WILLMAR -- The budget picture for Willmar Public Schools is looking a little better, but the district's reserves are expected to shrink by about $900,000 by the end of the fiscal year on June 30.
The School Board approved a revision to the 2005-06 budget Monday. At its April 24 meeting, the board will get its first look at proposed budget cuts intended to slow down the deficit spending that began last year.
State law requires schools to adopt budgets in June, before their next fiscal year starts. Those budgets are based mostly on assumptions, but none more than this year's. When schools adopted their budgets in June 2005, the Legislature hadn't decided yet how much state aid schools would get this year.
A revision in January adjusted the budget to reflect changes in the state's funding formula. Monday's revision brought the numbers even closer to reality, said Bob Haines, director of business and finance.
Revenue will be more than expected, and expenses will be less. However, those changes don't do away with the deficit that is expected to drain reserves from $5.2 million to $4.3 million.
ADVERTISEMENT
The district projects revenue of $39.3 million and expenses of just more than $40 million.
Revenue will be $490,000 more than projected in January. Some of that comes from higher interest rates on investments and some from an increase in special education tuition from other districts.
However, declining enrollment continues to hurt the district, Haines said. If enrollment were the same as a year ago, the district would be receiving $355,000 more in state aid, which is tied to student numbers.
Expenses will be $414,000 less than projected in January. Fewer employees are retiring than expected. When that happens, the district saves money in severance costs.
"It's a hard one to call," Haines said. "It's likely to be the opposite next year." Last year, severance costs were higher than planned because of a high number of retirees.
Some of the savings are temporary. A portion of the Senior High roof repair cost was shifted to the 2006-07 budget because of work schedules. The money will still be spent, just not in this fiscal year.
Haines also displayed a projection of the general fund reserve for the coming years. The board has set a policy of keeping a reserve equal to 6 percent of the budget, enough to pay operating expenses for 22 days. For the coming year, the reserve will be about 10 percent.
However, after that, the reserve is expected to begin to fall sharply. A lack of new state aid for several years has contributed to the problem, along with inflation, Haines said.
ADVERTISEMENT
Enrollment in the district is expected to level off in the next few years, but it is still declining, leading to less state aid, he said.
Without changes, the reserve could fall below the 6 percent mark next year.
"We're not planning to go there, but if we don't do anything, that is where it's going to be," said board Chairman Dion Warne.
In his presentation to the board, Haines said the fund balance can be maintained through cutting expenses, asking voters to approve an operating levy, or a combination of the two.
The district made $800,000 in budget cuts and fee increases a year ago. Cuts this year are expected to be at about the same level.
