RO School Board approves budget

The Red Oak School Board has settled on its FY 27 budget.
The certified budget is a document showing the amount of taxes to be levied for each fund and or program and the aggregate revenues and expenditures. It must be certified no later than April 30. On April 28, the Red Oak School Board met in special session to finalize the proposed budget.
Expenditures included are from five funds, instruction, total support services, non-instruction, other expenditures, and total expenditures overall. Key variables that fund property tax are from the general fund,
 Board Secretary Heidi Harris said the main variable is enrollment.
“I want to make a point here. We are down 21.4 kids this year, which equates to approximately $182,654.35 of state funding. Combining the last two years, we are down 108 kids. This is a big hit, as enrollment largely drives each year’s revenue and state funding. We’ve had conversations about the budget guarantee. There’s basically a one year lag. We’re in what I call the hangover year of our budget guarantee, because next year is the year that it resets to that 86 student loss,” advised Harris. “This past year has been relatively harmless. Next year, we take a beating, because we’re down such a significant number. And I say that because I need people to hear. I don’t think people understand that we need to tighten our belts right now.”
Superintendent Ron Lorenz shared some details about the proposed budget, stating that as they were directed by the board, the proposed FY 2027 budget reflects a total levy of just over $7.3 million.
“This includes a management levy of $1.2 million and instructional support income surtax of 8%. The resulting total tax rate is $15.27 per $1,000 of valuation, representing a decrease of 20 cents from the current year. The increase in the management levy is necessary as this fund is currently operating in a deficit, and just as a reminder, the management fund supports essential district obligations, including natural gas, property and liability insurance, legal settlements, early retirement programs and other allowable expenses,” said Lorenz
“To help balance this need, while minimizing the impact on property taxpayers, the instructional support income surtax was increased from 5% to 8%.
“This approach broadens the funding base so that support is shared more by all taxpayers rather than falling solely on property owners. And just for context, the surtax has been as high as 9% locally within the past six years and has reached 11% from 2011 to 2013, so 8% is not a great departure from where we’ve been in years past,” Lorenz explained.
Overall, Lorenz said he and the rest of the administrators are pleased to present a budget that does provide modest property tax relief to our community, even as they continue to navigate rising costs, declining enrollment and other financial pressures. He also elaborated on the politics that have been taking place in the statehouse this year.
“There’s been a lot of talk about property tax relief. One of the things that the legislature did for this year is absorb or pay the additional program costs that’s associated with the budget guarantee. Based on the minimal Supplemental State Aid that they provide, there were a staggering number of districts that are on the budget guarantee. Those that were driving for property tax reform couldn’t sell that if folks like us were saying ‘yeah, you cut them here, but you drove them up here,’ so they they said ‘okay, we’re going to absorb that.’  They don’t have the money to do that next year,” advised Lorenz.  “The fear that I have is, because there’s been all this talk about property tax relief, we’re going to yo-yo next year because there simply isn’t enough money in the state coffers to continue absorbing things. Once they sell their political agenda, then it’s going to be back to reality. I don’t want to be doom and gloom, but I do want to be really clear about that. What they’ve done is not sustainable with the budget guarantee and the additional program costs.”
As for the district’s management fund, Lorenz said that the district was in a tough position, as taxpayers are expecting property tax relief, so the district has to be mindful of that, but on the other hand, the district is currently operating in a deficit in the management fund.
“We have to do something with management. I think it’s a question of how much of something because I think, in my opinion, it’s a no-brainer. We have to levy at least a million, but if we want to start getting into just having some flexibility, if we want to look at early retirement, we’re probably going to have to start bumping that up because we’ve been depleting that or whittling that down over the last few years. Last year, we didn’t levy anything there because we were trying to control our rate. The reality of it is all these costs we’re talking about are predictably going to go up another 10% like they have,” Lorenz advised.
Lorenz added the state is scrutinizing schools because many have a very heavy management fund. Also, there is a potential that there are going to be legislative changes that impact management fund in the near future that the district has to be prepared for.
No oral or written comments were received at the April 28 meeting, and the board unanimously approved the district’s FY 2027 budget as presented.