As part of the state's funding reduction for all schools, Warsaw Community Schools will see a shortfall of almost $2 million in 2010.
During the Warsaw School Board meeting Monday night, Chief Financial Officer Kevin Scott gave a financial overview of the corporation's finances and how the state funding reduction will affect WCS.
In 2009, the state took over schools' general funds. WCS's 2009 actual general fund, Scott said, was $40,394,388. The expected 2010 general fund, based on the state spending formula, was $41,233,581. Recently, Scott said, the school corporation was notified its 2010 general fund was reduced to $39,352,433. The 4.5 percent shortfall is a cut of $1,881,148 for WCS, he said.
The advertised 2009 budget total was $69,382,666. The proposed 2010 budget in September was $69,064,426. The total budget includes general, transportation, bus replacement, capital projects, debt service, pension debt, preschool and rainy day funds. Beginning this year, the preschool fund will be rolled into the general fund.
Scott said the annual state budget is about $14 billion. The state budget is from July 2009 to June 2011. Though the state has a cash balance of $1 billion, it wants to retain a minimum cash balance of $700 million to make sure the state makes all its payments.
However, the state's revenue experienced a shortfall from its May 2009 forecast. It was $300 million short from July to October, and another $150 million short in November. State colleges experienced a budget reduction after the November shortfall.
Previously, the state had preserved a cash balance with stimulus funding, but that will go away, Scott said.
Another factor for WCS is the elementary school building project.
In 2004, the school board closed Atwood, Silver Lake and Claypool elementary schools. Students were then assigned to attend one of the seven remaining opened schools, leading to overcrowding in the schools. In 2007, the new school board voted to open and renovate Claypool, renovate Jefferson and build new Madison and Leesburg schools. All four renovated and new schools are expected to be opened for the 2010-11 school year.
Scott said when WCS held its public hearing for the school projects funding, the school corporation had to share what it would cost to have the facilities, including maintenance and personnel. At that time, Indiana schools were still collecting property taxes. The state also allowed schools to make facility appeals for building projects to recoup costs for things like custodians, utilities, operational supplies and insurance. During the last General Assembly session, Scott said, they eliminated the facility appeal.
"We got revenue cut we expected to get in 2007," said Scott.
Looking at 2010 and beyond, in the cash balance, the end-of-year general fund was about $4.5 million, with the end-of-year rainy day fund at $2.4 million. If the two funds are looked at as one pot, Scott said, there was $6.9 million in cash balance.
The general fund for 2010 is short $2.2 million, Scott said. Included in that is having Claypool open for a few months this year, Scott said. In 2011, that shortfall will potentially grow to $3.6 million.
Scott said he recommends WCS keep a minimum cash balance of 5 to 6 percent, or roughly $2.5 million. While he'd rather have 8 percent, he said WCS can't have lower than $2.5 million to make sure WCS makes its payments.
Scott provided a list of actions or events that could help WCS with its budget. Economic improvement was at the top of the list, but "sales tax in Indiana is not happening," Scott said.
If WCS sees an enrollment growth, that would benefit the corporation. As soon as WCS started the building project, however, he said the growth flattened out and that is partly due to the economy. Luckily, he said, WCS is not losing students.
Other actions that could help include spending down the cash balance to allow time for initiatives to deliver savings, the cost-savings initiatives and if the state changes rules on spending.
Schools are seeing a lot of cost-savings initiatives from many different places, Scott said. To help save money, the Department of Education recommends a hiring and salary freeze, retirement buyout potential, a review of health insurance plan costs, review of supply budgets. review of in-state and out-of-state travel, sale of unused buildings and review of overtime and work week of non-instructional staff.
"I wanted to point out Warsaw Schools is very cost conservative," Scott said.
For the budget order for 2010, Scott said the tax rate declined from $0.9161 in 2009 to $0.8484 in 2010, which is about $1.5 million on the assessed valuation of $2,168,190,567.
Out of 342 public and private schools in Indiana, the Indiana DOE ranks WCS 314 for general fund expenditure per average daily membership (student count) for the 2008-09 school year.
"We're not spending dollars willy nilly," said Scott.
Warsaw Community High School also recently was lauded by the Indiana Chamber of Commerce for being a Best Buy school for the 2008-09 school year, Scott said. The award is given to schools offering the highest educational achievement levels for the lowest amount of tax dollars.
In conclusion, Scott said 2009 was a positive year for WCS. This year and 2011 will present some difficult challenges, including new and larger buildings, staffing, no facilities appeal and significantly reduced state funding.
"We're going to have some challenging discussions in the future," Scott said.
Dr. Kent Adams, school board member, said, "We're all very much aware of what's transpiring here in the country and Indiana." He said Kosciusko County schools are not immune and WCS will be affected.
"We're all in this together," Adams said.
Superintendent Dr. Craig Hintz said he doesn't believe WCS is in the situation many school corporations are. WCS is in excellent financial situation, he said, but they need to plan for the future. He said they must monitor what's happening at the state and how that will affect funding. WCS will do what's best to keep reductions as far away from the classrooms as possible, he said.
