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Financial Update

December 2012

December 28, 2012

Our school district, like most district in the state, continues to face financial challenges.  In the past few years we have refinanced bonds due to favorable interest rates, and are finding ways to be more efficient and to stretch our dollars farther.

Our 2012-13 fiscal year began on September 1. The District’s General Fund budget approved by the Board of Education is $19,764,552. This is an increase of 2.66% from the previous year. Over 80% of our general fund budget is expended for employee compensation. The budget increase was necessary to cover wages and employee benefit increases, as well as rising operation costs.

The General Fund Budget includes all transportation costs, special education services, maintenance and operation of facilities and all extra-duty salaries/benefits. The General Fund does not pay for costs associated with the school breakfast/lunch program. 

The state of Nebraska imposes limitations on school district’s budget growth. In other words, we cannot grow our budget any further.

Our school district, in 2009-10, received state aid of $2,070,784. For 2012-13, our state aid is $750,054. This reduction of revenue at the state level has occurred at the same time we are experiencing steady student enrollment growth. Official enrollment in 2009 was 1,759; in 2012 enrollment is 1,842 students.

In the fiscal years since 2009-10, our district was not able to generate revenue fast enough to keep pace with the drastic loss of state funding, and we have limited cash reserves. 

We used our federal stimulus dollars (one-time revenue that is no longer available) wisely, and we have held the line on expenses. We have improved our cash position, which has reduced the need to access our general fund line of credit, thus reducing the amount of interest paid

Fiscal Year Line of credit accessed Interest paid for line of credit
2008-09 $4,355,000 $125,626
2009-10 $3,970,000 $87,939
2010-11 $3,495,000 $68,677
2011-12 $2,740,000 $51,730

State law allows a cash reserve amount to not exceed 35% of the General Fund. To eliminate the need for a line of credit, our reserves must be near 20%, but are currently closer to 10%.

Property taxes are the primary mechanism under state law for school districts to generate revenue. We are fortunate to have a large property tax base within our approximately 300 square miles of district territory. Approximately 25% of our property tax revenue is from agricultural land. The majority of our property tax comes from residential value, along with commercial and industrial property. An interesting note is that the property valuation within the city limits of Waverly comprises approximately 20% of the total property valuation in our district. In other words, 80% of our district’s property value is found outside the city of Waverly’s boundaries.

Our actual expenditures from the past five years in the General Fund increased a total of 7% from the 2007-08 school year through the 2011-12 school year. Our receipts in 2011-12 shrank significantly mainly because we no longer had federal stimulus funds and state aid levels were less (as previously noted). The following is taken directly from our annual financial audit (Schedule A-1) conducted by an independent accounting firm:

Audited Budget Year Starting Date General Fund Actual Beginning Balance Actual
General Fund Receipts
Actual
General Fund Disbursements
General Fund Ending Balance on August 31
September 1, 2007 $363,453.41 $15,859,825.55 $15,542,274.24 $681,004.72
September 1, 2008 $681,004.72 $17,005,961.21 $16,302,331.84 $1,384,634.09
September 1, 2009 $1,384,634.09 $17,575,892.11 $16,573,930.96 $2,386,595.24
September 1, 2010 $2,386,595.24 $17,536,806.51 $16,553,065.78 $3,370,335.97
September 1, 2011 $3,370,335.97 $15,894,861.58 $16,630,679.57 $2,634,517.98
September 1, 2012 $2,634,517.98      

From the chart above, you will notice that the ending balance in the General Fund increased from 2007 to 2011. This was intentional; improving our cash balance allowed us to borrow fewer dollars, and to prepare for the impending loss of state and federal funding. You will also see that our General Fund balance decreased by more than $735,000 during 2011-12 due to a significant drop in revenue. We will need to utilize our line of credit this year as we have in the past until tax receipts are received in May and June, allowing us to pay back the loan plus interest.

What does all of this mean? We are in a better financial position than 2009, but will continue to face financial challenges. This cycle will continue unless we can consistently get our receipts to exceed (or at least match) our expenditures. Despite the financial challenges, we have completed many projects (small and large), such as installation of window blinds at WMS, sound panels in the WHS wrestling room, completed a major upgrade to heating/cooling at Eagle/WIS, addressed moisture issues at WHS, purchased new buses, added new teaching positions, purchased additional band uniforms, purchased new social studies resource materials, as well as purchasing new student and teacher computers.

The Board of Education started a strategic planning process this fall that has included staff, administration and community representatives. As we work through this process to plan and prioritize, we must systematically address some of the “pent-up” needs/wants that could not be addressed since 2009. It is a constant balancing act; we have a finite amount of dollars, and every choice brings a trade-off with it. Remember that over 80% of the budget is already committed to salaries/benefits; then add in the significant costs for building operations/maintenance, transportation, and the remaining amount is discretionary for curriculum/instruction, supplies, materials, and technology. Administrators continue to gather information from staff, compile lists, and discuss these items with the Board of Education.

Click here to read about the School/Community Partnership for Essential Planning.

Financial challenges are not unique to our school district; see details for Ralston and Beatrice school districts at: Ralston Schools Article and Beatrice Public Schools News Article.

Please note that despite the financial challenges, our students continue to receive quality educational services and opportunities. We will continue to evaluate how to maximize resources and spend efficiently to meet our “Commitment to Excellence.”

Click here to view District Updates

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