The Anoka-Hennepin School Board unanimously approved the district’s fiscal year 2018 budget June 26.
When the board took a first look at the proposed budget in May, numbers were still very much in flux with an ongoing legislative session.
Chief Financial Officer Michelle Vargas presented a scenario where the general education formula increased 1.5 percent each year of the biennium.
At session’s end, lawmakers agreeing to a 2 percent increase each year was a victory for education.
“We can be happy with this legislative session,” Board Chairperson Tom Heidemann said. “It looks like we’re going to be balanced for this year and most likely next year.”
General fund revenue and expenditures are off by $511,045, but with a $4.5 million spend-down in one-time strategic investments planned, there is an adjusted operating surplus of $4 million, Vargas said.
Looking at the broader budget, the district expects to take in $556.9 million in revenue, a 1.6 percent decrease from fiscal year 2017, while expenditures are projected to rise 1.3 percent to $560 million.
Cuts will not be necessary this year as they were last year when $1 million was shaved from the budget by making changes at the central office.
General fund revenue is expected to increase 1.9 percent with rising enrollment and additional money on the formula, among other increases. In total, $502.5 million is expected to come in during fiscal year 2018.
Anoka-Hennepin is planning for an additional 130 adjusted pupil units during the 2017-2018 school year.
“That could be a conservative estimate,” Vargas said. “We could see more than that.”
The state will provide an additional $121 per pupil unit for a total of $6,188 per pupil unit. With increasing enrollment and the formula change, Anoka-Hennepin will collect an additional $5 million in revenue.
More money will also be available for long-term facilities maintenance projects and special education.
“We are highly dependent on state revenue,” Vargas said.
Taxpayers are the second largest revenue stream for the district, providing 16 percent of general fund dollars, or $79.7 million.
The district approved a $92.2 million 2017 tax levy in December 2016, which marked a 0.1 percent decrease from the 2016 levy.
General fund expenditures are expected to increase by 1.6 percent to $503 million.
An additional 42 full-time equivalent positions – 20 FTEs to accommodate increasing enrollment and 22 FTEs to enhance special education services – will increase expenditures.
Salaries are estimated to rise by 2.5 percent, and insurance premiums are expected to jump by 5 percent, as they did last year.
Once again, utilities are estimated to increase by 3 percent, and the transportation contract will see costs rise by 3.75 percent.
Long-term facilities maintenance projects will ramp up by $1.4 million, but an $8.1 million reduction in building projects and capital lease payments will provide a cushion.
Vargas called both the food service and community service funds “very stable.”
Food service revenue is projected to increase by 2.6 percent to $20.8 million, while expenditures will increase 4.2 percent to $21.1 million.
A 5-cent meal increase approved by the board will help food service boost revenue, but expenditures are going up too.
Food service has not been fully staffed in several years, so the district will make that happen this year, but at a cost.
A $383,704 deficit is expected, less than the $1.1 million deficit in fiscal year 2016, but considerably more than the $50,114 deficit last year.
Community service is projecting a surplus of $18,741.
Revenue and expenditures will both be affected by growing Adventures Plus and School Readiness programs.
“As much space as we can have, they’ll fill it,” Vargas said.
Revenue is set to increase by 3.1 percent to $23 million, and expenditures will increase by 2.8 percent to $22.9 million.
The capital projects fund will see no revenue for the second year in a row.
“We don’t have a lot going on in this fund anymore,” Vargas said.
The fund had tracked long-term facilities maintenance projects, but now only projects that cost a minimum of $2 million are accounted for in this fund; the rest are tracked in the general fund.
Expenditures are decreasing by $2.4 million, but still come in at $688,000 due to interest payments on 2014 elementary additions.
The debt service fund shows the largest disparity between revenue and expenditures: $1.2 million.
In late 2016, the district pursued a bond refunding on $20.4 million bonds initially issued in 2009 to fund post-employment benefits.
Revenue plunged by $19.9 million with the sale of the bonds not reoccurring, and expenditures are increasing by $278,557 with double payments required until bonds are redeemed in fiscal year 2019, according to Vargas.
The account’s fund balance seems extraordinarily high at 194 percent of annual expenditures, but 88 percent of the balance is in an escrow account to pay off the bonds and will fall off in February 2019.
Though trust fund revenue is increasing and expenditures are decreasing, a planned spend-down of the fund balance will occur. Revenue is estimated at $950,000, and expenditures will come in around $1.3 million.
“Thank you very much, Ms. Vargas, for being so careful in your budgeting process,” Heidemann said. “We really do appreciate how thorough you are, and you make sure that we’re covered on all these different formulas so we’re not surprised. I know that it takes a lot of work and a lot of research for you and your team. You do an outstanding job, and we really do appreciate it.”