We all heard the warnings from certain school board members and district administration:
"If you take money out of fund balance to reduce the levy, it's a 1-year solution. Next year you'll be facing bounce-back."
True? In principle, sure.
In practice? That depends.
But, first, what exactly is this bounceback they're talking about?
In a nutshell, what it means is that next year we'll get hit with the property tax increase we avoided by using fund balance this year PLUS the additional hit of property tax increase due to NEXT year's spending.
In an oversimplified world, it's like using your savings account to make a mortgage payment when you're running short in a given month. The next month comes along, and you still have to make that mortgage payment, but now your savings account has taken a sizable hit. So unless you've done something to improve cash flow, you'll be in a pinch again. With the school district, it's more like your next month's mortgage payment actually increases 6%.
But that all presumes that we do nothing to curb the spending.
Tax Levy = (Operating costs - State Aid) + Debt Levy
Of those variables, what exactly can we change?
State Aid is only increased with increased enrollment.
(That was the logic behind using the 4K as a "cash cow" for the district.)
The Debt Levy is something we're stuck with; the only remedy is to refinance some of the debt.
The bottom line is that we need to trim our operating costs.
What are the (current) district operating costs?
District administration budgeted to spend $68,500,000.
Over the last several years, the budget (spending) has increased by about 6% per year.
Salaries and fringe benefits account for 80-85% of operating costs.
How do we avoid/minimize "bounce-back"?
- We simply need to spend less.
- We cannot continue adding 6% to the budget operating costs every year.
- We need to be more efficient with the resources available.
- When personnel costs represent 80- 85% of the budget, the only logical place to target is the 800 lb gorilla in the room---personnel.
The board also will need to make some changes to the salary structure for teaching staff. Folks...a simple reality is that when we have kindergarten teachers retiring with salaries just shy of $80,000, something is wrong. There are medical professionals who save lives every day that don't earn that much. No one will disagree that teachers' jobs are important. And an effective teacher can even ultimately "save" the life of a student. But the relative cost in terms of dollars and cents has become too high. Especially when contracts are for 190 days vs. 260 days for the average worker. Everyone thinks that they deserve a higher salary. We get that. But the education system is rapidly spinning out of control.
What we cannot do
We cannot keep dipping into fund balance. That's a fact, Jack.
The board /district is correct when they warn that doing so represents a temporary (1-year) solution. We WILL continue to need to need short-term borrowing, and any further hits to fund balance WILL affect the interest rate we can obtain. More importantly, fund balance is not a bottomless source of funds.
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