Revenue is higher than expected, but an operating deficit projected
The Osseo Area School Board unanimously approved the district’s 2018 budget at its June 13 meeting.
Expenditures for the district in 2018 are projected at $296 million, with total revenues projected at $289.5 million, and an estimated fund balance of $68.8 million.
Due to a 2 percent increase in the General Education Funding Formula from the state Legislature in the 2017 legislative session, the district is projecting higher revenues than previously anticipated. Enrollment is also projected to increase. The district did not increase projected expenditures due to the increase in revenues.
The district is anticipating an operating deficit of $4.3 million for fiscal year 2018. The proposed fund balance is $2.9 million higher than the district originally planned for.
General fund expenditures, which account for the majority of district spending, are projected to be $234 million, a 2.58 percent increase over fiscal year 2017. This is lower than the district’s trend of 3.75 percent increases in previous years, as well as the district’s tactic of limiting increases to 3.25 percent. Revenues for the general fund is projected at $229.8 million, a 2.81 percent increase over fiscal year 2017. An estimated fund balance of $55.5 million is projected for the general fund in 2018.
Revenues for the food and nutrition services fund are project to increase 4.32 percent for fiscal year 2018. The fund balance for the food and nutrition services fund is expected to decrease by approximately $108,000 compared to fiscal year 2017.
The community service fund is also projecting a decrease in fund balance of approximately $396,000.
A planned deficit of approximately $790,000 is projected for the capital land proceeds fund.
Debt service fund expenditures increase 10.66 percent in the adopted budget, due to annual payments of principal and interest pertaining to debt service requirements. Specifically, the 2016A General Obligation Facilities Maintenance Bond requires an additional $1.9 million payment in fiscal year 2018. The balance for this fund is projected to be $1.3 million at the end of the fiscal year, as opposed to $2.8 million projected for the end of fiscal year 2017.
“We are spending down reserves that have been built up purposely,” Boardmember Mike Ostaffe said. “It’s not necessarily recklessly, there was a thought process to that. We are going to pay very close attention, at least I certainly am, over the next year, and the next several year budgets to ensure that we are looking at everything that needs to be done to maintain that balance as high as we can, and not rely on gimmicks, or the Legislature at the last minute coming through.”
The district is not assuming a funding influx from the state, Boardmember Robert Gerhart said.
“The other thing to keep in mind too is … when you look out multiple years in the future, we’re not necessarily assuming influxes of cash from the state,” he said. “So, often once you get a year or two or three years out, the picture looks worse than it will actually be, because, like it or not, the state usually doesn’t let us know what they’re going to do until the last minute. We [assume no state funding], and get pleasantly surprised when they come around and offer something.”