SMITHVILLE — Smithville School District Assistant Superintendent Wayne Krueger said there is no need to panic despite the district facing a six-figure revenues deficit in the budget, requiring spending of reserves.
Smithville School District will have a million dollar spenddown of reserves by the end of June. A reserve fund is made up of money that can be accessed while a district waits for local and federal revenues to come in. A board of education policy requests the reserve fund balance remain between 21 to 26 percent of the total expenditures budgeted in a school year. Currently, the fund stands at 20.35 percent.
The spenddown is needed because of funding gap created between June and December when the district is beginning a new fiscal year while entities dispersing revenues to the district are not.
“(The board) wants to keep this percent of the budget between 21 and 26 percent,” Krueger said of reserves. “They don’t want it to get too low because there are implications. ... In theory, if it got too low, we couldn’t make payroll. If it got too low, and you were trying to run a bond issue for example, that is one of the things they base the credit rating on. How good are your fund balances?”
After evaluation, Krueger said two major factors contributed to spenddown. The first is the number of added staff, personnel accounts for 77 percent of the district’s expenditures. In addition to adding staff for the new Eagle Heights Elementary School, each building added grades, cafeteria staff, custodians, nurses, librarians and principals.
The second major factor, the assistant superintendent said, is low enrollment. In the last three years, the district has gained nine students.
“That, we scratch our heads on,” Krueger said. “It is a fact. So, this whole project and (Eagle Heights) and all this was put into motion several years ago and who would have thought several years ago we would level off?”
Despite a tapering of enrollment, Krueger said the district needed the new school regardless. Smithville Middle School was over capacity. With the addition, that building has seen dramatic relief and room for growth, Krueger said.
“I do think it will come,” Krueger said of increasing enrollment due to increased population, noting there were more than 160 building permits issued in Smithville this year. “It just wasn’t here at the beginning of the year.”
The four-year budget recovery plan, consisting of cutting costs where the district can, projects $800,000 recovered by the end of June 2019. The cutting costs process has already begun with reducing material, supply, travel and operating budgets in the current fiscal year, Krueger said.
The district is also beginning renegotiation of contracts with vendors to reduce costs. In addition, the board approved an early retirement incentive plan for higher-salaried personnel.
“We are not desolate,” Krueger said. “We are not going to be. The recovery plan, while we have to make some adjustments ... is not going to impact learning directly.”
The idea is to tighten the district’s belt to avoid decreasing the reserve fund balance to 15.31 percent in 2019 and 10.51 percent in 2020, which would occur if expenses were not cut.
“We are still very conservative, ... the adjustments we make will really not be noticed by most people,” the assistant superintendent said.
Smithville School District’s budget materials including audits, the budget recovery plan and projected fund balances can be found on the district’s website, smithvilleschooldistrict.net.