Budget deficit down slightly
Final budget gap at $6.7 million with vote scheduled for June 20
LANSDALE >> The news has gotten slightly better for the North Penn School Board, as they approach a final vote next week on adopting a budget for 2019-20.
“We will be recommending approval of the final budget next Thursday, June 20. We did have the proposed final budget passed at the May action meeting, and we have made a couple of changes,” said Director of Business Administration Steve Skrocki.
In May the school board voted to adopt a preliminary 2019-20 budget with a 2.3 percent tax increase, with spending of roughly $274 million, and with a deficit that began in early drafts at roughly $14 million at the start of the year. That deficit was narrowed down over the course of the year by way of refining anticipated budget variances, transfers from reserves, and other expenses such as health care cost projections and retirement costs coming in better than expected.
Skrocki told the school board, acting in their capacity as the board’s finance committee Monday night, that the most recent calculations have produced a slightly better bottom line.
“We have made some minor adjustments to our revenues, and our revenues increased by $134,194. The majority of that was to increase our projected earned income tax for next year,”
“With the way collections are actually continuing to increase for this fiscal year, we felt comfortable in bumping that number up for next year,” he said.
Through the end of May 2019, earned income tax revenue is up by 4.3 percent for the current year over the prior one, a figure Skrocki said was “pretty darn good” and led to the increase in next year’s baseline figure.
The other late adjustment to the draft budget was a drop in anticipated expenses by roughly $97,000, meaning a total net positive change of $231,449 from the last revision. Incorporating those latest revisions now bring the budget’s total expenses to $273,977,289, according to Skrocki, resulting in a final draft deficit of $6,726,415 which could be covered from the roughly $40 million in various district reserve funds.
“That’s with the 2.3 percent Act 1 (tax) increase baked into the budget,” he said.
Staff have also learned since last month that certain grant funds may not be available at predicted levels, according to Skrocki, but the loss of that funding will not impact the district’s bottom line.
“We’ll lower our revenues, but also lower our expenditures too: that is a
one for one match,” he said.
Staff have been working with a deadline of 4 p.m. on this coming Wednesday, June 12, of finalizing any last minute changes to the budget, before submitting to the state for the needed approvals, and Skrocki asked the board members and public to give any last input, ahead of a final vote to adopt the budget during the board’s action meeting scheduled for June 20.
“If anything else comes up between now and Wednesday that’s material, we’ll make that change. Otherwise, we’re looking at the $6.7 million budget deficit for next Thursday, with the 2.3 percent tax increase,” he said.
During his financial reports on the current year, Skrocki also told the board some last-minute good news on the 2018-19 budget that is about to end: a $2.5 million deficit anticipated at this time last year appears to have been made up.
“We are bringing in more revenue than budgeted. We are projecting a $2.5 million increase on the revenue side. On the expenses, we’re anticipating to under-spend, by about $1.1 million,” he said.
“That $1.1 million, keep in mind, whatever we under spend below the expenditure budget, that’s what can be considered for a capital reserve transfer at some point,” Skrocki said.
Each year the board’s practice has been to transfer any unexpected surplus funds into reserves, for use on small capital purchases like roof repairs
and equipment purchases. Skrocki told the board that the district’s audit of its 2018-19 budget will likely be done “some time in August,” and once the audit is complete staff will recommend a transfer of the surplus into reserves.
“It looks like we’ll be in position to at least recommend a transfer to the capital reserve fund of at least $1 million, and that’s really good, because we need that to be funded for the projects we have in the pipeline,” Skrocki said.
Committee member Jonathan Kassa thanked Skrocki and his business office staff for their efforts on the 2019-20 budget, particularly in narrowing the budget variance and planning for worst-case estimates early.
“I’m very appreciative that you give us the worst case scenario, and it’s typical of your sound management, and the effectiveness and efficiency of the rest of the team and administration, that we’re able to see this type of swing,” Kassa said.
“Even though it’s only one percent” of a budget that’s over $260 million, Kassa said, “there was a projected deficit this year, and we still came out $900,00 up,” he said.
The North Penn School Board next meets at 7:30 p.m. on June 20 at the district Educational Services Center, 401 E. Hancock St.