The first economic indicator that contributed to the lower mill rate than previously projected was an increase in the school district equalized property values by about 0.9%. In reality, the values increased by more than double that, 1.97%, but the #$%^& TIF property value has to be backed out of the funding formula because its deferred tax status. Isn't Evansville reaping all kinds of rewards from awarding that TIF to the not-soybean crushing plant, Mayor Decker?
The second surprise to hit the district was an unexpected increase in state aid despite under-spending the budget by nearly some 345 thousand dollars last year. This was courtesy of our governor who wanted to give property tax relief in the form of increased state aid while maintaining the revenue cap, which would result in lower local taxes.
Now the third element enters in. We are a declining enrollment district. Our total enrollment dropped to 1717 this year. This is the fifth straight year of enrollment decline since a high enrollment of 1831 was reached in 2008. This is a 6.2% decrease in enrollment in five years. Those 114 kids represent over a million dollars in revenue lost. With the new law enabling enrollment out of a district at any time, the state provides an increase in the revenue cap equivalent to the number of kids in the district for the September count but in another district for the January count. I'm not sure about the reasoning here, but for Evansville, it represented nine more kids' revenue added to the cap. To review:
Mill rate=(Total Local Tax Levy/Total Equalized property value)x1000
The Total Levy went down by just a skosh from the September estimate and the equalized property value increased. These two arithmetic changes both contribute to a lower mill rate. Yeah!
Now I'd like to explore the lack of accuracy associated with our district's estimate of expenditures, or what is lovingly referred to as a budget. The planning side of school finance is probably one of the most unnecessarily convoluted processes on the planet, but the following data is really of great concern to me because property taxes that support the school district (and every public entity, I suppose) are based on the budget, not the expenditures. Since the fiscal year ending in 2008, the school has created two budgets that predicted a surplus, one that predicted a balanced budget and three that predicted a deficit (see data in this document: http://www.ecsdnet.org/subsites/Doreen-Treuden/documents/2013-2014%20Budget%20Information/State%20of%20the%20Budget%201-30-2013%20FINAL.pdf). The only time an actual deficit was realized was in 2011-12, when the predicted $672K deficit ended up as a $157K deficit. As a result, a lot of surplus has been added to the fund 10 balance since then. The total amount placed into the Fund 10 Balance since 2008 is $1,095,588.93, or an average of about $183K a year. All the changes in economic indicators since September has produced a surplus budget for 2013-14. An additional $165,483.13 is projected as a surplus this year. The district track record for projected spending vs. actual errs on extremely conservative side. The average annual overestimate of budgeted vs. actual spending for the ECSD since 2008 is $296,102.99. They think they're going to spend an average of nearly $300K more than they really do. Does that mean the district will actually realize a surplus of $461,586.12? I think a case could be made that it's time for the district to scale back on the estimates. The case they make when confronted with any kind of criticism regarding this issue is that "the estimate is within 2% of the actual." Ok, that's a fair statement. However "within 2%" suggests that there will be a natural statistical variance around zero difference such that half the time they will be 2% high and half the time they will be 2% low. ECSD budgets have consistently resulted in a considerable addition to the fund balance because the annual estimate is consistently 1.7% high (out of six budgets, only one year showed the actual budget exceeded the planned budget and that year there was still a surplus, just lower than predicted). I think this is an indication that it's time for a change in the process of estimating expenses. Especially in light of all the cuts made in our curriculum in the last two years and the resultant loss of very good teachers who left because they weren't valued or saw the handwriting on the wall.
The district has that policy that states that the district will strive to have a 15% Fund 10 balance by 2020. I strongly support having a healthy Fund 10 balance. But the 2013-14 budget results in a surplus of $165K and a projected 14.6% Fund 10 balance. If the pattern holds for actual spending vs. planned spending, it's very likely the fund balance will go over 15% by next June 30. Okay folks, you have six more years to meet this fund balance goal. You don't have to get there right now. Hire some teachers. Buy some technology, implement safety measures, bring ECSD back to some semblance of an educational institution, not a public school on life support. Probably one of those STRATEGIC PLANS would be handy right about now...
Now I'd like to explore the lack of accuracy associated with our district's estimate of expenditures, or what is lovingly referred to as a budget. The planning side of school finance is probably one of the most unnecessarily convoluted processes on the planet, but the following data is really of great concern to me because property taxes that support the school district (and every public entity, I suppose) are based on the budget, not the expenditures. Since the fiscal year ending in 2008, the school has created two budgets that predicted a surplus, one that predicted a balanced budget and three that predicted a deficit (see data in this document: http://www.ecsdnet.org/subsites/Doreen-Treuden/documents/2013-2014%20Budget%20Information/State%20of%20the%20Budget%201-30-2013%20FINAL.pdf). The only time an actual deficit was realized was in 2011-12, when the predicted $672K deficit ended up as a $157K deficit. As a result, a lot of surplus has been added to the fund 10 balance since then. The total amount placed into the Fund 10 Balance since 2008 is $1,095,588.93, or an average of about $183K a year. All the changes in economic indicators since September has produced a surplus budget for 2013-14. An additional $165,483.13 is projected as a surplus this year. The district track record for projected spending vs. actual errs on extremely conservative side. The average annual overestimate of budgeted vs. actual spending for the ECSD since 2008 is $296,102.99. They think they're going to spend an average of nearly $300K more than they really do. Does that mean the district will actually realize a surplus of $461,586.12? I think a case could be made that it's time for the district to scale back on the estimates. The case they make when confronted with any kind of criticism regarding this issue is that "the estimate is within 2% of the actual." Ok, that's a fair statement. However "within 2%" suggests that there will be a natural statistical variance around zero difference such that half the time they will be 2% high and half the time they will be 2% low. ECSD budgets have consistently resulted in a considerable addition to the fund balance because the annual estimate is consistently 1.7% high (out of six budgets, only one year showed the actual budget exceeded the planned budget and that year there was still a surplus, just lower than predicted). I think this is an indication that it's time for a change in the process of estimating expenses. Especially in light of all the cuts made in our curriculum in the last two years and the resultant loss of very good teachers who left because they weren't valued or saw the handwriting on the wall.
The district has that policy that states that the district will strive to have a 15% Fund 10 balance by 2020. I strongly support having a healthy Fund 10 balance. But the 2013-14 budget results in a surplus of $165K and a projected 14.6% Fund 10 balance. If the pattern holds for actual spending vs. planned spending, it's very likely the fund balance will go over 15% by next June 30. Okay folks, you have six more years to meet this fund balance goal. You don't have to get there right now. Hire some teachers. Buy some technology, implement safety measures, bring ECSD back to some semblance of an educational institution, not a public school on life support. Probably one of those STRATEGIC PLANS would be handy right about now...
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