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 (40%), state foundation formula (49%), and federal sources (11%). 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 $20M+ 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 ($13M), 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. 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. This week will be busy with banquets, district sports, baccalaureate services, and graduations. I’m personally fortunate enough to have two daughters graduating this week, Reagan from kindergarten and Alyssa from high school. One is just beginning and the other is moving on to her next journey. It’s an exciting time to be a parent and district employee at St. James! Congratulations to all the St. James R-I graduates!