As a practical matter, the proposed budget that is published in the newspaper is of very little use as a fiscal management tool for the school district. In reality, the only utility it serves is to meet the statutory requirements for annual budget publication in local taxing authorities. As a consumer of this information though, where should you focus? As a start, you probably should take a look at the tax rate included at the bottom of the publication. However as we discussed last week, viewed in isolation and without the proper context the tax rate alone tells us very little. But it does tell you something right? When analyzing the proposed budget it is first and foremost important to remember this is in fact a summary, not intended to provide anything further than a broad overview of the budget.
The column labeled 'Budget 2020' is pretty self-explanatory since it is the summary of how we expect our revenues and expenditures to perform for the next fiscal year. Not to in any way be confused with the 'line item' budget, this is an overall spending plan and provides a road map for the upcoming fiscal year. The middle column, or 'Re-est. 2019' is exactly what it states, a re-estimate of the current fiscal year. Essentially this refines the budget that was certified from the prior fiscal year. In Hudson's case, and in our development of the overall budget this re-estimation is important because it serves as a launching point for the next fiscal year when the board sets their budget targets. The final column indicates what actually happened in the fiscal year that ended the prior June 30th. If I were a consumer of this information, my eye would be drawn to the far right, where I could view the average change over a three year period. Is there a percentage increase/decrease that seems strange? If so, why? The line that immediately jumps out to me is line 35A, which indicates a 56% increase over the last three years. Why is this? Well this is to account for the construction project that is set to begin with Phase III of the elementary renovation project.
It may also be of use to understand what the lines of the budget summary consist of. Lines 1-3 should be rather self-explanatory. This is the revenue that will be generated from taxes. For Hudson, line 4 is rather important because this is where we account for the tuition we will receive from neighboring school districts for students attending under open enrollment and special education. Lines 10-13 account for state funding to the school district and makes up a pretty large portion of the overall revenue at 41%! Then accounting for just about 2.5% of the overall budget is our federal funds, included in lines 14-15. The majority of line 15 is revenue that is used to fund special education programs. You may be wondering about line 17, this accounts for the bond sale we closed on March 5th. This is the revenue that will be used to fund Phase III.
On the expenses side of the budget, line 23 is the largest number of the budget and is where the salaries and benefits of most employees reside. The non instructional program described in line 32 is the food service, or hot lunch program. When you get to line 36, this is where you should notice that for fiscal year 2020, our overall spending plan is $13.3 million.
Each of these three columns is the sum total of seven funds that make up the overall budget. The general, or operating fund is the largest component of the overall budget and is used to fund the day to day operation of the school district. This fund next year has a spending plan of $8.7 million. The student activity fund is how we fund our activities and sports teams. Next year, we anticipate expenditures in this fund of $400,000. The management fund is used to pay for our property and casualty insurance, worker compensation insurance, and retirement benefits. We have budgeted $266,000 for this fund. The sales tax fund is where our construction costs are accounted, so for the next fiscal year, we are anticipating expenditures of $2.8 million. The Physical Plant and Equipment Levy fund for next year has estimated expenditures of $308,000. Debt service is where we will make our bond and lease payments for construction and computers. That is budgeted at $506,000, and finally the food service fund should have expenditures of roughly $335,000. We will hold a hearing on the budget at 6:00 p.m. on March 18th during the regular board meeting.
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