May 10, 2021
Published: May 10, 2021
April and May are two of the busiest months of the year for central office personnel. For me, it includes keeping up with the hiring season, monitoring the status of the current year budget, working with building administrators and directors on improvement plans for next year, and developing the preliminary budget that will start in July. There is much work and planning that goes into building a budget.
The first step in putting together next year’s budget is determining where we are relative to the present budget. By examining the present budget, we are able to make some projections and determine if we are going to meet the year end cash balances we expected when we set the budget last summer. In addition, when we are this far into the budget year, it is relatively simple to make a final review of the budget to determine 1) did we significantly miss any budget lines and 2) are there any surprises, or items that need to be reclassified to the proper account?
Once any adjustments to the prior year are made, we can begin on the current year. The first thing we have to know is the amount of revenue we expect to receive. In other words, how big is the pie we are getting ready to divide? St. James R-I School District’s operating budget consists of three major revenue sources; local taxes (43%), state foundation formula (45%), and federal sources (12%). Therefore, it is critical to make a fairly accurate estimate of these three amounts. Key pieces to these calculations are the state budget, the legislative session, the state economy and our enrollment. In all, we will receive somewhere around $22M+ of operating revenues.
After determining this amount, it is time to look at the expenses. Since personnel costs are by far the largest part of the operating budget ($14M), we start here. Wages and benefits account for approximately 70% of our operating expenditures. Personnel costs are comprised of three major components; wages (76%), retirement (11%) and health insurance benefits (13%). Models are built to determine how much can be given in raises. Adjustments to schedules can be made periodically in an attempt to even out the percentage raise given to both ends of the experience scale. We have been fortunate the past few years not having to raise the retirement percentage. It has remained at 14.5% for certified staff (hold a professional teaching certificate) and 6.86% for classified staff. Staff members also match this out of their wages. So, the reason the teacher retirement system is nice (and is well funded) is because 29% of wages are contributed annually.
Once wages are determined, we can move on to the remaining 30% of the expenditure budget. This is typically done in one of a variety of manners: using a schedule for items that are fixed and recurring, estimating, calculating percentages, growing the prior year budget by a percentage, meeting to determine needs for the coming year, etc. In all, the budget is never set in stone. Budgets have to remain a working document in education because so much of our estimates on the revenue side are not in our control.
One pleasant surprise for all districts across the country this past year is that Congress passed three stimulus bills that provided nearly $190.5 billion to the Elementary and Secondary Emergency Education Relief (ESSER) Fund. These funds will be distributed to each state who are required to then distribute at least 90% to local school districts. St. James R-I School District has already received $694,197 in ESSER funds. These funds have already been used to coordinate a long list of response efforts to navigate COVID-19. According to the numbers received from the Department of Elementary and Secondary Education (DESE), St. James R-I School District will receive $2,571,447 ESSER II funds. We anticipate these funds being available to local school districts within the next few weeks. There are several allowable uses for ESSER II funds according to DESE. One is for school facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards. Due to several existing issues at our elementary and non-renovated high school buildings, the strategic plan has been updated to include upgrades to improve the indoor air quality within these facilities, including ventilation and HVAC upgrades. Although we do not have exact numbers yet, St. James R-I is projected to receive an additional $5.5M through the ESSER III funds this upcoming Fall. Student learning acceleration, training for teachers, and other facility upgrades are part of the tentative plan for these funds. All ESSER funds are supplemental monies to help school districts deal with the many hardships associated with running a school during a pandemic. These funds are to remain separate from our regular school year budgets due to the fact these are non-recurring funds. There is much more to school budgeting than can fit in one article. Hopefully, this quick synopsis has given the reader a little insight into the school budget process.
All of this important work is done so we are able to provide the very best educational opportunities for our students. The next couple weeks will be busy with banquets, district sports, baccalaureate services, and graduations. I am so excited that our students will be able to finish this school year as normal as possible. Our senior class will be able to have a traditional ending to their senior year which will include an in-person graduation on our football field on Friday, May 21 at 7pm. This is a resilient group of 132 outstanding young people who are moving on to their next exciting journeys in college, trade schools, the military, or careers. Congratulations to all of the St. James R-I graduates!