Financial update This year the district began the budget process by reviewing and agreeing on budget assumptions for fiscal year 2005. The budget will have to be reduced next school year due to declining enrollment, increases in operating costs and reduced state funding. The reductions will be made in all areas of staffing and programming throughout the district. It is anticipated that the district will need to reduce expenditures by approximately $300,000 for the fiscal year 2005. The school board reviewed assumptions regarding district goals, projected enrollment, revenue, class sizes, program offerings, salaries and fund balance expectations. During the review process it was determined that the administration would use input from the site teams, which are composed of teachers, support staff and parents, to determine the necessary budget cuts. The district also invites input from parents and community members by writing to the district at P.O. Box 368, Kimball, MN 55353, by contacting a board member or by e-mail at scott.thielman@kimball.k12.mn.us. The preliminary budget will be presented by April 15, 2004 and the final budget must be adopted by June 30, 2004. Budget overview I want to give a brief overview of the district’s funds and how they are monitored. An overview of the budget helps individuals understand the type of accounts that are required by the State. Each fund is separate and cannot be commingled. The funds are broken down into the following categories: Fund 01 (General Fund) Fund 01 includes funds that were formerly separate like fund 03 (transportation) and fund 05 (operating capital). The general funds are used to pay transportation costs, repair buildings, pay energy bills, purchase textbooks, pay employee salaries, and purchase instructional supplies. The general fund accounts for the majority of the district’s expenditures. Funds in this account can be used to supplement all other funds except debt service. Fund 02 (Food Service Fund) Fund 02 is dedicated to pay for food services. The district contracts food services out to TAHER. The district has been using TAHER for over twenty years. Funds in this account can only be used for food services and not any other fund. Fund 04 (Community Services) Fund 04 is made up of many components. It includes; community education, adult basic education, after school enrichment programs, the latchkey program, early childhood family education programs, youth development programs, preschool screenings and a portion of summer recreation programs. Community Service funds cannot be transferred to any other fund. Fund 06 (Construction) Fund 06 is dedicated for construction or building funds. This fund holds the construction bonds for the district. As bills are paid for construction, the funds are taken from this account. This fund continues to be used for construction related expenditures. Building funds cannot be transferred to any other fund. Fund 07 (Debt Service) Fund 07 is used to pay off the bonds that were issued to build the Elementary School and to renovate the High School. The State provides aid to the district and the remaining balance comes from the local taxpayers. Within this fund, the State requires a five percent excess in the account. Over time the excess builds up and then the State makes an adjustment in the amount required by local taxpayers. Debt service funds are dedicated and cannot be transferred. Cash flow Cash flow is the amount of money that a district receives throughout the year. Monies are received from the Counties and the State. It is important to understand the State’s funding formula because it impacts the district’s cash flow. Last year, the State changed the way it disbursed monies to the school districts. In the past, school districts received 90 percent of the state allocation in the current year and 10 percent in the following year. The State changed that portion last year to 83 percent for the current year and 17 percent for the following year. For the 2003 – 2004 school year, the State only disburses 80 percent of the allocation in the current year and 20 percent in the following year of the budget cycle. The district received 7 percent less of the allocation last year and will receive 3 percent less this year which drastically impacts its cash flow. The 10 percent reduction in the disbursement schedule will force the district to continue to use an Aid Anticipation Certificate. The certificate enables the district to meet obligations and will have to be used until the reductions in the General Fund disbursements can be made up. The aforementioned funds and information hopefully will provide an overview of the district’s financial status. If anyone has additional questions, please do not hesitate to contact me at (320) 398-5585, ext. 330.
