Residents in the North Kansas City School District won’t see a tax increase this year, but district officials say keeping a balanced budget in the years to come may not be possible without local growth, spending cuts or an increase in operating revenues.
The North Kansas City School District’s Board of Education voted last week to approve a final budget for the 2013-2014 school year that will maintain the tax levy at $5.8898 per $100 of assessed valuation. The rate has remained the same since 2007.
“We’ve worked on this budget for months and again and again,” said Paul Harrell, the district’s chief financial officer. “Hopefully, it’s a strong operating plan for the current school year.”
The final budget approved last week comes after an announcement in June that the district would need to cut $4 million from its preliminary budget for the new school year due to lower assessed valuation figures.
Initially, in June, the district was anticipating a drop in assessed valuation of 3.25 percent — which created the $4 million shortfall. But when final assessed valuation figures were determined this month, the drop was actually 2.83 percent. Although this meant the district’s shortfall was about $600,000 less than expected, Harrell said the district still chose to cut the full $4 million from the 2013-2014 budget.
“We went ahead and stuck with the $4 million adjustment because a big part of our budget is based upon our state revenues and we already know that the governor is withholding $66 million until we know the outcome of House Bill 253,” Harrell said. “So, there are some big uncertainties with our state revenue at this point in time so therefore we’ve taken the more conservative approach and held on to that higher figure.”
Harrell said that more than $1 million of the withheld $66 million would go to the North Kansas City School District.
In the 2013-2014 budget, the district accounted for the shortfall by applying $2 million from the district’s fund balance to the 2013-2014 budget, while saving another $2 million by not filling about 25 vacant positions and reducing purchasing for the new school year.
Harrell said the unfilled positions were a mix of teaching, associate teaching, paraprofessional and administrative positions.
The district was able to re-allocate $2 million from its fund balance, according to Harrell, because it ended the 2012-2013 school year with a balance of 20.65 percent. After the 2013-2014 school year, the district estimates that fund balance will drop to 14 percent.
School board members previously have said they’d like their fund balance to fall somewhere in the 14- to 18 percent range. After the 2013-2014 school year, the fund balance will be at the low end of that, which could force the district and board to look toward other options for next year’s budget.
“This isn’t a trend we can continue,” Harrell told board members last week, before adding that to go any lower with the fund balance would go beyond the district’s “comfort zone.”
During a later discussion of the board’s financial goals for the upcoming school year, superintendent Todd White said the district would need to find a way to prevent the district’s expenditures from exceeding its revenues.
In the 2013-2014 school year, the district’s revenue is projected to be $219,746,172, while its expenditures for the year are budgeted at $237,878,463.
Harrell said the district will either need to see increases to its assessed valuation, reduce its expenditures or increase its total operating revenues through a local bond or levy.
The district receives revenue through local, state and federal funding, but 66 percent comes from local property taxes.
The district’s largest expense is salaries and benefits, which account for approximately 80 percent of expenses.
Board member Terry Ward applauded the district for continuing to set strenuous academic goals despite a challenging financial picture.
“We are launching a very daunting year, trying to get done everything we are trying to get done,” he said.