Vermillion school opt-out decision delayed Better bottom line allows school board to buy more time

Vermillion school opt-out decision delayed Better bottom line allows school board to buy more time Michael Granaas repeats the oath of office administered by Vermillion School Business Manager Sheila DeSmet at Monday night's meeting. Granaas, a professor at The University of South Dakota, was elected to a three-year term on the board in April. by David Lias Fueled by a better than projected bottom line in the school's general fund, the Vermillion School District won't be seeking a opt-out of state-imposed property tax limits � at least not for now.

The general fund balance when the district's books were closed June 30 wasn't $675,000, as school administrators and the board have conservatively projected.

The bottom line is approximately $864,0000, due to a variety of factors. The school district didn't have to touch its general fund's contingency budget, reserved for emergency expenditures.

And nearly everyone employed by the district, aware of the district's financial situation, have been doing their best to cut spending.

The school district also received nearly $144,000 by participating in a class action lawsuit against a roofing company that used substandard equipment. The company worked on the middle school and high school roofs. There have been no problems with the two buildings, but the district still shared in the lawsuit's settlement.

"If the school board wants to use it for roof repair, then they have to place it in the capital outlay account," Superintendent Bob Mayer said. "If they do that, they can't move it out.

"But if they want to use it to enhance the school's fund balance, they have to place it in the general fund and they can't use it for roof repair. That's a decision that they will have to make at some point."

The extra money enabled the school board to buy something valuable Monday night � more time.

"With these particular figures and where we're sitting right now, and not even addressing the $140,000 (from the roof settlement) ? with our fund balance right now, I would not call for a motion for an opt-out at this time," Tom Craig, president of the school board, said. "I'm feeling better because I don't feel quite as stressed about the decisions we're going to have to make. It's not as critical as it was two weeks ago."

Positive changes

"In the past two years, I have made presentations to our staff in an attempt to communicate to them our particular financial situation," Mayer said. "This past year, when I did it, we projected that the fund balance or the reserve at the end of this year would be $675,000. We also expected to spend $893,000 of the fund balance to

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get to the $675,000. We didn't spend it; we spent $738,000 instead of $893,000."

Mayer said the administration and school board adjusted those figures at at budget study session held June 18.

"So the $675,000 that we expected to have in the bank is not the situation that we have now. It was obvious that we weren't going to spend all that we had anticipated, and we expected some increase in revenues at that point in time," he said.

At the end of the fiscal year June 30, the general fund balance was $864,000. Mayer credits these factors for the better bottom line:


* The fund balance itself on June 30 was $535,000. But the district did not spend the contingency, which is a line item in the budget reserved for emergencies. There is $145,000 in that fund.


* The Vermillion School District received $76,000 more revenue that budgeted.


* The district spent $108,000 less than budgeted.

"The revenue budget has 30 different categories into which the district receives money, and the district's total budget of approximately $7 million contains nearly 550 categories, Mayer said.

"Out of that $7 million, we were off 1.25 percent. That's not too bad, because you don't always know what you're going to receive," he said. "That's pretty good budgeting by our business manager."

Increased taxes didn't fuel the healthier revenue stream. In fact, tax receipts for Clay County were approximately $63,000 less than the previous year, said board member Nick Merrigan.

Much of the increased funds, Mayer said, are in the form of grant funds.

"And in another respect, we underspent the budget $108,000 in our expenditures, which is a positive thing," he said, "and probably the reason for that is we did some belt tightening. The teachers requested less and the principals approved less and less was spent."

Some things haven't changed

"This year we are projected to have a $514,000 shortfall," Mayer said. "We've got the money for that, because we have $864,000 right now. We never anticipated not being able to deal with this school year. The problem that we're going to have to deal with is the next school year, in 2003-04. Because depending upon how much our expenses go up, we're going to have a shortfall of right around $700,000 to $750,000."

The only way this future problem could be solved, he said, is if the Legislature takes positive action in the next session.

"We're going to have a new governor," Mayer said. "And some of the Legislature will be new, too, and perhaps they will, because of all the publicity that opt-outs have received throughout the state, rise to the occasion and increase funding so that local schools don't opt-out and property taxes don't increase."

Mayer said it is possible that the school district, once again, won't spend the budget's contingency funds. "But we don't know that. You don't know what kind of emergency situations you may have."

"I want to take this opportunity to thank the teachers and the administrators. The $108,000 that we saved in expenditures this year is a direct reflection on the effort of the people in the district to save money," Craig said. "Most of that probably came out of supplies and things of that nature."

"I think it's important to point out that when we looked at the opt-out to make the vote by October, to get it into the assessor's office by October, that was to receive money for the second half of next year, and we know now that we don't need that," school board member Nick Merrigan said. "If we can delay it until next spring to see what the Legislature does, I think that would be the prudent thing to do."

Planning for the future

Craig said the school board will continue to look at trimming the 2003-04 budget where possible.

"The idea is to take some of the information that the citizens' panel came up with, look at their recommendations, look at what the community wants, and continue to try to reduce the deficit spending," Craig said. "This gives us another year without having to ask for additional taxes.

"Hope springs eternal, I guess, so we're all thinking with the problems being experienced by various school districts throughout the state, maybe this will give us the year timeframe we need to get better revenue funding from Pierre."

The district would need to hold an opt-out election in spring 2003 to avoid cuts the following fiscal year, Mayer said. With the legislative session ending around March 1, and the district needing to notify certified staff of cuts by April 15, he said the district would have a 45-day window to decide whether to opt out.

"I think it's our job as a board to recommend it (an opt out next spring) if we think that's what's best for the district," Merrigan said. "Whether we think it will get blown out of the water really isn't the issue. The issue to me is, if we've done everything we believe is prudent on the cut side, then we need to ask for more money. Then it's up to the taxpayers to either get behind it or vote it down and tell us we haven't made enough cuts."

"It's our responsibility to make sure there is an adequate education for the youth in the Vermillion School District," board member Floyd Boschee said.

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