Wednesday, January 19, 2011

Octorara's Budget . . . Continued

A couple of weeks ago I wrote a post shining a light on the challenging budget year Octorara has before it as board members and administrators work to approve a final budget.

A number of factors including a slower than expected economic recovery, lower state funding coupled with ever increasing costs make this years budget battle even more challenging than most.

At Monday night's board meeting business manager Dan Carley and Superintendent Tom Newcome updated the board and the community on the budget process and options being weighed in an attempt to balance the budget in time for the state-imposed June 30th deadline.

Here are the rough notes of the presentation and questions asked by board members as recorded by Ellen Brown and published in the Octorara Report blog.

Mr. Carsley presented the multi-year model they will use through the budget process.  The standard going forward will be to look at the effect of the budget you are working on has on future budgets.

There are 4 years of actual, the current year, the preliminary budget & 4 years going forward.  It gives a good summary of where you are coming from and where you are headed.  The model is currently based on an adjusted index of 1.8%.   There are different scenarios included in the model.

They can put changes into the model as they move through the process to see how the discussion will change the budget.

[Board member] Mr. McCartney asked if it took into account the changes in the PSERS funding.  Mr. Carsely said that the future year amounts of 12.19%, 16.6% and 21% are in there.  He had not made the adjustment for next year, as the preliminary budget as presented needs to be approved per state law.

Mr. McCartney wanted to know if amounts of property tax increases in future years were included.  Mr. Carsley said they aren't, because the budget as it is now, will not be the final product.  The future years are based on very conservative numbers.

Dr. Newcome presented potential budget reductions in seven (7) areas.

Potential Budget Reductions


Downingtown is looking at cyber charter school students.  They would like to use Brandywine Virtual Academy (which is what Octorara uses for our Alternative Ed students).  The problem with this is while it would initially decrease costs, if current Octorara students decided they wanted to use it, it could end up costing us more.

Dr. Newcome asked the Board for more suggestions.;

[Board member] Mr. Norris asked what the athletic budget is.  Answer:  approx. $350,000

Mr. Carsley made the changes that were being discussed to the model.  Where we had a negative fund balance in the 3rd future year, it was now positive.

Mr. Norris asked about an item that had been presented at the Finance Committee during the audit report.  The auditors stated that the district needs a policy that states what the floor of the fund balance needs to be.

Mr. Carsley said that the bond rating had been increased from A to A+.  Part of the reason for the increase was the management of the fund balance.  He prefers not to go below $3 million in the fund balance.  They will work on a policy that puts in a floor.  They need a fund balance of that much to cover the summer months before property taxes start coming in.

Mr. McCartney asked if the model included guesses as to what will come out of Harrisburg.

Mr. Carsley stated that he had decreased state funding by $600,000 based on things he had heard.

[Board member] Mr. Ganow had a couple of comments about #4 & #6:
#4 - wanted to clarify that the projections for the cyber charter students was based on students currently attending a cyber charter and that we would attempt to get some of them back.
#6  - the decrease for athletics seems like a larger percentage than the other cuts.

Dr. Newcome said that the idea is to hit non-required items harder.

[Board President] Ms. Bowman wanted to know if this would be an accurate characterization of the budget:  Revenues are declining. So if we do nothing, we will be in the red.  If we raise taxes to the index (with no exceptions), we will still have an issue.  We need to decrease expenses.

Mr. Carsley said that it was accurate.

Ms. Bowman said that the preliminary budget that is being voted on does not contain any of these adjustments.

Dr. Newcome said that there will be pain.  Failure to reach the goal will have bad long term effects.

Mr. Norris asked about the time frame for #2 and what legwork had been done.

Dr. Newcome said the timing is still being worked on .  Recommendations from the Board will be part of the process.  He hopes to have something by April to give the district a 2-month lead time.  It will be part of the RFP to keep the current staff.

[Board member] Mr. Hume wanted to know who is setting the policy for the fund balance.  Mr. Carsley said it was the auditors' recommendation.  Mr. Hume thinks it sounds good to an auditor, but it is taxpayer money.  We are taxed above the limit.  He is opposed to putting money aside.  He thinks if the district needs cash, they should borrow it.

He also had a question about the public utility tax line item.Mr. Carsley said that it compensates schools for lost revenue.

Ms. Bowman stated that starting in July, they need money to get through the summer.  In order to borrow at a good rate, we need an adequate fund balance (also to maintain bond rating).

Read the notes from the entire board meeting including presentation introducing a small change in graduation requirements and the potential for three college courses being offered at Octorara next year.

No comments: