needs of all the students in the district.