Fund balance is necessity
A fund balance is necessary because the July through November payroll for Edmond Public Schools will require about $36 million, Goin said.
Goin added the district ended FY2013 on June 30, 2013, with an available fund balance of about $15.4 million. With state and other sources of revenue to be collected from July through November anticipated to be in the neighborhood of $25 million, it becomes clear that for payroll alone, a healthy incoming fund balance will be necessary. Beginning in December ad valorem collections will significantly increase cash flow.
“In further consideration of the maintenance of a fund balance, fiscal years 2010 through 2013 were distressing for Edmond and Oklahoma school districts,” Goin said. “During that period of time overall state allocations to Oklahoma school districts fell dramatically. When increases in the state’s student population are built into the equation, about $240 million less was allocated than would have been the case if FY2009 funding levels had been sustained. Locally, in FY09, our basic state aid for Edmond was $38.8 million; in FY13 (and with an additional 1,500 students) state aid was $33.4 million. While some progress was made by the Legislature for FY14 funding, the gap compared is still substantial.”
Goin explained what assisted in keeping Edmond and Oklahoma districts, generally, from having to make extremely deep reductions in programs and personnel over the last four fiscal years was a significant infusion of federal stimulus and Education Jobs funding to supplement budgets.
“At the time the state was reducing funding allocations, the federal government supplemented Edmond Public Schools’ funding by (about) $21 million,” Goin said. “The judicious use of these federal funds over the ensuing budget cycles has allowed us to maintain reasonable class sizes and programs that benefit students. The supplemental funding also contributed to our achievement of positive fund balances and to the provision of modest teacher salary increases.”
Goin went on to say the current situation is that federal funds infused into earlier budgets are now depleted and “sequestration” reductions are placing basic federal program allocations at lower than pre-stimulus levels.
“Even with these constraints and an expectation that our beginning fund balance for FY15 could fall close to a 6.5 percent level (5 percent is mandated in local board policy; the state allows a 14 percent carryover), teacher salaries have been slightly increased this year to include a step increase at a cost of $850,000 and the possibility of a $200 stipend this coming spring, a $374,000 expenditure, should we maintain at least a 6.5 percent fund balance following the receipt of the mid-term funding adjustment from the state,” Goin said.
“Within that context, the cost of a $2,000 increase for teachers this year would require $3.7 million and place us in precariously low fund balance territory. Beyond being unsustainable as a recurring expense in future years, it would not even be affordable the current year.”
Tulsa Public Schools Superintendent Keith Ballard agrees with Goin’s observations.
“To suggest that carryover funds be used to cover teacher raises is a poor solution, especially given the decline in per-pupil funding we have experienced over the last five years,” Ballard said. “A cardinal rule of school finance is not to pay recurring expenses, specifically teacher salaries, from onetime funds, specifically carryover funds.”