ROCSD finance picture is OK in near term

The Red Oak School Board has a clear picture of the district’s finances moving forward. 

The board met in special session Monday, Jan. 30 for a meeting with Forecast5 representative Gary Sinclair, who gave an overview of the district’s finances to date, and an overview of what the board can expect for finances, moving forward.  

Sinclair said the district’s enrollment reached a peak in 2013, saw a sharp decline in 2014, before a slight increase the past two years, with 1,200 students enrolled in 2016. Compared to other districts in the area, Denison has the highest enrollment numbers, and Red Oak is the second-lowest in enrollment with the Shenandoah School District having the lowest numbers in 2016. Certified enrollment was a 1,133.1 students, and Sinclair said a continued decline was expected moving forward. 

“We’re projecting you’ll be down 10 students per year. We’ve worked with the district for you to have the right amount of spending. That gets out of whack when you lose 40 kids over four years, so you have to continually monitor that,” Sinclair advised. 

Looking at the district’s unspent budget authority at the end of 2016, Sinclair said the district was in positive shape. 

“In 2009, you were down to 3.9 percent of your authority. It went up to 14.21 percent in 2012, and you ended with 11.83 percent in the last reported year, in 2015. ISB recommends a range of five to 15 percent, not to exceed 25 percent. You’ve been in that range for the past six years. Compared to other districts, you are in the bottom three, but it’s not a value judgment. If you can maintain that trend line, that’s great,” Sinclair said. 

Based on the numbers, Sinclair said 55.7 percent of the general fund spending went to salaries, while 22.8 percent. 6.9 percent went to other services, 6.8 percent went to supplies, and 3.7 percent of the funds went to other items. 

Looking at the unspent balance, Sinclair said their figures projected the unspent balance would go down a quarter of a million dollars. With planned reductions in 2018, it would almost balance. It would remain largely unchanged the next two years, before falling from $1,510,452 in 2017 to $961,000 in 2021, and $469,596 in 2022. 

Sinclair said there were several factors that come into play that will result in a drastic decline in the unspent budget in 2022. 

“We’re projecting a decline in enrollment by 10 students per year, 2 percent supplemental state aid, and the cost of benefits and salaries. The way to change the projections is to change the costs you can control. A 4 percent supplemental state aid would benefit the district greatly, but it’s very unlikely, and not in your control like other factors are,” commented Sinclair. 

Following the meeting presentation, Messinger said he could legitimately plan some reductions moving forward that would not drastically impact programs for the 2017-18 school year. After that, it got harder. 

“The next round of cuts after that will not be that simple. I think we’ll have some very difficult decisions after that.  They won’t be easy, but they’re the logical ones for us to make,” Messinger advised. 

After next year, the needed cuts would be similar, but the impact would be far greater. 

“Cutting a teacher at that point means that we will lose some sections or courses, or possibly an entire course. Class sizes will go up. Even if we made a cut now, the class sizes would go up, but the size of those classes wouldn’t go up too heavily based on the building. The second round of cuts is going to have a much bigger effect on those class sizes,” commented Messinger. 

Board member Mark Johnson said with the general fund balance being what it was, coupled with declining supplemental state aid, it was a poor outlook for the future. 

“As long as we have declining enrollment, this will continue. It would be wonderful to get to a point that we have some free play, so that every year we have declining enrollment we don’t have to think about getting rid of people,” Johnson said. 

Messinger advised the board he would take Sinclair’s information and compile a report for a future board meeting.