Phillips reviews past, pending budgets, noting improved financial status
While the Aurora school district’s budgeting process is several weeks from being finalized, Supt. Jody Phillips projected to his board and district patrons Monday that tax asking will go down for the coming fiscal year.
Addressing the topic at length as the primary focus of Monday’s two-hour board meeting, Phillips explained that this year’s budget will look vastly different, due in part to legislative changes in the school funding formula, and due in part to what he called a better financial starting point than the district has faced the last three years.
“We are a big benefactor of LB 583, which was $1,500 per student,” Phillips reported of a newly adopted state aid formula. “And also the increase in special education reimbursement went up to 80 percent when we have typically been running around 41 or 42 percent. We also have LB 243, which addresses property tax authority, so as we’re moving forward developing a budget those are components that our district specifically has not had in the form of state aid for quite some time.”
While expecting an influx of state aid, Phillips also advised the board of his recommendation to use a good portion of that revenue to pay down a $1.2 million general fund debt the district has accumulated over the past few years. He explained his rationale by first reviewing the 2022-23 fiscal year, which will end this month.
“In the fiscal year and the budget year that we have, we had facility repairs and maintenance items that need to be taken care of and probably the most important one was to maintain enough cash on hand to adequately meet payroll bills without short-term borrowing,” he explained. “The previous two years we ended up borrowing just over one-and-a-half million dollars to fund the general fund, which as a taxing entity we should not have been in that situation. So, basically, this fiscal year was kind of a culmination of funding what we need to fund as well as getting back on track.”
Phillips said he was pleased to report that the general fund balance at the start of last fiscal year was negative $255,843, though the year is projected to end this month with a positive balance of $1.67 million.
“I am happy with where we are ending the 2022-23 fiscal year,” he said. “We’re starting in a much better position than what we were the last three years.”
Phillips’ review of the 2022-23 and pending 2023-24 budgets led up to discussion on an action item involving a resolution which would allow the budget to exceed the property tax base growth, increasing by as much as 6 percent from the previous year. Phillips explained that the language in the resolution is misleading.
One district patron, Patrick Linehan, suggested in fact during the public comment period that some districts are playing games with the revised budget formula, seeking to get as much state aid as possible for fear of losing that revenue in future years. After reading a legal notice in the News-Register regarding a proposal for the board to consider a 6 percent budget lid increase, Linehan asked the board to postpone any talk of increasing the tax levy authority to see how the next year plays out.
“To our public, I would say we are not engaging in game playing,” Phillips responded. “It’s not a 6 percent increase. Your taxes will go down this year. Our tax asking is going down. The (legal) notice in the paper was not to say taxes are going up 6 percent. It was based off the new tax authority bill. One of the options in there is to exceed the 3 percent lid. One of the options is to go up to 6 percent above the lid, so it’s not a 6 percent increase (in spending).
“I need to know what our limits are as we go to develop a budget,” Phillips later explained. “This would allow me to know that I have up to 6 percent. Like I said, tax asking is not going to go up next year. It’s a matter of how much it goes down.”
‘Spending guardrail’
Board member Brock Wyatt said by voting to approve the resolution, he sees it as a spending guardrail moving forward.
“I don’t feel like if we say yes to this we necessarily land on that 6 percent,” Wyatt explained. “I think we need to find this balance of paying down the debt, but also giving as much as we possibly can back to the taxpayers. Third, looking beyond this year, part of the reason we’re in the situation we’re in is that we didn’t have the foresight to look three or four years down the road. I think it’s important to consider those years going forward.”
Wyatt said based on his analysis, this year’s district’s budget could end up with a decrease of between 1 and 8 percent.
“I think we need to be as close to that 8 percent as we possibly can, but I don’t know that we can get there,” he said. “I’m supportive of this decision, but I don’t know that I’m there yet to go the entire 6 percent.”
Asked what the district increase has averaged over the past three years, Phillips estimated that number at $425,000 per year, or about 3 percent. Almost all of that increase, he noted, went to cover salary and benefit costs, which represent about 85 percent of the total budget.
The board then voted unanimously to approve the resolution.
Phillips noted that work to finalize the 2023-24 fiscal budget cannot officially begin since valuation figures will not be announced until Aug. 20. However, shared shared some background and perspective that he said makes him optimistic heading into a new fiscal year.
Strategic plan
Following up on a detailed report from last month’s meeting, the board voted Monday to approve the focus areas and goals identified in preliminary stages of developing a strategic plan for the district. The four primary areas include academic programming and student achievement; budget and finance; facilities; along with safety and security.
Phillips said he wanted teachers and staff members to hear the preliminary findings and goals before the board took any action, thus he delayed a vote until the August meeting. With Monday’s unanimous approval of a 2-page summary document, Phillips said work will soon begin to develop action steps toward those goals.
“I do believe we’re at the point we need to solidify what this plan looks like and then move on to action steps,” Phillips said of what he projected will be a five-year plan. “We’ll have some good, emotional conversation about how to get these things done.”