School board considers spending some savings
The board held a study session Monday night, where they looked at the fund balance, sometimes referred to as a reserve fund.
Several board members seemed willing to use part of the fund balance to avoid laying off staff or cutting programs, and it appears there might be money to spare.
The fund was at $26.7 million on June 30. The board spent $1 million of it last fall to lower the property-tax increase, leaving $25.7 million.
The district has aimed to maintain a fund balance equal to two to three months of operating expenses, which would be $16 million to $23.9 million, said Doug Bunton, director of business services.
The midpoint between those two numbers is $19.95 million.
The suggestion seemed to be that the fund balance could take a hit of several million dollars and still maintain two to three months of operating expenses.
Board member Tim Cullen said he would not want to use the fund balance to pay an expense that recurs every year—such as a salary or utility bill.
Bunton has preached that same philosophy to the board many times. The reason is that fund-balance money can be used only once, and then it's gone, while an annual expense needs to be funded year after year.
But Cullen said the board could look at one-time expenses, or expenses that don't recur often. He mentioned two items that apparently are being planned for 2008-09, the re-crowning of the Monterey Stadium field and a fence for Lincoln School.
Use the fund balance for items such as that, and that would free up money to maintain people or programs, Cullen said.
Superintendent Tom Evert last year estimated that the board would need to find about $2 million in cuts in order to balance the 2008-09 budget. Bunton on Monday would not say whether that's the right figure.
Bunton said he and his staff are working on a budget projection that will give a more precise estimate, and he plans to have that number ready for the board when it meets on Tuesday, Feb. 12.
Bunton said, however, he doubted that the board could find $2 million worth of one-time expenses in the 2008-09 operating expenses.
Bunton also warned the board that the district's budget woes won't end with next year's budget.
Estimates show the district's enrollment dropping every year through 2011-12 before it starts to creep back up.
Losses in enrollment mean losses in revenue under the state's school-funding formula.
What they say
Janesville School Board members commented on the possible use of the fund balance to stave off budget cuts in 2008-09:
Kevin Murray—He said he was frustrated, that after being told he had to make budget cuts in the past few years, now he is being told there is a "pot of money" that could have helped avoid cuts.
"If we've got some money, ... why aren't we using it to take care of the best resources that we have—the people who work here?" Murray said.?
Debra Kolste—She recalled that one of the main purposes of the fund balance is to tide the district over when cash flow is low. Not too many years ago, the district had to regularly borrow money in order to bridge a gap in cash flow. Now, the fund balance makes cash-flow borrowing unnecessary.
Amy Rashkin—She counseled caution in paying off expenses that come up periodically. Such spending is now on a schedule so it doesn't all come due at the same time.
The district might replace some textbooks one year, for example, and replace old computers the next year. Using the fund balance for such items might lead to one big bill in later years.
DuWayne Severson—He'd be willing to look at uses for the fund balance as long as the district was careful and doesn't overdo it.
"Sure, it looks good one time, but it doesn't help us out for the long term," Severson said.
Bill Sodemann—He said he'd be interested in using the money to buy a building in order to stop spending money for buildings the district now leases.
Lori Stottler—She also rang the warning bell, saying that the $25.7 million fund balance is not all just sitting there in an account. Some of it is reserved for specific purposes and couldn't be used for just anything.