Your District May Be Headed for an Iceberg Don’t Ignore the Warnings

The Story of the Titanic Image from griid.org

Susan Barkley, Assistant Director Kentucky Department of Education Division of District Support Presenter

173 districts 54 are independents No charter schools Largest = 94,000 students Smallest = 109 students 2/3 have less than 3000 students Kentucky School Districts

Photo from accuweather.com

 Fund Balance  Revenues compared to expenditures  Enrollment and attendance  Staffing levels  Tax rates  Bonding capacity  Using “Band Aids”  Lack of information The Warning Signs

Our Icebergs DEFICIT BUDGET CRISIS INSOLVENCY NO BONDING CAPACITY Photo from cbc.ca

 Data already collected  Annual Financial Report and Balance Sheet data  Enrollment/attendance data  Staffing data COMPILE, COMBINE, COMPARE! Using Financial Data

 General Fund: Committed, Assigned, and Unassigned  Funds over which the Board has control  Amounts remaining after considering current obligations  Includes board-designated funds, outstanding purchase orders  Trend data is important Fund Balance

Gee, that doesn’t look so bad…

…until you look at compared to the three previous years! Without action, you’ll hit the iceberg in

Revenues and Expenditures  Is the district spending more than is received during the year?  Include transfers  Watch other funds! (food service, day care, construction)  OVERSPENDING = REDUCTION IN FUND BALANCE

Fund balance is decreasing & becomes deficit Overspending results in a hit to fund balance

 Legislative funding is directly related to attendance  Attendance = Funding  What is the trend? Enrollment/Attendance

ADM is decreasing Staffing remained the same, despite a consolidation Consolidation

 Certified and Classified  Salaries and benefits are 85% of general fund expenditures (state average)  Legislative funding is directly related to attendance  Staffing level should be responsive to attendance level  Or other expenditures must be reduced Staffing Levels Salaries & Benefits Everything Else!

To stay out of trouble, action must be taken

Tax Rates/Assessments  Tax Rate  The rate for this year impacts EVERY future year

Compensating rate produces same level of revenue as PY This doesn’t seem like much for a single year, but…

 Total principal and interest payments on bonds and leases (including KISTA)  Compare debt to fund balance  High debt ratio indicates financial weakness Bonding Capacity

 Redirecting funds  Capital Funds Request  Beware of soft money  ARRA and other short-lived grants  Pork barrel appropriations  When $ runs out, cuts must be made if no other funding source “Band Aids”

 Look for ways to increase revenues  Tax rates  Additional grants  Look for ways to decrease expenditures  Efficiencies  Cut unnecessary spending  Are staffing levels appropriate for the enrollment? Changing Course

Immediate action is necessary BUT Results take time State recommendations On-site visit State takeover Changing Course

Your Good Questions