Friday, January 23, 2009

Financial Clarification

Several months ago, our Treasurer held a mini-seminar on our school district finances. As she spoke to those gathered to listen (Board members and a few members of the community), she displayed on a large screen financial spreadsheets and the updated 5-year forecast which included the newly passed teachers' contract amounts as well as the passage of the levy at a reduced rate.

Those residents who attended that evening appeared to pay close attention to what was said and shown, taking notes and asking some questions. It occurred to me that they might wonder how that presentation correlates to the recent Blade article which talked about our district finances.

The article was a positive piece on the fact that we made the last payment on our operating debt in December. This debt was the result of energy bonds and income tax anticipation notes (translation: $1.6 million loan). Paying off debt is always a good thing.

The article began by reminding readers that five years ago, our district faced a $1.1 million deficit that remained after eliminating bus service and some mid-term personnel cuts. Mention was made of the emergency levy that was passed and the income tax levy that also passed (although the article did not mention how squeaky close that vote was, even on the fourth try).

Don't miss this part: the district was in the red $1.1 million dollars AFTER cutting busing and staff. It doesn't take a genius to figure out that the district had been over-spending for quite a while to get into such a fix.

If you read through the article carefully, and also read between-the-lines, you will note that those two levies that passed back then built up a surplus of $6 million by 2008. According to my Funk & Wagnall's, a "surplus" is "the amount that remains when need is satisfied." In other words, those levies collected from our resident taxpayers $6 million MORE than was needed to restore busing and and other items.

Doing the math shows how badly we overpaid in taxes in this district over the past five years. Makes my head hurt.

Now, to be fair, the excess was a bit more than the levies were expected to collect. So it was somewhat of a surprise to both sides of the table just how much that surplus turned out to be.

It was this surplus that allowed the current Board to reduce the income tax levy percentage on the ballot last November. It was also this surplus that prompted the teachers' union to demand such a high wage increase for the next two years.

The article ends by observing that state educational funding is our biggest threat. That might be. I would guess that the ever-increasing levels of unemployment (which affects tax collection) along with the continuous increases in energy and other costs are also significant factors.

Anyway . . .

At the financial presentation by our Treasurer last fall, all in attendance were shown that this district - with minimal increases in spending - will face a $4 million deficit in the year 2013.

You read that right: $4 MILLION in the hole by 2013.

During her financial presentation, the Treasurer stated, "So as you can see, because of this (situation), I will be instructing the Board to cut $2 million in expenses in 2011, and I will be instructing them to cut another $2 million in 2012, just so we can stay afloat in 2013".

If that doesn't scare the stuffin' out of you, you must be planning to move out of our district in the next couple of years.

While the retirement of our debt this past December is a very good thing, that doesn't mean all is rosy in Swantopia. There is still a lot of very hard work to be done - by all of us.

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