FREDERICKTOWN – Fredericktown schools is projected to end the 2022 fiscal year with a revenue surplus.
Treasurer Heather Darnold presented an updated five-year forecast of district finances during Tuesday’s board meeting. Darnold shared the last forecast in November 2021.
Expenditures are expected to be less than the revenue by $723,273 for the current fiscal year. By the last year of the forecast, fiscal year 2026, the district is expected to go into deficit spending, where expenditures are projected to be greater than revenue by $80,400.
Without adding more revenue, the district would have to cut its 2026 projected expenses by 0.61% to balance the budget. When it comes to cash balance, a key indicator of financial stability, the district is projected to see improvements by fiscal year 2026.
The forecast is ever changing. Projections are extrapolated based on historical trends and current factors ever changing, so outcomes are not guaranteed.
Darnold mainly focused Tuesday on how the district anticipates ending the current fiscal year.
When it comes to the most recent expenditures from last month, expenditures exceeded revenue, mainly due to large medical claims, the purchase of chromebooks, a bond payment and the increase in utility and fuel costs, Darnold said.
Overall, both revenue and expenditure increases are projected in the coming years.
Revenue
During the past five years, total revenue increased by 0.60%, or $73,677, annually. Darnold projects it to increase by 0.83%, or $103,999, annually through the 2026 fiscal year.
When Darnold reported 5-year projections in November, the major changes expected had to do with the Fair School Funding Plan, which remained true for much of the latest projected values.
Under the plan, per-pupil costs are based on actual expenses, calculated on a district-by-district basis. Previously, districts saw deductions for students who decided to attend school out of district. Now districts will be directly given a complete net amount based on enrollment.
“We lost 24 kids from fiscal 20 to 22,” Darnold said Tuesday. “That was about a $175,000 decrease in funding for us.”
Another projection similar to November included the expectation that restricted funds will increase.
This is because the student success and wellness funds became restricted in the 2022 fiscal year and moved to the general fund, as opposed to Fund 467 which had previously been created specifically for those funds, Darnold said.
Real estate property tax also impacts revenue, specifically making up 29.41% of the district’s revenue overall. Property tax revenue historically has had an average annual rate of 2.68% and is expected to change at an average annual rate of 1.61% through 2026.
Expenses
Throughout the past five years, total expenditures increased by 1.74%, or $204,735 annually. Annually through 2026 expenditures are projected to increase 2.08% or $247,143.
Roughly 54% of the district’s total budget is salaries. Employee benefits (retirement, medicare, workers compensation and insurance) are about 24% of the total budget.
Darnold aims to be below the 80% mark for total salary and benefits, and the district is under that threshold at about 77%.
Other expenses factored into projections are insurance premiums. The last two years the district had 0% increases in its medical premiums but next year will have a 3.5% increase.
Purchased services decreased this fiscal year compared to last fiscal year because open enrollment out of the district is no longer deducted, again because of the Fair School Funding Plan.
In the coming years, however, Darnold anticipates increases in purchase services due to utilities going up. Supplies and materials are also expected to increase, mainly due to fuel costs, Darnold said.
The district will purchase two buses in fiscal year 2023, partially using grant funds and the remainder from general funds already budgeted.
“Between salaries, benefits. fuel, utilities, it costs the district approximately $45,000 per day to operate, which equates to about $1.3 million a month,” Darnold said.
Darnold will file another forecast in November, which will have projections through 2027. She anticipates that the largest changes come November will depend on any student population changes and the triennial update.
