As always, the thoughts below are mine and do not represent the opinion of the Board as a whole or of other members of the Board. These are just my thoughts.
There have been some changes to the budget for the 2008-2009 school year. Discussion continued last night but I think the ideas are pretty well developed and ready to go. The three most important points of information in my opinion are as follows:
1) The millage increase has been reduced to .25 mills. This proposed decrease was done by applying the recently approved Galleria assessment increase tax payments for 2006 and 2007 to the general fund for the 2008-2009 school year. This amounted to approximately $577,000. This amount was not in our budget for this year since we did not have any idea about where the assessment for the Galleria would end up.
2) The District is projected to have just over $2,000,000 in surplus funds for the 2007-2008 school year. This is due to two things. First, we received unexpected (or at least unbudgeted) tax revenue from Covenant. There had been some question as to what they owed and what they would pay. Counsel was able to reach an agreement with them that allowed us to get about $1,000,000 in revenue that was not in the budget for this year. The other $1,000,000 portion of the surplus is mostly due to revenues being slightly higher than expected and expenses being held in check by District staff.
3) Surplus funds from this year are being proposed to be used to fund future retiree healthcare costs. Our collective bargaining agreement(s) dictates the amount the school district needs to pay for retiree healthcare. Accounting rules have changed to allow for districts to account for these retiree benefits in a way that is different from before. Previously we had these benefits included with the General Fund budget. Essentially, all that has happened is that the Board has discussed funding these retiree benefits for at least the next two years using some of the $2 million in surplus funds from the 2007-2008 budget year and putting these funds aside in a special fund dedicated to this purpose. Again, the new set-aside fund is required. What is being discussed is how much we want to initially put in that fund. Current policy says that anything in our Unreserved Fund Balance over 6% of next year expenses goes to the Capital Projects fund and that anything over 8% of next years expenses can be used at the Board's discretion. The $2 million surplus mentioned above would give the Board about $250,000 to use at its discretion. However, this would not even be enough to fund even one year of the expected $480,000 retiree health care cost. For this reason, the Board discussed the possibility of changing our policy to allow for any funds over 6% of Unreserved Fund Balance to be sent to a specified fund (Capital Projects or Retiree Healthcare being two such funds). From what I gathered during the discussion, the Board was in favor of keeping the policy in place that does not allow us to dip into the Unreserved Fund Balance to balance next years budget. The actual wording of the policy is still a work in progress and when the exact wording is worked out, I will post it here.
I believe there will be more discussion next week to determine the correct amount to put in the retiree healthcare fund. An initial funding amount of $1 million was mentioned.
A couple of my thoughts here. First, I am happy that we have gotten closer to a zero-mill increase on this budget. It's a heck of a lot better than where we started out. Expenses were reined in without impacting the education integrity of our school district. This was also done without mortgaging our future and without bringing down our fund balance. Our fund balances (ALL of them) will still get nice sized increases for next year. Our Unreserved Fund Balance will remain at 6% of budgeted expenditures (which is an increase since our expenditures are increasing), our Capital Projects Fund will receive additional funding (in anticipation of a high school project), and we will be able to fund the Retiree Healthcare Fund as well. What will happen is that anything over the 6% Unreserved Fund Balance will be split between Capital Projects and Retiree Healthcare. Using our surplus from this year to fund those two dedicated funds will reduce the future millage impact on Mt Lebanon residents. Personally, I want to be careful with how we fund the Capital Projects Fund since there is no decision yet on what we are actually going to do with the High School. However, for the Retiree Healthcare costs, we know pretty well what is going to happen until our next teacher contract comes up. If the retiree healthcare benefits are negotiated at that time, then our expenses would most likely change (up or down, depending on the agreement) going forward. Therefore, it might make sense to fund three years of the retiree costs but no more than that.
I'll post again once the budget is passed.
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All the best!