Despite uncertainty with state funding, projections indicate the Mehlville School District will increase its operating fund balance for the current school year, according to Chief Financial Officer Noel Knobloch.
Based on Knobloch’s projections, the district’s operating fund balance will be nearly 21.5 percent on June 30 — greater than the 18.09 percent originally anticipated.
Revised 2011-2012 budget projections Knobloch presented to the Board of Education last week estimate Mehlville will end the school year with a surplus of $19,000 instead of a $55,000 deficit as originally anticipated.
Mehlville’s revenue for the current school year is projected to be roughly $1.767 million more than originally anticipated while total expenditures have increased by about $1.693 million — a positive gain of $74,000.
Mehlville now is projected to receive $101,882,000 in revenue and spend $101,863,000 for the current school year.
The original 2011-2012 budget adopted last June projected Mehlville would receive $100,115,000 in revenue and spend $100,170,000.
The revised budget projects an operating fund balance of $19,352,591 — 21.45 percent — on June 30. That balance includes food service, activities and athletics. Excluding those, a fund balance of $17,050,443 — 20.14 percent — is projected on June 30.
The original 2011-2012 budget projected an operating fund balance of $16,476,798 — 18.09 percent — on June 30. That balance included food service, activities and athletics. Excluding those, a fund balance of $13,887,986 — 16.25 percent — was projected on June 30.
“We had projected about 17.5 (percent) to 18 (percent) with the budget, but since revenues were positive and the expenses were less, obviously that had a 2.5 (percent) swing on the reserves,” he said.
Board Member Mark Stoner said he is glad to hear the district is being “good fiscal hawks.”
“It looks like we’re going to spend less than we expected, collect a few more dollars in revenue than expected,” he said. “It looks like our operating fund balance should … stay around 19, 20 percent.”
However, Stoner said the district has to prepare funding for programs like the One-to-One Open Source Pilot Program, if the district continues the program.
“We have to really get smart on how to fund something like that if it proves to be a good program, and I think we’ve heard some pretty positive feedback,” Stoner said.
Superintendent Eric Knost said the decision on whether to recommend phase two of the pilot program, which would allow one laptop for every student in the incoming freshman class, will be made by April.
Though noting it is “very early in the budgeting process,” Knobloch said one of the biggest revenue variables is state funding. The difference between the highest and lowest amounts the district could receive among three scenarios is more than $3.4 million.
“That’s the one big variable we don’t have a good feel (for) at this point in time in regards to the budget,” Knobloch said.
Three options exist for funding of the state’s current foundation formula: prorating the funding formula and two pieces of legislation, Senate Bill 454 and House Bill 1043. The current foundation formula was adopted in 2006 and designed to be phased in over a seven-year period.
In the past, the Department of Elementary and Secondary Education, or DESE, has prorated the funding formula, making payment calculations and prorating the amount allotted for each district to equal available funds. If prorated, Knobloch said DESE is estimating funding will be at 86 percent next year.
“But you’ve got to remember, next year the formula is fully phased in,” Knobloch said. “So that means that the money switches from the hold-harmless (districts) to the formula … because the formula districts now are going to be 100-percent funded under the new formula, where this is only 86 percent this year, so that’s why we would show a significant jump next year.”
Another option for funding is to prorate the state adequacy target, or SAT, meaning DESE would adjust the SAT to a number that makes the formula work. This option was introduced with SB 454, sponsored by Sen. David Pearce, R-Warrensburg.
The SAT is an average amount of dollars determined to be the necessary amount school districts spend annually on one student to deliver an education.
“We would only get $9.8 million from the state,” Knobloch said, “and there are two bills out there, one in the Senate and one in the House, which would work similar to the compromise, but they’re spreading the pain, if you will …”
HB 1043, sponsored by Rep. Mike Thomson, R-Maryville, would modify payments to work within available funds.
Under HB 1043, no district would see more than a 2-percent funding change, positive or negative. In a symbolic vote with other area superintendents designed to send a message to the Legislature, Knost said he voted for HB 1043.
“It’s hard to look at something that would be very good for our district and claim to be a passionate public educator and watch it decimate the budget of a neighboring school because of a heavy swing,” Knost said.
Knost said if the district was being selfish, it would want to prorate the formula.
However, he said the district could live with any option other than prorating the SAT.
Knobloch said if legislation is not enacted, DESE has to make a decision on how to fund the formula.
“So DESE only has two decisions to make, prorate the formula or prorate the SAT, without legislation,” Knobloch said.
Board Vice President Larry Felton asked if the Senate and House bills do anything to reconcile the differences between hold-harmless and formula school districts, to which Knobloch said the bills “only attempt to ease the pain.”
“If you look at those two bills, you can see that everybody who is on the formula comes out better, everybody who is on hold harmless comes out worse … they’re trying to get some consensus on which way to go,” Knobloch said.
If DESE chooses to prorate the SAT, Mehlville would return to hold-harmless status in which its state funding would be frozen at the amount it has been receiving.
The district would gain about $9.8 million if the SAT is prorated rather than approximately $13.3 million if the formula is prorated for the coming school year.
Knobloch said except for the last two years, the formula has been fully funded.
It was 96 percent funded last year and 99 percent funded the previous year.