Growth through management By Plain Talk A combination of a one-time supplement to state aid granted to all school districts in 2004 by Gov. Mike Rounds, combined with a highly conservative attitude toward spending, has enabled the Vermillion School District to increase its general fund balance – its rainy day fund – by 3 percent.
That�s also sparked a torrent of rumors in the past two weeks, judging by the phone calls fielded by both school district officials and the Plain Talk.
Many citizens, judging by phone and face-to-face conversations, are convinced that Vermillion School District officials have once again �found� money they thought they didn�t have.
�I think the term ?found� is not the correct term to use in this instance,� said Superintendent Mark Froke.
The memories of what happened nearly a decade ago � long before Froke was hired and the current members of the local school board took office, are still apparently fresh in the minds of many citizens.
In 1996, the school district attempted an opt-out to hold off a predicted $400,000 shortfall in the general fund budget.
In November 1996, however, an audit revealed that the school district was sitting on a $692,000 budget surplus that administration officials became aware of in July 1996.
The school board reacted by apologizing publicly to citizens, and enacting reforms in the oversight process of the district�s budget.
Froke suspects that recent rumors of �found� money may be fueled by the district�s ability to increase its general fund balance, in part, by being frugal.
�The board, the administration and the staff did whatever possible to save money,� he said. �That took place all throughout the year. Even after we had a successful opt-out on March 15, everybody maintained a conservative process.�
Vermillion school patrons voted March 15 to opt-out of the state tax freeze by as much as $800,000 annually for the next five years. The school board placed the opt-out directly on the ballot rather than wait for a possible petition drive.
The school district will receive half of the opt-out, or $400,000, during 2005-06 because of the timing of the tax collections. The full amount � $800,000 � will be received in each of the following years, and $400,000 will be received by the district in the last half year of the five year opt-out.
Despite the additional funds, the board still needed to cut $100,000 for 2005-06. �This opt-out was needed
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just to maintain where we are at currently. We are not able to bring back previous cuts,� Chris Girard, school board member, said at the board�s July 11 meeting. �This will help with our cash flow. We are hoping to start building the general fund.�
Froke said the school board approved a general fund total budget of $6,879,051 for the 2005-06 school year.
He added that the board�s goal is to build the district�s �rainy day� fund balance to nearly $1.4 million.
�The school board has a goal of establishing a 20 percent fund balance,� Froke said. �That�s what is allowed as a maximum by the state.�
As of June 30, 2004, the general fund balance stood at $669,383, which represented 10 percent of the total general fund.
As of June 30, 2005, the school board was able to increase the general fund balance by approximately $213,000 to a total of $883,329.
That represents 13 percent of the total general fund, and a 3 percent growth in the fund balance.
School officials believe citizens may be mistakenly interpreting the latest fund balance figures as being newly �found� money in the district�s books.
?Point of praise�
The growth of the fund balance, said Nick Merrigan, school board member, can be chalked up to everything from good luck to good fiscal management.
Merrigan, a member of the board�s finance committee, said the extra black ink in the general fund balance is �a point of praise.�
School administrators saved money last year in a variety of ways, both planned and unexpected.
The resignation of a high school teacher last year reduced personnel costs. District officials also limited substitute teacher hiring.
�We held the line on overtime wages,� Froke said. �We found areas to cut in travel, in telephone use and in supplies.�
Mother Nature helped, too, Merrigan said.
�It was a mild winter, and we didn�t have to move too much snow,� he said.
Besides ad valorem taxes and a one-time state aid supplement, other significant growth factors in the general fund include nearly $44,000 from Medicaid, $32,000 of interest earned on the general fund balance, $14,300 in county apportionment funding and reductions in spending on regular salaries, substitute teachers, workers� compensation, contractual services, and health and dental insurance.