2010-11 School District Budget
How
can the reserve fund be used to address revenue shortages?
Link to Presentation on Fund Balance
Planning (PDF)
POSTED: March 8, 2010
In an effort to cover the possible loss of millions in state
aid, district leaders across the state are having to make a
difficult choice between depleting their reserve funds to fill
this year's funding gap or taking a more conservative approach
that would allow them to maintain long-term financial stability.
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WHAT IS A
FUND BALANCE? |
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A fund balance is created when the school district has money
left over at the end of its fiscal year from either under
spending the budget or taking in additional revenue.
Total Fund
Balance is comprised of Reserve Funds, Unreserved and
appropriated and unreserved and un-appropriated. Reserve funds
are monies that can be put aside to pay for a specific known
future expense. Examples of reserve funds in the Port Jervis
School District include: workers compensation;
assessment challenges; unemployment claims; and ERS.
Part of the unreserved fund balance may be applied as revenues
to the district’s following year budget to lower the tax rate.
A portion may also be set aside to pay for emergencies
or other unforeseen occurrences. |
Given the state of the economy and the likelihood that state
budgetary problems will extend well beyond the 2010-11 fiscal
year, Port Jervis officials are favoring the conservative
approach.
If Governor David Paterson's proposed state budget stands,
educational funding statewide will be cut next year by $1
billion. State Comptroller Thomas DiNapoli has warned, the
following year could be even worse, due to the “funding cliff” facing
the state and schools, as federal stimulus aid expires under
current laws.
"We must take the long-term approach to ensure that we have
adequate funds to carry us through these difficult years,” said
Assistant Superintendent for Business Lorelei Case.
The preliminary 2010-11 budget presented to the Board of
Education March 4 calls for a transfer of $750,000 from the
district’s fund balance to close the state revenue gap and to
help reduce the tax levy.
As part of the budget presentation, Case provided a
detailed
analysis of how the annual application of reserve fund money
effects district finances. She warns against depleting the reserve funds to
lower taxes in a particular year. "This might appear to be a
quick fix, but as our community has seen in the past, in the
long-run it actually drives up school taxes," said Case,
noting that
poor fund balance planning contributed directly to two of the
district's largest tax
increases: a 42 percent increase in the late 1980s and the 26.88
percent increase in 2005-2006 school year.
She said, "Our plan to apply a conservative amount to the
budget, consistently year after year, would ensure stability and
help us avoid a significant increase in the next three years."
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Budget
Development Calendar
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School Board members lobby legislators for aid
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Preliminary 2010-11 Budget
(PDF - Presented 3/4/10)
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Link to Presentation on Fund Balance
Planning (PDF)
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