by Mike Kroll
In last week's paper I wrote about our difficulties in obtaining useful financial data from the City of Galesburg's finance department. To be fair we asked two other local governmental bodies about obtaining their financial data and were pleasantly surprised by how cooperative both Knox County Treasurer Robin Davis and School District 205's assistant superintendent for finance and operations Paul Woehlke were to our requests. In both cases they stated that year-end summary financial data is available from them within a month of the close of the fiscal year. Furthermore, both said that mid-year data should not be a major problem as their computerized accounting systems were capable of generating most reports extremely quickly.
We inquired about their concern of significant financial changes occurring after the close of the fiscal year that would render timely reports inaccurate (the reason most commonly given by Galesburg finance director Gloria Osborn for delayed availability of city financial data). Both Davis and Woehlke, responding for their own respective entities, said simply that such changes are rare and typically insignificant to the overall financial picture. Neither the school district nor the county operate with a fiscal year matching the calendar year. In the case of Knox County their fiscal year runs from December through November while District 205's fiscal year begins in July and ends in June (corresponding to the state's fiscal year).
Both the county and the school district face many unique financial challenges but, like the city, both are greatly impacted by the persisting poor economic circumstances in this region. On Monday night following the school board meeting Woehlke provided us a copy of District 205's auditor's financial statement for the 2007 fiscal year that ended June 30, 3007. While this is hardly “fresh” data Woehlke assured us that most of the financial figures contained in this report would have been available before the end of July 2007 had we requested them.
Since the data are available we can examine the financial status of District 205's fiscal year 2007 in a general manner here with the promise of a more complete report on the current fiscal year later this summer.
On the income side FY 2007 saw an extremely small increase in property tax revenues of barely one percent over FY 2006 but at least it wasn't the decrease many feared. The increase in federal and state aid to the school district was somewhat larger at about eight percent. State aid to the school district grew by $1.1 million due to an increase in the foundation level per student and the increased federal money represents a half-million dollar increase in the poverty grant. The school district also rode the wave of higher interest rates that has now passed to see an increase in revenue from investments.
The postive news on the revenue side must be offset by increases in district expenditures between FY 2006 and FY2007 of nearly one million dollars. One area of increased cost to the school district is the higher than expected participation in the early retirement program. Part of this program includes salary increases up to six percent during the last few years of participating teachers career. A retired teacher's pension is calculated based on their salary for the years immediately preceding retirement and these salary increased boost participating teacher's monthly retirement check. As in all early retirement programs the school district is counting on recouping these costs through the replacement of retiring experienced teachers with entry-level (or nearly so) teachers. The accuracy of this assumption remains to be determined.
If you aren't already aware of the high cost of running a high school consider that with just the single high school district 205 spent nearly $5.2 million in instructional costs alone there in 2007 while all of the elementary schools combined totaled almost $6.5 million. Instructional expenses at each of the two junior highs averaged around $2 million in FY 2007. A growing expense in District 205's instructional area is the preschool education program fueled by the governor's push for universal preschool availability. The demand for preschool services has been growing at manageable levels so far but this has the potential to become a significantly greater expenditure in the coming years. It remains to be seen how well state aid will fund the preschool initiative.
Running a school district involves much more than just instructional expenses. For example, the largest non-instructional expenditures of FY 2007 involved major capital improvement projects included under both the Operations & Maintenance and Fire prevention & Safety funds. These included the new parking lots at the high school as well as King and Nielson schools and the new district security system. FY 2007 also saw the school district make a larger than usual purchase of computer technology and it is becoming clear that the demand for instructional technology will continue to grow.
Nearly all governmental entities are required to do their accounting in what is termed Fund Accounting. In simple terms this means that revenues and expenses are segregated into specific funds and money cannot be commingled. These funds represent use of restricted income sources such as state aid or reflect a variety of separate property tax levies. For example, money that comes in for instructional use cannot be used for building maintenance. The school district operates out of four principal funds, Education, Operations & Maintenance, Transportation and Fire Prevention & Safety. A fifth, the working cash fund, is the last of the major funds. There are also a variety of lesser funds reflecting specific initiatives or programs.
Many area school districts are fighting a losing battle to maintain their education funds. The Galesburg schools have faired better than most in this regard. The education fund actually increased by $833,312 between FY 2006 and FY 2007. The bad news is that both the O & M and Fire Prevention funds decreased significantly due to the previously mentioned planned expenditures in FY 2007. Between those two funds District 205's total balance of funds at the conclusion of FY 2007 was down $164,351 but this was not unexpected.
As school officials prepare to begin the new fiscal year in July they remain concerned about whether planned additional increase in state aid will materialize. Even if the state meets its commitment to higher state aid levels the sorry condition of the state's own budget almost surely will mean that such extra money will be late arriving. In fact Woehlke expects delays in the receiving the remaining state aid payments due for the current fiscal year. While the financial outlook for School District 205 may not be rosy it remains much better than many nearby school districts.