Budget 101

There is an old African adage that says, “When the pond starts drying up, the animals begin looking differently at each other”. That adage applies to school budgets as well. The other saying that applies to school district’s is, “In absence of information, people make stuff up.” This blog, then, has a dual purpose: 1) to acknowledge that when budget gets tight, people may take it personally and blame someone else for “hogging all the water”; and 2) it is best that people have information so they can respond to both fact and fiction.

Here is some budget 101.

  1. The BPS has a budget of approximately 161 million, 83 percent of which goes to staff. Sometimes people are surprised by that percentage. They say, “83 percent of your budget is people!” However, in any service business (think school, hospital, or government) 83 percent is not atypical.
  2. The BPS projected an ending fund balance in the neighborhood of six percent. As a superintendent, I have always known by rule of thumb a good place to end the year is with a balance of ten to twelve percent. Six percent is on the low end, fifteen percent is, most years, higher than the BPS needs. Other school districts’ ending fund balance will differ from ours. Their fund balances makes sense for their context. In North Dakota, the context of a Class B school may be very, very different from a Class A school.
  3. The BPS student body is growing at about 2.3 percent a year or an average of 350 students. Growth is a good thing, at least when compared to the other choice of decline. Note that state aid for last year (2015-16) is being received this year, in 2016-17. In other words, expenses for educating students are incurred the year before the reimbursement in state aid is received. This is one reason we need an ending fund balance as costs to educate more kids are high. (As a side bar, if you look askance at the legislature for this pattern of aid, you are that animal at the pond. The legislature, I believe, instituted the current pattern of aid for good reason: at one time, most North Dakota schools faced declining enrollment. Not so long ago, North Dakota was the oldest state in the union, in terms of citizens’ age. Today, North Dakota may be the youngest state in the union. Whether the legislature should go back to funding in “real time” is a good question. Another good question is could the state could afford it, now. I suspect it could not, this session). However, a decade or more of reimbursement trailing a year after expenses at a time where each new school year brings hundreds of new students and thus, new huge expenses can and will erode ending fund balance unless cost containment / budget cuts outpace enhancements and inflation – difficult at best while maintaining quality education.
  4. Salaries of staff who provide services in new space (teachers in additions, teachers and support staff in new schools / additions) are a general fund expense and do impact the general fund. See #1, above, for the impact of such costs.
  5. The BPS has added teachers, support staff, professional support staff, and administrators in response to increased student numbers. People generally understand the need for additional employees of their category. Building understanding for additions to other categories may be harder to grapple with. Yet every person not at teacher, including myself serves in a support role to the classroom and acts as a liaison to families and the larger community. Teachers and students should see more administrators in classrooms, problem solving issues, and advancing the mission. Extra-curricular coaches and advisers should have more “go to” immediate help than before. Still it is hard to keep pace when there are so many needs, so many more students and families to serve, and limited dollars. We can only spend a dollar once and then that dollar is gone for good.
  6. Health insurance increased seven percent. Under the Affordable Care Act, more BPS employees qualify for health insurance benefits. This impact of both the increased rate and increased number of employees participating is projected to cost BPS four million dollars this year. That being said, the BPS health insurance increase is significantly lower than increases other school districts are facing.
  7. Growth in student numbers certainly provides challenges in terms of space. For secondary schools, HMS and SMS are over capacity and WMS will be shortly. CHS will not be big enough for the incoming enrollment. BHS and CHS are gorgeous high schools and yet need improvements to the physical plant. The BPS continues to be short on space in particular areas of the school district: for elementary schools, on the NE, the NW, the SW, and SE.
  8. The closing of Saxvik Elementary can be a “confounder” for some and a clash point for others. The Saxvik Building with its dirt crawl space on its very tight lot would need millions of dollars invested in it for adequacy reasons. That investment would have been wise for a building on a larger campus, with a better physical foundation, in a growing neighborhood. Students from Saxvik were routed to neighborhood schools, and nearly a million dollars in annual efficiencies resulted. Still, I recognize it is painful to say goodbye to a school that served so many;
  9. Construction of new schools does not impact the general fund positively or negatively. The BPS community has built three new schools, provided additions to several more, and made improvements to many “core city” schools (think office remodel, added air conditioning, safety improvements to the building access, science rooms, improved school kitchens, etc). Voter approved bonds pay construction costs for new schools and the building fund (not part of the general fund) pays for additions and improvements such as those at Highland Acres, Grimsrud, Prairie Rose, Moses, Murphy, and others. Controllable budget (or dollars line-itemed in our budgets) pay for remodels to classrooms such as science rooms and for new roofs and better heating and cooling. A state grant as well as controllable budget was used for safety improvements. The enhancement process was used to provide furniture, fixtures, and equipment in Legacy High School. These dollars impacted the general fund.
  10. In determining to build new or add on, the BPS has been guided by broad-based community tasks forces and the work is done via public Board meetings which invite and encourage public input.
  11. As we continue to grow, new space (new buildings, additions, or equity work) will likely require a bond. We have been studying how to get this work done without adding an additional tax burden much beyond what all taxpayers carry today.

My hope is these info bites will provide you with facts so people do not have to make stuff up. And as North Dakota experiences a bit of a drying pond, having facts can help reduce your stress as we all adjust to a new business climate.

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