Note:  This budget update, prepared by an EISD parent, is posted to KEI with permission.

 

Dianna Pharr

 

 

 

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Updates were not sent in November and December due to holiday demands.  This month, meetings of note included a finance committee meeting on 1/27 and a regular board meeting on 1/28.  This update will focus on the current activities as I am not sure that the comments and issues raised the past months matter as much due to the developments described below.

 

Summary

 

Big news is that the new permanent Supertindent, Nola Wellman, has filled the role that interim Supt. Jess Butler has been in approximately the last 1.5 years.  She seems to have stepped right in and appears to be quickly taking charge of the budget process.  As they say in the movies, there is a new sheriff in town.  More on the implications of this below.  The last I heard, there was still approximately $4.9 million in budget reductions/revenue enhancements needed for the 04-05 budget.  The fund balance at the end of this year (03-04) in August 04 should be significantly more than anticipated last year with the total being in the range of $18.9 million dollars.  Supt. Wellman indicated that she is recommending that the Board not close an elementary school this year.  A cautionary note on this, a demographic study by the District projects an elementary enrollment decline of around 260 students over the next five years.  Campus staffing plans are being formulated this month by the staff and administration.  Perhaps the biggest changes may be at the middle school level where scheduling changes for the number of class periods will likely be implemented.

 

Details

 

Rather than summarize each meeting I will summarize the events by topic.  This is particularly appropriate as there really was not much discussion by the Board on the budget at the Regular school board meeting.  The school board meeting ended at 9:40, beating by approximately 1.5 hours the previously shortest regular board meeting in the last 18 months.  At least for now it appears that the Board may defer to Supt. Wellman and the administration without a lot of micro-management.  If this holds up, this may be the most significant long-term development to come out of January.

 

Fund Balance

 

The outside accounting audit for 02-03 has been certified and it indicates that the fund balance in August 2003 was approximately $21.9 million.  This is more than $3 million over what the board had planned on during the budget discussions in the 02 Fall and 03 Spring.  Slightly more than $3 million of this fund balance is targeted to be used this year (03-04) as the current year budget is a deficit budget with spending exceeding revenue by that amount.  In past meetings the Board has indicated a willingness to have the fund balance drop to at least $15 million and there seems to be an expectation that a significant amount of fund balance will be used to balance the upcoming 04-05 budget. 

 

At the finance committee meeting it was stated that the fund balance was significantly higher than planned for a number of reasons.  The biggest reasons were an accounting accrual issue and the amount we ultimately had to pay the state last year under Robin Hood.  The accounting issue was a $1.1 million change due to a change in how the district accrues for staff payroll liabilities.  At a very high level, this has something to do with changing from accrueing based on budgeted staff levels vs. accrueing based on actual staff levels (particularly if positions go unfilled throughout the year).   In addition, the final Robin Hood payments changed about $1.2 million dollars (final tax valuations play a big role in this).

 

An on-going debate will be what level the fund balance should drop to.  It was noted by the district auditors at the finance committee meeting that the TEA (Texas Education Agency) formulas would place the optimal fund balance at $12.1 million.

 

Board member Ellen Balthazar questioned what goes into the TEA formulas.

 

One of the outside accountants indicated that he had the impression that the TEA guidelines were really geared to schools without property wealth that were running low fund balances.  He stated that he was not sure if the numbers made sense for property wealthy districts that give money to the state. 

 

Supt. Wellman asked if there was a level at which if the fund balance dropped below that level than the auditors would flag our fund balance as a concern in an audit.  The auditors said that they do not really project where the fund balance should be operated at other than to flag the number if district funds dropped so low that a serious concern of the district entering bankruptcy was raised.

 

I’m sure we will hear more on how much fund balance will be used in 04-05 over the next couple months.

 

 

Elementary School Closing and Enrollment issues

 

Supt. Wellman stated that she will not bring a recommendation to the board to close an elementary school this year.  Supt. Wellman stated that looking at the demographic studies indicates that this will remain on the long term list of items to review for future years.  She indicated that some of her reasons for not closing a school included that the fund balance offers some current flexibility and her desire to see what happens in a special session on education funding expected to be called for by the Governor this spring.  Supt. Wellman in one meeting called this “a reprieve for a time.”

 

A demographic study of district enrollments was presented to the Board.  The study indicated that elementary enrollment is projected to be down 108 students next year and in five years down 260 students.  Birth rate, census data, and housing data did not indicate an increase in kindergarten enrollments in the near future.  The study noted that these drops were on top of a drop of 468 elementary students from 1999-2003.

 

[A personal observation: If nothing happens on the Robin Hood front and the enrollment numbers show signs of following the projections, then I suspect the closure issue will be dealt with in the coming years without a lot of board debate]

 

Other Budget Issues

 

Supt. Wellman presented a budget development calendar for creating the final budget by August.  Campus staffing plans are to be worked on this coming month.  She indicated that staffing needs at each campus are being identified based in part upon instructional and student ratios.  She indicated that there will be some staff shifting and some staff reductions.    

 

A major change at the middle schools appears to be the change from 8 class periods to 7 class periods.  Supt. Wellman said that she will continue to meet with the middle school principals to finalize this change.

 

Supt. Wellman indicated that she anticipates proposing a deficit plan for 04-05 [i.e. fund balance will be used].  No mention was made of how much fund balance the administration will propose to be used.

 

Supt. Wellman indicated that a long term budget plan can not rely on fund balance and that it must be recognized that when fund balance is used it can not be used again.

 

Supt. Wellman presented a budget calendar that has most of the activity happening this coming month with staffing plans and salary schedules finalized in March/April.  Thus, we are somewhat in a waiting mode.

 

After the demographics, elementary school, and other budget comments by Supt. Wellman, the Board literally said nothing.   The regular board meeting then wrapped up with some formalities.  A larger number than normal of district staff/administrators were present at this time and many of them actually clapped.

 

[I got the sense that the EISD staff was excited to see some long term permanent leadership since almost every major district position is currently filled by “interim” staff.  I heard one of our interim administrators joke “we are the few, the proud, the interim.”   I also got the sense that the EISD staff was excited to see more deference (at least for now) apparently given by the Board to the professional educators.]

 

More to come next month as we see what shakes out.  Though cuts are coming, a least for now perhaps the process itself looks like it will not be as painful as last year.