FINANCIAL MANAGEMENT
June 22 2020
Impending Challenges
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IMPENDING CHALLENGES
IMPENDING CHALLENGES
IMPENDING CHALLENGES
This is a link to one comparison between using only budget cuts to solve the impending financial challenges versus using a combination of budget cuts and a phased in operating levy to solve the same financial challenges.
This comparison is being used for illustrative purposes only, and is one of a number of comparisons that could be used. At this time, no decisions have been made by the School Board as to which type of budget adjustments will be used to meet the impending financial challenges facing the Shakopee Public Schools. These decisions will be made at the July 20, 2020 board meeting.
SCHOOL BOARD DECISION TIMELINE
FUTURE PLANS
Analysis of Budget Adjustment Options
BEGIN WITH THE END IN MIND
WHY?
DEFINING THE CHALLENGE
School districts maintain fund balances for financial stability, cash flow and unanticipated expenses.
We have worked hard to rebuild the fund balance in recent years - however, the fund balance for the 2020-21 school year is expected to decrease by $2.5 million to cover expenses.
Additional effort is required to rebuild the fund balance to a healthier level while maintaining our programs and services. There are three options to rebuild the fund balance: reduce expenses, increase revenue, or a combination of the two.
Source: Minnesota Department of Education
DEFINING THE CHALLENGE
EXPENSES < REVENUE
DEFINING THE CHALLENGE
KEY INFORMATION
Projected Budget Deficits:
-$2.5 million for school year 2020-21 (FY21)
-$5.8 million for school year 2021-22 (FY22)
If nothing is done (which is not an option):
Unassigned Fund Balance on June 30, 2021: $1.1 million
Unassigned Fund Balance on June 30, 2022: -$4.7 million
DEFINING THE CHALLENGE
Shakopee receives less funding per student than both the metro and state averages - and also spends less per student - while still maintaining our quality programs and services.
Source: Bergen KDV, District Auditors
DEFINING THE CHALLENGE
If state funding had kept pace with inflation since 2003, Shakopee Public Schools would have received more than $5 million in additional state aid in the 2019-20 school year alone.
We also pay nearly $9 million annually for unfunded mandates that are not being reimbursed from the State or Federal government as promised.
Source: AMSD.org; MDE February 2020 inflation estimates
DEFINING THE CHALLENGE
Shakopee Public Schools has no voter-approved operating levy, putting us about $1,250 per student below the metro average.
The last time local voters approved an operating levy increase was more than a decade ago.
Source: Minnesota Department of Education
DEFINING THE CHALLENGE
Shakopee Public Schools currently receives $0 in voter approved operating levy revenue.
SUMMARY OF CFAC REPORT TO SCHOOL BOARD FINANCE COMMITTEE
DEFINING THE CHALLENGE
PATH TO LONG-TERM FINANCIAL STABILITY
BOTH TYPES OF BUDGET ADJUSTMENTS ARE NEEDED
Reduce expenses
Increase revenue
PROPOSED BUDGET CUTS
OVERVIEW:
POSSIBLE PHASED IN LEVY OPTIONS
INCREASE REVENUE with an OPERATING LEVY
POSSIBLE PHASED IN LEVY OPTIONS
PHASED-IN LEVY #1: 400,300,200,100
BOARD REQUEST
In acknowledgement of the immediate (next year and the years that follow) budget challenges, district leadership has been working on a range of budget adjustments strategies.
In acknowledgement of the projection of future budget challenges (starting next year and continuing in the years that follow), and the need to increase revenue or make cut cuts to meet this challenges, district leadership has been working on various forms of phased in operating levies.
Should the School Board want to direct, district leadership will be prepared to share at the School Board Retreat on July 11, a recommendation for a specific phased in operating levy to be considered for use on November 3, 2020.
-A motion for directing such action may be appropriate at this time.
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