Cuts Coming?

The Red Oak School Board received a clearer picture of their financial future at a special financial workshop during their regular board meeting Monday, Aug. 22. 

The workshop was led by Gary Sinclair, with 5Cast, who said the numbers presented were the best professional judgment based on their research. The district enrollment numbers were up for 2017, but Sinclair said that wasn’t the outlook for the future. 

“Right now, we project the enrollment to stay flat, and we project the served enrollment to stay flat,” Sinclair said. 

Supplemental State Aid for the district is at 2.25 percent moving into 2017. Sinclair said their predictions were for the aid to stay in the two or three percent range through 2021.

When it comes to the district’s general fund, Sinclair predicted a drop to $1.298 million in 2017, $816,000 in 2018, and down to $152,000 by 2021. Sinclair predicted a decrease in unspent budget authority of $128,000 in 2016, $572,000 in 2017, ending up at $154,000 in 2021.

Looking at the full unspent balance for the next five years, Sinclair pointed out some big issues. 

‘There was a quarter of a million dollars in budget guarantees that is gone. In 2015, you had a total regular program cost of $7.460. Two years later, you only have $8,000 more. For two years, your biggest source of revenue and authority went up only $8,000,” Sinclair commented. 

Sinclair said the results are preliminary numbers, and the finished report would be provided later in September. 

Board member Bret Blackman asked what the key reason was behind the general fund balance dropping from close to $1.3 million to only 150 thousand. 

“In fiscal year 2016, we’re confident you’re going to take in $12.453. We’re also confident you’re going to spend $13.183. You’re going to overspend cash by $729,000. What change moving forward will make that different?” asked Sinclair. 

Moving forward, Sinclair sees the issue addressed by reducing costs, but not enough that was going to make a big difference  moving forward. Sinclair said in the future, the district can offset costs by using a cash reserve. 

“It may not impact property taxes as much as you think. If taxable valuation goes up what it did this year, you can put on more cash without raising the tax rate. You won’t actually be able to take major action on the overspending until the next budget year,” advised Sinclair. 

The special education funding deficit was a contributing factor in the reduction of general fund balance, and the drop in enrollment. Sinclair said the enrollment drop was the single biggest contributing factor. 

Superintendent Tom Messinger said the district’s cost of repairs and maintenance continued to go up, and while the costs were necessary, but like anything else, if money was spent there, there was less money to spend somewhere else. 

“The principals are working on a plan on different options to move people around to different buildings if we don’t do any construction work. There’s no doubt the one best way to reduce programs is to reduce our operating costs,” 

Board member Paul Griffen said the unspent budget balance was a big problem that needed to be addressed as soon as possible. 

“We do have on the books a resolution to keep that unspent balance between seven and nine percent.  We have a board action to do that, and we need to make sure we get there,” Griffen said. 

Despite the bleak picture, Sinclair said the district was in a good position to solve the issues. 

“You have to know there’s an issue, and you do. You have to figure out what changes you’re going to make to address those issues, and the board will have to follow through on the changes you need,” advised Sinclair. 

The board will review the official numbers after Sept. 15 and examine the steps that can be taken to reduce spending moving forward.