AApproval of FY21 Preliminary Budget Revision 7 13 20

Background Information:

FY21 General Fund Budget

General Fund

The FY21 Revised preliminary budget is presented with final revenue information received from the State of Alaska and the Kenai Peninsula Borough.

Revenue

State of Alaska:

Revenue projections for the FY21 State of Alaska Foundation Funding were created using a flat Base Student Allocation (BSA) value of $5,930. The FY21 student enrollment projection of 8,573 was determined and presented in the Five-Year Enrollment Projection document.

State revenues include $77,652,172 for Foundation Funding, $285,929 for Quality Schools funding, and on-behalf payments of $10,626,356 for a total State funding of $88,564,457.

For FY20, we had an October twenty-day student count of 8,535.05. Through our normal process, we projected 8,681 students for FY20. On the last day of school, prior to shifting to remote learning, March 5, 2020, we had 8,398 students enrolled. Historically it is normal to have an enrollment decline at the end of a school year. We are concerned about the student enrollment for FY21 since we are facing so many unknowns at the Start Up of the school year. To put a face on this concern, if we were to lose 100 students from random schools across the District, we would lose approximately $843,246 in State Foundation Funding.

Kenai Peninsula Borough:

KPB support was originally budgeted for $52,776,473, which is the projected maximum allowable for FY21. Since the passage of the FY21 General Fund budget in April, KPB passed Ordinance 2020-19 that set funding at $50,000,000, which is $2,776,473 less than the maximum allowable previously budgeted.

The amount of KPB additional allowable funding is influenced by the amount of State Funding the District receives. If we incur a loss of enrollment as discussed previously, the amount of money the Borough can give us will be reduced as well. The additional allowable amount is determined by taking 23% of State Basic Need. If we were to lose $1 million in State Basic Need, the reduction in allowable KPB funding would be $230,000. This needs to be kept in mind in case of significant enrollment decreases. The decrease in funding was based on decreased revenue concerns related to Covid-19.

Miscellaneous Revenue:

Other budgeted revenues include e-rate, interest earnings, and miscellaneous for a total of $1,180,000.

Total General Fund Revenue available for FY21 is estimated to be $139,744,457.

Expenditures

The Expenditure budget was developed using the same staffing formula as FY20. Expenditure projections for salaries include step increases for current employees that include a 2% increase. Adjustments were made to healthcare based on the current number of employees that have coverage, opted out and recommendation for contribution rates by the District’s Health Care broker. Salaries and benefits comprise approximately 80% of total expenditures.

Adjustment to instructional and custodial budgets were made based on a formula that includes projected enrollment and building size. Utilities were budgeted using a three-year average.

The In-kind budgets were adjusted based on KPB Ordinance 2020-19, which is $314,308 over prior year allocations.

Additionally, there is a transfer to food service in the amount of $750,000.

The total of all expenditures and transfers for the FY21 Preliminary General Fund budget are estimated to be $145,535,841.

Use of Fund Balance

Revenue from all sources for the FY21 Revised Preliminary General Fund Budget totals $139,744,457 and expenditures and transfers total $145,535,841, it is necessary to use fund balance in the amount of $5,791,384.  

At the end of FY19, the unassigned fund balance was $3,929,885. We anticipate increasing the unassigned fund balance by approximately $1,750,000 at the end of FY20. The net result would be an anticipated usage of all unassigned fund balance.