BOE Work Session - Budget Woes
Updated: Jun 12, 2020
Who decides where and how money gets spent in LSR7 and what do finances look like after the pandemic?
These questions (and more) were answered during the School Board’s June 9th BOE work session. If you haven’t had time to watch it, here are some of the highlights about what taxpayers should know.
Fast forward to 43 minutes into the video -- Wesley Metz, LSR7’s CFO, reviews school district financing 101 and previews budget projections.
Local and state revenues account for about 96% of LSR7 district revenue sources. The remaining funds come from federal aid.
Based on a call with the governor last week, state funding will be significantly reduced due in large part to fallout from the pandemic. This will result in approximately $4M less in revenue from the state. In LSR7, all state funds are allocated for teachers’ and staff salaries.
In addition, the governor stated that no further gaming tax revenue will be provided to school districts for this fiscal year.
LSR7 may need to consider a tax levy increase related to Prop C state funding (which would provide approximately $3M in additional state funding). Voters can approve this with a simple majority vote.
The governor stated that no Missouri district will be receiving funding for transportation for June which results in a reduction of approximately $266,000. The state should be funding transportation at 85%, however, the state was planning to fund at 19% before the pandemic. Now that will be less.
LSR7 is delayed in receiving anticipated tax revenue from the county partially related to pandemic fallout and partially related to disputed property taxes. Currently, the district is 3% short of normal collection.
Federal funding is projected to stay flat. The District will get $1.2M from the CARES Act which can be used for salaries or whatever is needed.
Nutrition services, BASS, and Student Activities Funds will see a reduction of $2M. Revenue reductions have affected both the nutrition services and BASS fund balances, both of which may go to a negative balance for the first time. BASS funding is already in the hole. Food services fund is down to $400K and will probably go negative. The district will have to determine how to deal with these deficits and may have to transfer money out of operating funds to bring them to zero. This happened because we continued to pay salaries and benefits to employees during the shutdown even though LSR7 lost revenue.
The shutdown of schools resulted in a $2M reduction in total district expenses.
The governor stated that July/August funding will likely be withheld. Withholding on the front end might allow LSR7 to receive more on the back-end.
According to district officials, they are budgeting assuming the “worst-case scenario” in order to be conservative. Next year, we are projected to be starting the fiscal year with an $8-10M deficit.
Will need to evaluate projections each month as the economy changes and the district will amend the projections as needed. If the economy does not improve by January, the Board and administration will need to make tough budget decisions for the following year.
Opening of the new middle school will cause fund balance to go down considerably if the economy doesn't recover rapidly.
State revenue may also go down in the future if enrollment continues to decline in the district. Dr. Miller states that the district's re-entry planning following the pandemic shutdown can have a vital impact on enrollment and therefore, district funding.
The preliminary budget will be included in the board packet on Friday, June 12, 2020.
The $244M bond package passed last week. This debt is projected to be repaid by 2040.
At around hour 1:16 in the video, Kyle Gorrell, LSR7 Director of Facilities, discusses the Blue Parkway municipal road construction impact to LSHS in preparation for the city’s TIF meeting scheduled for June 10, 2020.
Additional work was identified by the administration last fall as being necessary but this work was not included in the bond package that voters approved. This has left the district scrambling to find another ~ $1.6M somewhere within the already tight budget. If spent, this money would provide a net zero change in the number of parking spots at the school but would include a third entry/access point for the LSHS stadium.
The school board will continue discussions about this topic in future meetings.
In the figures below (provided at the work session), the red lines indicate work that would be required to be done that was not included in the bond package and money in which the district would be financially responsible. The blue lines indicate work in which the city would be financially responsible.