The penny pinching has paid off.
Steve Lund, director of business services for the Brainerd School District, told school board finance committee members Tuesday that since the board's April budget revision, the district has incurred a savings of $1.9 million as the district works to close out its books on the previous school year.
Lund said in April the district was forecasting $2.3 million in revenues over expenditures for the 2008-09 school year. Instead, the district ended the fiscal year with about $4.3 million in revenues over expenditures, 2.6 percent of the annual budget. Only about 20 percent can be attributed to additional revenues with about 80 percent the result of improvements in managing expenses, he said.
The district now has an unreserved fund balance of $6.8 million, or 9.44 percent, with a projected balance of 9.97 percent of the total budget by the end of the school year. The board's new policy is to maintain at least 5-7 percent in the district's unreserved fund.
Lund explained during his budget presentation that there are a number of factors that may be attributed to the favorable budget figures. The district's Other Post Employment Benefits liabilities are now funded through the district's levy, although the committee Tuesday recommended the board transfer $671,000 of general funds to the OPEB Trust fund to provide the initial structure for a projected, self-sustaining cash flow for future OPEB benefit payments.
The district saved a total of $407,000 since the projected April budget because third-party billing reimbursements were higher by $150,000, the district ended the year with 16 more students than projected and it received increased reimbursements from the Department of Education for AP testing and concurrent enrollment, said Lund. The district also saved $190,000 in operating capital fund and $105,000 in deferred maintenance from prioritizing in spending. Lund cautioned board members that the district can't continue to see these cost savings all the time, since the district has 11 buildings that need to maintained.
Of the $1.4 million of expense reductions, about $400,000 affected the reserved funds while about $1 million affected the general fund. Most of these were relatively smaller cost savings with only four items exceeding $100,000.
Some of those cost savings included the following:
• Salaries and benefits came in $219,000 under budget.
• Fuel costs came in $132,000 under budget, which represents 20 percent of the budget. Lund said he expects favorable fuel prices again this year.
• Re-employment costs, or the district's unemployment costs, came in $110,000 under budget. The district budgeted high because of the large number of 2008 layoffs. Superintendent Steve Razidlo said this figure speaks highly of those who were laid off due to budget cuts since a lot of them found work.
• Contracted services and contracted repairs were $106,000 under budget. This is attributed to prioritized projects and the closure of Whittier School and the Minnesota Learning Center at the Brainerd Regional Human Services Center, which is now at the Lincoln Education Center.
• Transportation came in $120,000 under budget. The district saved $180,000 in transportation costs in 2007 when five bus routes were cut. The $120,000 represents additional savings, said Lund.
• Teacher substitutes came in $55,000 under budget. This fund was decreased during the April revision and still came out favorable, said Lund. Teachers are taking fewer sick days.
• Snow and garbage removal came in at $29,753 under budget. About 60 percent of these cost savings is in snow removal, said Lund. Lund said the current garbage vendor has been helping to find ways for the district to become more efficient in this area.
• Fuel escalator came in $24,630 under budget because fuel prices decreased. Lund said he is reluctant to adjust this $130,000 budget figure given the unpredictability and volatility in the fuel market.
Other cost savings were found in a decrease in office supplies, instructional supplies, fuels for district vehicles, grounds maintenance, custodial supplies and workers compensation insurance premiums, said Lund.
Due to these favorable financial results, the district in late summer hired an additional 9.63 full-time-equivalent instructors and four educational assistants to reduce large class sizes in the elementary schools at a total cost of $629,650. These figures will be added during the November budget revision but represent an additional general fund balance of $621,000 over what has been forecasted, said Lund. Lund said the district waited until the end of the summer to make sure the district was able to hire and sustain these new teachers before they were hired.
Board finance chair Molly Kurtzman thanked every staff member who "had a hand in our spirit of frugality."
"I don't know if our community really understands the shift in how we spend our money, how we track it, how we watch it," said Kurtzman.
"This is the story of the numbers," said Lund. "The community told us to tighten our belts and we heard that loud and clear. I think these numbers show that."
Lund said there remain other variables in the future the board needs to be mindful of. The district is receiving state stabilization dollars and federal stimulus money through fiscal year 2011. If the state doesn't have a solution for the $3.4 million it "backfilled" into this district during the next two years using state funding received through the federal stimulus package, the board will have to make more cuts in 2013, he said. In 2013, the district also will operate for the first year without its $199 per pupil operating levy, which will expire.
"We're in a good position going into the uncertain future that we have," said Lund. "We want to sustain the recently hired teachers. We brought them back not just for one year, we want to sustain them."
"I think we're entering an era of frugality," said board member Bob Nystrom. "I think we've implemented that and our staff has done a great job in that area. We can't have a false sense of hope and go back to our old ways. This will be our future."
JODIE TWEED may be reached at email@example.com or 855-5858.
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