Gasconade R-2 closes out 2019-20 budget with higher fund balance

Deficit spending expected in 2020-21 due to state withholdings

By Roxie Murphy, Staff Writer
Posted 7/8/20

The Gasconade County R-2 School District closed out the 2019-20 budget June 30 with a 26.3 percent fund balance — up from 25.49 percent last year, while beginning the 2020-21 budget expecting …

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Gasconade R-2 closes out 2019-20 budget with higher fund balance

Deficit spending expected in 2020-21 due to state withholdings

Posted

The Gasconade County R-2 School District closed out the 2019-20 budget June 30 with a 26.3 percent fund balance — up from 25.49 percent last year, while beginning the 2020-21 budget expecting nearly $400,000 less funds than projected.

“This has been a very interesting budget time because of restrictions and withholds,” Superintendent Dr. Chuck Garner said. “You think you’ve got a handle on it and the very first part of June, we thought we were going along fine and DESE (Department of Elementary and Secondary Education) had a cash flow that went from 96.5 to 95.2 for another $87,000 withhold.”

Garner said based on that, the cost savings they have been able to put in place and restrictions from the state, they were still able to utilize the stimulus money from the federal government CARES Act. They were able to end the year with a fund balance of 26.3, up from last year’s 25.49 percent.

“That’s propped up, though, with that stimulus money,” Garner said. “Unless they come up with that stimulus money again, that was a one-time fund that was able to tide that.”

Garner said that is the end of the stimulus and the reason they need to make adjustments to the year-end 2019-20 budget.

“We need to make sure all of our transfers are up to the legal standard and where we are ending our unrestricted fund balance at 26.3 percent,” Garner said. “When we get into next year’s budget, you will see it is going down.”

The board agreed to approve the amended budget and transfer funds to balance the 2019-20 budget and passed it with a 7-0 vote. “The unfortunate news moving into fiscal year 2020-21 — if you saw the news today at three-o’clock — the governor announced withholds again for July, starting in the new fiscal year budget,” Garner said. “Starting out, he withholds $448 million in fiscal year expenditures and $132 million from K-12 public education.”

Garner had estimated in his own calculations for the budget that Gov. Mike Parson would withhold around $125 million from the new budget. He can only estimate what that number will look like for the school district. “We don’t know specifically because we don’t know the proration factor,” Garner said.

The district is allocated funds from the state based on the education foundation formula which is determined by an amount given per student or the student adequacy target (SAT). “To know specifically what amount the district would receive, we have to know the proration factor which depends on the exact number of students enrolled in schools in the state of Missouri. If there are more kids enrolled in the school, the pie is only so big so everyone gets a smaller piece. If there are fewer students, then the pie is divided equally and everyone gets a bigger piece. We project that enrollment is fairly steady.”

DESE lowered the SAT from $6,375 to $6,210 per student, which allocates $302,464 less to the district from the foundation formula only.

“That doesn’t take into account transportation reimbursement, Prop C tax receipts or local tax efforts,” Garner said. “We were projected to have a $6.4 million budget and now are projected to receive $6.1 million of what we were supposed to get this year.”

Since DESE’s cash flow was also affected, the district calculated the proration factor at one level and then lowered it again because they (the state) did not have enough money for disbursement in June. Garner stresses that these numbers are projections and could go up or down in the coming months.

“Lower transportation reimbursement due to the state economy and lower Prop C receipts and potentially lower local tax receipts would all lower the projected revenue,” Garner said. “When you put all of those numbers together, along with increases in expenses, we are projecting $855,664 in withholds, lowered receipts and increases in operation.”

However, the district was able to save $691,757 through cuts and savings, including the elimination of five-and-a-half positions, bringing the total deficit to $163,907.

“This will be the first unbalanced budget for the district since 2015,” Garner said.

The R-2 district has also asked the county to help them apply for $91,000 through the federal CARES Act. “The problem is these numbers are fluid,” Garner said. “We may get funds in July that change in August and September. This deficit may go up or down from month to month.”

The projected deficit would bring the district’s fund balance down from 26.3 percent to under 24 percent.

“This is the reason why we have the unrestricted fund balance — to be able to weather storms like this and the board has done a great job to weather that balance, to be fiscally responsible and to be solvent,” Garner said.

There are a few positives from recent legislation that should help the district combat the deficit caused by withholdings. “School districts that operate under ‘hold harmless’ (agreements) that couldn’t receive less funds — the governor is forcing those schools to bear the weight of some of the expected cuts,” Garner said. “The governor said ‘if the economy bounces back, we can backfill the funds.”

The second monetary positive is a hold on a funds transfer law due to the declaration of the state of emergency. “The governor has waived a statute that temporarily allows us to transfer money form our capital fund to the operations fund,” Garner said. “We normally can’t do that until we are financially stressed, which the district is not.”

The statute has been waived through Dec. 31, 2020, and allows schools to transfer funds from fund four to fund one — which is not currently offered.

“It doesn’t make sense for us to do that today,” he said. “We will look again in November and December to make the determination if we need to do that and how much to assist fund one. If things get better, we may not need to do that at all. If things get worse, it would allow us to potentially do that.”

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