Overall, the District’s financial position is excellent. Most metrics remained stable from FY 2020 to FY 2021. There are no significant areas of concern with regard to district finances, although I do note the employee cost ratio has increased to 83% and has been at or above 80% for the last four years. The increase in FTE due is due to enrollment growth and making strategic investments in hard to fill areas. The target for this ratio is 80%.
Some general observations include first and foremost the fact our general fund revenue increased by $411,821 or 4.8% from FY 2020 to FY 2021. Most notably, this increase came in the state sources object code and can be attributed to growth in enrollment and a slight increase in supplemental state aide, although a significant increase in federal funds due to COVID relief was also a major contributor. At the same time, the district’s cash reserves are full and it remains unnecessary to levy for cash reserves. Finally, our general fund expenditures increased by $135,135 or a rate of 1.6%.
The total general fund balance increased from $2,223,215 in FY 2020 to $2,393,171 in FY 2021. At the same time, the restricted fund balance increased from $221,734 to $236,633. The district was able to clear some of these restricted funds due to changes in legislation that permitted the creation of a ‘flex’ account. The district is encouraged to continue to utilize this tool in order to keep these balances as low as possible. It is worth noting that dropout prevention, talented and gifted; and early literacy are reserve funds excluded from consideration for flex fund spending. The district may wish to closely examine these programs against the fund balance to ensure maximum leverage is applied against these expenditures. As a reminder, these funds are reserved because they can only be used for specified purposes under Iowa Law. Reserve funds for Talented and Gifted make up the bulk of these restricted funds at $182,472, and as you can see from the table to the left, this fund continues to grow.
Tax rates for the FY 2021 budget year were 14.04151, down from 14.20904 in FY 2020. Overall taxes were down for the district as well, in spite of the continued increase in the residential rollback and natural increases to taxable valuation district wide.
The district currently carries a long term debt note of $5,140,000 when it sold revenue bonds during the winter of 2019. At the same time, the district carries short term debt primarily for the lease of computer devices that support the district’s connected learning initiative. Both of these notes are paid through the capital funds improvement funding stream and are not therefore general fund expenditures. It is also important to note the district is currently not utilizing any general obligation funding mechanisms.
In spite of our strong financial position, enrollment will need to continually be monitored. While one year certified enrollment may be down 22 students, the next year certified enrollment may be up 27. While enrollment remains strong, the COVID pandemic has resulted in a significant drop in enrollment. While expected to rebound, it is something that will need to be carefully managed in the short term. *Note: keep in mind the enrollment provided here is a look back at the 2020-2021 school year when we did experience a decrease in enrollment due to COVID. It does not take into consideration the substantial increase in enrollment that we are experiencing during the 2021-2022 school year.
Finally we should take special note of the district’s unspent balance ratio. This is perhaps the most important of all the financial health indicators and one that should be closely monitored and watched. The news here is good, with an increase in this ratio every year since 2011 when the district completed major budget cuts and ended with a balance of $90,971 or 1.29%. In the prevailing years it has grown steadily to $3,501,131 or 28.53% in fiscal year 2021. Like the financial solvency ratio, this puts the district in a good position in light of unpredictable funding from the state, and particularly since we will be in a position to manage unbudgeted expenditures that have come about as a result of COVID-19.
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