BFY17 Budget Revision 2016-12-5

2:15 p.m.

Background Information:

General Fund

This budget revision to the FY17 Budget includes updates that account for changes to state funding from both the revision of the governor’s veto and the 20-day count.  Information is also included explaining the increased use of fund balance and changes to expenditures.

Revenue Budget

As you are aware, Governor Walker vetoed items from the FY17 budget in an effort to preserve a portion of remaining State savings.  The $6.35 million intended to reduce the K-12 foundation funding was equivalent to a reduction of approximately $25 to the base student allocation (BSA).  Subsequently, the legislative finance office determined that the technical language in the bill was not sufficient to implement the intent of the veto.  In the meantime, the district reduced the original FY17 revenue budget, believing that the veto would remove that $444,812 from the foundation funding.  This revised budget includes reinstatement of that funding. 

The FY17 20-day count ended October 28, 2016 and the Average Daily Membership (ADM) information was submitted to the state on November 11, 2016.  The FY17 ADM, which determines the level of state funding for this year, was reported at 8,792.70 students, which was 11.70 students above the 8,781 students projected for FY17.  The count included 8,037.46 students in brick and mortar schools and 755.24 students enrolled in the Connections home school program.  This preliminary ADM will likely change because of the reconciliation process with other districts and the final ADM will be confirmed by the state in February or March. 

The total adjustment to the Foundation revenue is $1,387,445, which includes the $444,812 not vetoed, which brings the regular state aid to $81,289,428.  Additionally, with the change in student numbers, there is a change in the Quality Schools grant total of $2,543, bringing the Quality Schools total to $286,183.  The total increase in state aid of $1,389,988 brings the total revenue budget is $139,441,890.

The borough maximum allowable is currently $49,238,684, due to the change in student enrollment.  The FY17 borough contribution is currently budgeted at $48,238,432, so there is room for an additional contribution of $1,000,252 at this time.  A decision has not been made about whether or not to request the additional funding for FY17. 

At the November 22, 2016 Borough Assembly meeting, Ordinance 2016-19-16, Appropriating $1,000,000 from the School Fund, Fund Balance to the Kenai Peninsula Borough School District, was introduced.  The effect of this ordinance is to move a portion of the Facilities Maintenance fund balance of $2,288,499 from Restricted for Facilities Maintenance to Unassigned Fund Balance.  If enacted, this change would not affect our revenue as we have already accounted for the contribution in prior years.  It would simply be a reclassification of $1 M that already resides in fund balance. 

The original FY17 budget listed anticipated use of fund balance at $1,967,428.  With the changes to revenues listed above and expenditures explained below, there is a need for an additional use of fund balance in the amount of $274,200.  This will bring use of fund balance to $2,241,628 and total revenue and use of fund balance to $141,683,518.

Expenditure Budget

The district reviews actual employees hired in each position in order to adjust salary and benefit accounts from estimates made during the preliminary budgeting process.  In addition to those standard changes, this revision includes the adjustments for implementation of the Collective Bargaining Agreements and Memorandums of Understanding recently approved.  Including these changes allows us to move forward with budgeting for FY18.  The total amount of all salary and benefit changes is an increase of $1,297,228. 

Changes to the expenditure budget also include an increase in Charter Schools’ expenditure budgets of $198,045, which includes all expenditure changes due to the recalculation of state aid.  The final increase of $168,915 is due to additions for some additional contracted services and maintenance costs in FY17, such as background checks and computer software upgrades.  The total increase to the expenditure budget is $1,664,188, bringing FY17 anticipated total expenditures to $139,828,446.

There are 2 scheduled transfers from the general fund totaling $1,855,072.  The transfer of $655,072 to Student Transportation offsets the portion of K-12 funding that Governor Walker vetoed which survived review by legislative audit.  The other transfer currently scheduled is $1.2 M for Food Service.  There will be a review of both Student Transportation and Food Service later this year to determine if the transfers should be adjusted.  The total FY17 expenditure and transfer budget is $141,683,518.