Budget Updates and Anwers

By Dr. Elizabeth Fagen

Dr. Elizabeth Fagen, Superintendent, Douglas County School District
Posted

Budget is the No. 1 word I hear lately, and with good reason. We are at the height of budget season, and in the economic climate, lots of questions and concerns about cuts have been raised.

Although many details remain unknown as we are waiting for the latest revenue forecasts and a final vote by the state Legislature on K-12 funding for the upcoming year, a few things are certain. We are absolutely committed to putting our students first and doing everything we can to minimize any impact on the classroom. Our goal is to bring the SBB (student based budget) reductions required for a balanced budget as low as possible so as to avoid any impact on our students.

The following are questions and answers to the questions I hear most often.

Q. When will the school budget be final?

We hope to have more answers by April. Based on revenue forecasts in December, Gov. John Hickenlooper amended his proposed budget and has recommended an expected $89 million cut be taken off the table. This is great news. However, many variables still remain including March revenue forecasts, the question of funding student growth, and final decisions on the state budget by the state Legislature. While we are optimistic, we are preparing for multiple scenarios.

Q. What are the cuts?

We have been preparing for what we believe is the worst case scenario, and from there, discussing what we will do in the event of a smaller reduction. Our goal is to bring the SBB reductions required for a balanced budget as low as possible so as to avoid any impact on our students.

We are involved in ongoing contract negotiations with the Douglas County Federation of Teachers and cannot discuss details of those meetings. However, we believe there is a pathway that gets us to zero furlough days for our teachers and staff.

We are hopeful that we can present a final budget that includes:

  • zero furlough days for staff;
  • a $50 or less SBB reduction in our elementary schools (zero is the goal);
  • a $100 or less SBB reduction in our middle schools ($50 is the goal);
  • a reduction in class sizes at our high schools; and
  • the preservation of electives in our high schools.

We believe we can achieve these goals by realizing efficiencies in our cost-of-doing business line items -- such as utilities -- and making additional cuts to central administration.

Q. There seems to be different interpretations of how much money is in the fund balance. Please address the fund balance and how those dollars are used.

Recently, there has been a great deal of misinformation about the DCSD fund balance. The facts are as follows:

  • At the end of 2010-2011 school year or FY 2011, the district had a fund balance of $66.4 million. This is the number that is represented on the Comprehensive Annual Financial Report (CAFR).
  • Within the $66.4 million fund balance, there are two "pots" of money. The first is assigned/restricted fund balance totaling $40 million. The second "pot" is an unrestricted fund balance which represents savings/reserves that can be used to offset cuts and cope with emergencies. The second pot totaled $26.8 million.
  • The first pot of money, the assigned/restricted fund balance can be broken down as follows:

Dollar amount designated in the assigned/restricted fund balance

Purpose

$11.7 million

Tabor Reserve

$4.8 million

Extended Separation Agreement (This fund is paying those who chose early retirement at the end of fiscal year 2009.)

$21.3 million

School & Department Funds (These dollars are allocated to schools and departments within the District.  The District previously adopted a policy that allows schools and departments to carry over discretionary monies that had not been spent in any one year.  This policy change has resulted in providing schools and departments flexibility in how they spend their money.  In fact, many schools may plan to use these funds to help soften the cuts in this school year and/or next school year.)  This figure also includes $4.5 million in kindergarten tuition that remains in schools

$543,000

Transportation

$784,000

Insurance Reserve Fund

$434,000

Supplies Inventory

  • The unrestricted fund balance or the second "pot" of money in the fund balance totals $26.8 million. This number represents the ending unrestricted total from last year.
  • Normally, unrestricted fund balance represents money that was allocated (budgeted) but not spent during the year for various reasons. Since it is budgeted or allocated, it can and likely will be spent in subsequent year, so the money in the fund balance can be responsibly spent on one-time expenses -- not ongoing expenses. However, since the current district leadership team did not prepare the 2010-2011 or FY 2011 budget (or those previous to FY 2011), CFO, Bonnie Betz, wanted to deconstruct the unrestricted fund balance. To do this, she compared budget to actual over several years to find budgets that are consistently, significantly higher than actual spending. Where found, those budgets can be reduced on an on-going basis and the dollars can be reallocated to our budget reduction for FY 2013.
  • From the $26.8 million number, we must subtract the one-time money totaling $11 million that was used to balance the 2011-2012 black budget. This leaves an unrestricted balance of approximately $15 million.

Maintaining a reasonable and healthy fund balance is critically important to the financial stability of the district. Just like all of us try to maintain a savings account in our family budgets, the district must keep dollars available for emergency use. For instance, if a boiler breaks in one of our schools, we need funds available to replace it.

It is important to note that the 2011 budget was developed in the spring of 2010, prior to the hiring of superintendent Fagen, the chief financial officer, and the majority of the current administration. The prior administration increased some line items, including utilities, substitute, and medical fund, during FY 2009 and FY 2010. Those increases were not necessary, and this resulted in fund balance increases.

Superintendent Fagen and her team are dedicated to budgeting more closely to actual needs, as proven by the allocation $11 million of the fund balance to offset the cuts in the current year.

For more information, please refer to the chief financial officer's report from Jan. 17 or visit the "Budget Facts" page at www.dcsdk12.org.