The fiscal year for public school districts in Iowa runs from July 1 to June 30. When we close our books for the school year, the months of August and September are considered 'hold open' months. This is to ensure all the revenue and expenditures are accounted for in the appropriate fiscal year. By September 15th, we are required to submit our (CAR) certified annual report, which details our financial position. To view a summary of our CAR, you can find it on our website. The Executive Summary is included below, and if you are interested in reading any of our most recent audit reports they can be found on the 'About Us' page of our website.
Overall, the District’s financial position is excellent. Financial metrics remained stable from FY 2021 to FY 2022. There are no significant areas of concern with regard to district finances.
Some general observations include first and foremost the fact our general fund revenue increased by $467,805 or 5.2% from FY 2021 to FY 2022. Most notably, this increase came in the local sources object code and can be attributed to growth in open enrollment. It is also worthy to note 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 $499,131 or a rate of 5.7%. This due to both ESSER funding expenditures and increases in FTE due to enrollment increases.
The total general fund balance increased from $2,393,171 in FY 2021 to $2,517,362 in FY 2022. At the same time, the restricted fund balance increased from $236,633 to $288,159. 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 $207,419 and as you can see from the table to the left, this fund continues to grow. (Important note: the district is currently in the process of examining specialized programs such as talented and gifted to determine how best to utilize these resources for maximum student benefit.)
Tax rates for the FY 2022 budget year were 14.09778, up slightly from 14.04151 in FY 2021. 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, however a bond referendum was adopted by the voters in September of 2022.
Enrollment projections appear to be solid in both the short and long term. The increase in 34 pupils during the year can largely be attributed to open enrollment. These trends are likely to continue in light of a recent change in open enrollment laws in the State of Iowa. Further, the City of Hudson continues to grow at a steady pace with multiple housing additions currently in development. Barring any unforeseen changes, the District will need to plan for rapid enrollment growth in the next half decade. (Important note: These enrollment numbers do not reflect the total picture, and as such there are two important caveats. First, preschool numbers are not included here due to the lack of historical analysis. Second, these numbers do not include the most recent enrollment figures, which will be available later in October.)
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 $4,109,767 or 30.68% in fiscal year 2022. Like the financial solvency ratio, this puts the district in a good position in light of unpredictable funding from the state.
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