PHILADELPHIA — At the Indian River’s Board of Education meeting Thursday evening, fund balance and next year’s 2021-22 budget were topics of conversation as the district plans for a still uncertain future amid the ongoing COVID-19 pandemic.
Audrey Stevenson, business manager for the district, spoke to the board about the district wanting to maintain a fund balance that is at least three months of expenditures. Over the past two years, the district’s highest monthly expenditure was $10.9 million, with the average closer to $7 million.
“We target to have a minimum fund balance of $21 million, but a conservative fund balance to put us in the best place possible would be to have a fund balance right around $32 million,” she said. “In addition, we want to make sure that we can always sustain our payments through the summer months when we have no revenues, as well as any one-time emergencies, making sure we have enough in our fund so that if there are any one-time emergencies, we have the ability to use fund balance. Obviously, there’s a lot of uncertainty right now in regards to our state funding, but there’s also some uncertainty in regards to our federal funding.”
Ms. Stevenson noted the district has been consistently maintaining or growing its fund balance over the past 10 to 15 years. Because of COVID, at the end of last year, it made a conscious choice to be very careful in how it spent, getting the district’s spendable fund balance to $31.5 million.
With a conservative fund balance being $32 million, Ms. Stevenson said the district is, in her opinion, going into this coming year in “the best possible place we could be at.”
In an analysis she presented, Ms. Stevenson shared some assumptions she had made and how the district might be affected by them. First, she assumed that there would be a $1 million decrease in total appropriations from this current year to next year. That was just a guess, because some sort of a baseline was needed, so she chose $1 million. She also assumed that the district would fully spend what it appropriates this year and next year.
She noted if the district is not increasing its fund balance in the way that it has in the past, it’s not going to be able to use it in the way that it has in the past.
“And if we do have to use it in the way that we’ve done, we’ll be spending it down in a way that will be concerning and take some of that lovely cushion that I was talking about away,” Ms. Stevenson said.
Another assumption she made was that the district is going to be able to find reductions within this budget cycle for next year that will cover the $1.5 million increase in personnel due to contractual obligations.
“We need to continue to be vigilant on 2021 spending until our State Aid expectations are set — if they do come out and they decide that we are going to have a 20 percent cut, we as a district will be really glad that we held off on some of those expenditures at the beginning of the year because that will mean less stress, the board has to take less drastic measures to try and match that deficit in revenue,” Ms. Stevenson said. “We also need to aggressively consider all items for our 21-22 budget cycle. With the uncertain funding, I think that the more conservative we can be in this budget cycle the better.”
Ms. Stevenson noted while taxes or increased taxes are an option, it’s important for everybody to remember that the district’s tax levy makes up about 2.8% of the revenues of the district, a very small percentage of the district’s revenues.
In light of this, Ms. Stevenson stressed two words before the board: caution and restraint; two words she said they will be hearing from her often over the next few months. As for how the pandemic will end up affected the district’s funding, there is no clear answer at this point.
“I just want to make one plea to the board, and the plea is actually to going to be to the whole Indian River community: As we start bringing items for the new budget up, I’m asking that as people come up with proposed additions to the budget, they’re looking at suggestions for corresponding reductions in other areas,” Ms. Stevenson said. “We know we can’t increase the budget, so if something does need to be added, I need people thinking about what can we possibly reduce, to be able to make that new service or that new item possible.”