Budget projecting operating fund balance of roughly $16.5 million on June 30, 2012.
July 06, 2011 - Two Mehlville Board of Education members opposed passage of the school district's roughly $100 million budget last week — the first dissenting votes cast on Mehlville's annual financial blueprint in six years.
The board voted 4-2 on June 28 to approve the district's 2011-2012 budget. Board members Rich Franz and Mark Stoner were opposed.
Mehlville is projected to receive $100,115,000 in revenue and spend $100,170,000 over the next fiscal year — a $55,000 deficit.
For fiscal year 2011, which ended June 30, the district was projected to have $102,800,000 in revenues and $100,470,000 in expenditures — a roughly $2.3 million surplus.
Based on a projected total cash balance of roughly $25.4 million on June 30, the 2011-2012 budget estimates a balance of roughly $25.3 million on June 30, 2012.
Under state law, a school district is required to maintain a 3-percent balance in its operating funds or be considered a "distressed'' district.
The approved 2011-2012 budget projects an operating fund balance of $16,476,798 — 18.09 percent — on June 30, 2012. That balance includes food service, activities and athletics. Excluding those, a fund balance of $13,887,986 — 16.25 percent — is projected on June 30, 2012. Mehlville's operating fund balance was projected to be at $16,934,798 — 18.63 percent — on June 30, 2011.
That balance includes food service, activities and athletics. Excluding those, a fund balance of $14,190,986 — 16.51 percent — was projected for June 30, 2011.
Officials in May had projected a 2010-2011 budget surplus of only $132,000. However, Chief Financial Officer Noel Knobloch told the board last week that the district will receive about $775,000 in additional revenue and realize an additional $1.4 million in cost savings.
The bulk of that is a $392,000 state formula payment that was supposed to come in 2009-2010 because of an increase in the district's English Language Learner enrollment, Knobloch said. In addition, the district will get a higher-than-expected $230,000 in state sales-tax revenue, he said.
"Typically on the revenue side it's a lot easier to get a good feel for the numbers, but this year was just another issue with being able to pin it down," Knobloch said.
On the expense side, Knobloch wrote in his budget message that the district was able to save more than $700,000 in salaries and benefits due mainly to open positions; $353,000 on purchased services; $194,000 in supplies and $164,000 in capital costs.
The approved 2011-2012 budget projects local revenue to come in at $79,220,000 — a roughly 2-percent decrease from the $80,785,000 projected for 2010-2011. State revenue is projected to increase to roughly $14.5 million from $14 million due to higher sales-tax receipts, Knobloch said.
The approved budget reflects a salary freeze for certified and classified staff, as well as the elimination of four administrative positions; 10 certified positions, tentatively; and 15 classified positions due to the recent switch from a three-tier to a four-tier bus transportation system, Knobloch wrote in the budget message.
But those reductions will be offset by a projected 5-percent increase in health insurance premiums, as well as the district's contributions to the Public School Retirement System and Public Education Employee Retirement System increasing to 14.5 percent and 6.86 percent, respectively, Knobloch wrote.
In all, the district is projected to spend $76,247,000 on salaries and benefits in 2011-2012, according to the approved budget, which is a slight decrease from the projected $76,250,000 the district spent in 2010-2011.
Roughly $1.2 million is budgeted for capital expenditures — one-third the amount budgeted in 2010-2011, Knobloch noted. Most facilities projects have been curtailed, he said.
Overall, the revised budget "still shows an approximate break-even result," Knobloch told the board. "... We're looking to keep the reserve balance in the 13 to 18 percent range. We do expect revenues to go down because of some factors that won't repeat themselves next year. We'll lose stimulus money. We will lose recoupment of local taxes; we won't get that one-time payment, the correction of 2009-'10. So we expect revenues to drop by a couple percent.
"We expect expenses to stay relatively constant. We've had decreases in our total salaries but a small increase in benefits," he continued. "We've kept most of the other areas flat with the current year ... All in all, the budget that's presented here tonight is about break-even but once again as you know from the discussions we've had it's a very active budget. It can change within the next few months as we get final numbers, as we get final estimates from the state, as we get our final grant numbers, as we finalize our actual head-count and get all of our people slotted in. So we typically come back with budget adjustments in November. We do it again in February and we do it in May. So we try to get it as close to what it's actually going to be as we progress through the year."
Looking to the future, "(t)here is still a lot of uncertainty concerning revenue growth in 2013 and beyond," the CFO wrote in his budget message. "Without additional revenues, increases in operational and capital expenditures will need to be controlled. Reductions will be much more difficult to identify each year."
Franz and Stoner opposed the 2011-2012 budget, the first dissension on the issue since 2005, when then-board member Karl Frank Jr. cast the sole "no" vote against the approval of the 2005-2006 budget.
Franz praised Knobloch for his work preparing the budget but Franz took issue with the switch to a three-tier transportation system and the elimination of various administrative, certified and classified positions.
Those items were tied to decisions the board made before his election, he noted.
"And I realize that from time to time, we as a board are going to be asked to endorse by vote the actions of a previous board," Franz told the Call. "But in this case I felt that those issues were large enough that they deserved more discussion ... I would've been a lot happier if some of the discussion about those issues had taken place at the April and May meetings in addition to" the June 28 meeting.
Both Franz and Stoner said the district must focus resources on facilities improvements.
"We don't do that in this budget. In fact, nowhere in this budget does it give us the ability to address that," Franz said. "... Basically all we did was kick the can down the road and say we'll deal with it next year. Well, I don't know if we can afford to wait another year."
Stoner noted that if the district's ending operating fund balance exceeds projections by $500,000 or more, the district is required by a memorandum of understanding with teachers to devote half of the excess to teacher salaries.
"Which then increases the following year and all subsequent years your operating expenses for the district. So it becomes a cycle that needs to be broken for the long-term success of our schools," he contended. "Now when you sit back and look at this ... we need money to fund capital improvements, and that cycle will never be broken unless we can set aside money into an operating fund and then shift it into the capital fund without that continuing cycle going on.
"... It becomes a vicious cycle where you can't properly plan — without going back to the taxpayers — for facility improvements. And that's a cycle again that I say has to be broken. I think that's one of the major issues of credibility with the board and the reason why we have such a hard time doing any kind of improvements without going to taxpayers,'' Stoner said.