The Rockford School Board is reviewing year-end financial results from FY14, which ran July 1, 2013 to June 30, 2014. For the first time in three years, the district is facing a deficit. The deficit is $8.8M, less than a 3 percent variance from the adopted budget. It will not result in program cuts or reprimands from the state, which is important to note for RPS 205 staff, parents and taxpayers. The deficit is also unrelated to the district’s capital/facilities plan. The School Board heard the results at its meeting tonight. The School Board approved a balanced budget in June, and district leaders are committed to ending the year in the black. They’re also focusing on improved budget management at the administrative level.
“We’re not happy with these results,” said Superintendent Ehren Jarrett. “A measure of my success as superintendent is operating within a balanced budget. We have corrected our shortcomings for the current budget cycle, and we are committed to a balanced budget in FY15.”
Administrators initially forecasted a $3.2M surplus, but ended with an $8.8M deficit. Here’s a breakdown of what led to the budget variance and deficit:
Salary forecasts were off by 1%, or $1.7M, because 52 hourly FTEs (full-time equivalent staff) were omitted from the salary projection. The report was corrected before FY15 budget development. Additionally, negotiations were underway at the time the FY14 budget was approved, and the approved increase with AFSCME units exceeded the original budget placeholder for FY14. Salary forecasts have been adjusted for FY15:
FY14 Salary Budget $172M
FY15 Salary Budget $184M
An additional $3.7M was spent on supplies and equipment. The district was on target in its revenue forecast before the new auditors (hired this year) required an adjustment. This will be a $3.7M benefit in FY15.
Residential tuition for special needs students exceeded our budget by $1.6M, in spite of additional appropriations over the FY13 budget. For FY15, the district has allocated additional tuition funding. FY14 Residential Tuition Budget $5.7M FY15 Residential Tuition Budget $6.4M
A $100M bond sell in spring 2013 resulted in an additional $2.6M expenditure. Because of the timing of the first interest payment, the adopted budget did not include an appropriation for the first interest payment, though ample reserves existed in the Debt Service fund to make the payment.
The auditors also recommended that RPS 205 be less conservative in fully capturing forecasted cost in unemployment and workers compensation liability. That yielded a reduction to total expenditures of $800,000.
As noted above, revenue and expenditure forecasts have already been adjusted for FY15, which ends June 30, 2015. The School Board approved a balanced budget in June, and district leaders are committed to ending the year in the black.
Since FY07, RPS has run a surplus every year but one. In FY10, the state cut back on its payment schedule to districts statewide, and RPS was shorted $11M.
|Fiscal Year ||Surplus/(Deficit)||Note|
|2010||($3.5M)||State revenue came in behind budget|
|2011||$22.5M||Includes $10.4M in Health/Life Safety bond proceeds|
|2012||$23.2M||State revenue came in ahead of budget|
|2013||$11.7||One extra categorical aid payment came in from the state|
|2014 forecast||$3.2M||Better CPPRT and General State Aid led to projected surplus|
|2014 actual||($8.8M)||See above|
The district’s unaudited reserve balance remains at approximately $105.2M for all operating funds – above the School Board’s designated 25 percent. RPS is still in an enviable fiscal position considering the School Board’s move to provide tax relief and seed a Capital Fund with $50 million of existing surplus reserves. The $50 million Capital Fund is separate from the $105.2 million in operating reserves. The reserve position remains at 3% points above the School Board policy on reserves.