During the April 20 Gasconade County R-2 Board of Education meeting, Superintendent Dr. Chuck Garner told directors that the district’s financial health is uncertain and they may need to borrow from their unrestricted fund balance.

Garner said the state education system is expecting several withholdings, but he doesn’t know yet what that amount will be.

“I received an email this afternoon from the commissioner of education (Dr. Margie Vandeven),” Garner said. “There were several withholdings that the governor announced this afternoon.”

A $7.1 million withholding from transportation — about a 7 percent decrease from what they were told to expect at the beginning of the school year —  is expected to affect the district the most. The second withholding was supposed to be part of a supplemental bill that was passed in 2018.

“The legislature passed a supplemental bill in the 2018-19 school year for $154 million to pay schools who underestimated their enrollment numbers — we are talking about 900,000 kids in Missouri and it could throw things one way or the other,” Garner said. “They fund the formula once they know what school districts should have gotten the prior year.”

Because of COVID-19 and lack of funds to support the supplemental bill, the $154 million is now being withheld.

“I have not gotten how much that would have meant for us yet,” Garner said. “We don’t project our enrollment because we are a declining school district. We use the second preceding year’s enrollment.”

Most districts will be paid based on their submitted estimates, but Garner said he uses the previous year’s enrollment numbers. The supplemental fund would have allowed the district to readjust their numbers once the year was over and submit the actual enrollment numbers. If the district overestimates, funds must be returned.

“What that would mean to us? We should get clarification in the next couple of days, but now we won’t get (funds) if we were supposed to,” Garner said. “I don’t budget for that because we don’t know if we are going to get it or not.”

While the Missouri State Board of Education didn’t think that the amount would be withheld from the 2019-20 fiscal year, it was supposed to be paid out to close out the 2018-19 fiscal year already.

“They could come back and withhold it out of the 2019-20 fiscal year,” Garner said. “We won’t know if they are going to do that all the way up until June 30.”

Between the supplemental withholding and the additional withholding from transportation, Garner told the board they may have to borrow from the unrestricted fund balance, currently holding at 25 percent, the district keeps for emergencies.

“This is the reason why the board has always tried to establish an unrestricted fund balance. In case withholdings from the state happen, we have reserves to continue to pay our bills — just like running a household out of a savings account,” Garner said. “If we deficit spend this year and next year when the economy turns around, you are going to want to replenish funds you spent out of the unrestricted fund balance, so if we are ever in this situation again, we can weather those storms.”

The superintendent usually creates the following fiscal year budget with numbers from the previous year. However, Garner said he doesn’t think that will work this year.

“The last time we had an economic downturn was in 2008 — where we were in a position where we were having withholdings from the state,” Garner said about tax rates and the district’s projected income. “We look at our assessed valuation. If 100 percent of taxes are collected, this is what we should receive — but we don’t receive 100 percent of that. We multiply that by a reduced collection rate.”

Garner said they usually use a 97 percent collection rate for budgeting purposes.

“Since we have never been through this, it is hard to project at this point what that tax rate would be to build budgets to approve at the end of June,” Garner said. “That (2008) rate is the most recent one we can look at to say ‘what was the collection rate then?’ We have not gotten any recommendation from the state department.”