Trinity Area School Board is working on its budget for the 2014-15 school year, realizing it faces financial challenges.
At its March 27 meeting, the board heard from director of fiscal services David Roussos and Bob Armur, of financial services firm Janney Montgomery Scott LLC, who outlined some of the growing operating expenses and other issues the district has encountered.
Roussos said Friday the district’s numbers give reason for concern.
In January, a 2012-13 fiscal year audit shows the district’s fund balance has fallen below the amount recommended by its accounting firm Cypher & Cypher.
Stephen Cypher, of Cypher & Cypher, said at that time the district’s fund balance at the end of the 2013 fiscal year was $941,399, a little less than 2 percent of Trinity’s general fund budget.
Cypher recommends school districts maintain a general fund balance of somewhere between 3 and 6 percent of the general fund budget.
For the past six years, the district’s fund balance has remained at about 6 to 8 percent of the general fund budget, and topped $3.9 million in July 2012.
However, actual expenditures for 2012-13 were more than $2.9 million over budgeted expenditures. Cypher noted the largest over expenditures occurred in special education, instructional staff, transportation and administration, resulting in a net change of more than $3 million in the fund balance.
According to Roussos, one of the biggest expenditures was for charter schools, which cost the district $1.1 million. Roussos said the district had budgeted $650,000 for charter schools, “so right of the bat we’re $450,000 off.”
The district also spent more than $1 million in special education transportation last year, and will spend at least that amount this year.
The district’s basic education funding, along with state and federal grants, has dropped, forcing Trinity to look for ways to cover increasing expenses with fewer dollars – a problem many school districts face, Rousso said.
The board last month approved an $825,000 debt ordinance that will be used for debt payments on existing debt, due in May and November. Roussos said he plans to recommend the board approve a debt ordinance of about $4.5 million in November for the same purpose.
“Among various expenditures, we have $6 million in debt we have to pay each year. We’re saying we want to put that off a little longer to get our house in order right now, in terms of increasing revenues and dereaseing expenditures,” said Roussos. “We’re getting budgets back from various department heads and building principals, and they’ve been tremendous in looking for areas where to make cuts. This is all about increasing revenues, decreasing expenditures and deferring expenses in the short term to get us through this period so that within two or three years, our boats are settled down and things are calm and we can go forward.”
Armur advised the school district to consider raising taxes this year, something the district has not done in six years.
Roussos said the school district was on the precipice of facing one or more years of negative fund balance, and the district’s priority is to avoid that, in part because the state Department of Education would have greater oversight of the school district.
He also is concerned about the impact a negative fund balance would have on home values in the school district.
“How many people are going to be looking into moving into a school district that’s just had two years of negative fund balances? What does that do to home values? How attractive are we to other kinds of development? The last thing in the world we want to see is our fund balance go red,” he said.