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Anoka-Hennepin School District’s Chief Financial Officer Michelle Vargas presented three scenarios in preliminary budget talks for the 2024-25 fiscal year to the school board at its meeting on March 27.
“Annually — and especially in a budget legislative funding year — we like to look at our biennial budget as we’re looking at what’s going on in the legislative session and setting parameters for our budget,” Vargas said.
Vargas presented three possible scenarios for the 2024-25 fiscal years based on expenditures, parameters and projected revenue.
In all three scenarios, the district is facing a $4,243,674 budget deficit in the current budget year in its operating fund. All three scenarios differ in fiscal years 2024 and 2025 depending on how the Legislature decides to fund education.
The state’s projected budget surplus is $17.6 billion.
In the district’s first scenario, Anoka-Hennepin is facing a deficit of $4,756,546 in FY 2024 and a $14,574,416 deficit in FY 2025 in the operating fund.
If this were to happen, the district could “ride the storm” because the district carries a 10% contingency with its operating fund balance, Vargas said.
“You’re not out there cutting ahead of that,” she said. “We’re not making program changes and staffing changes.”
In that first scenario the district is assuming that the formula for the adjusted pupil unit increases by 2%. A 1% increase to the APU formula generates just under $3 million for the district.
Vargas said they are using the 2% figure in the first projection because that’s traditionally what the increase has been each year, but explained that district finance officials are using the 4% APU increase in scenarios two and three in FY 2024 because the governor is calling for it in his budget plan, and then assuming it will be a 2% increase in FY 2025.
In both the first and second scenarios, Vargas said the district is assuming a $15 million expenditure to pay for a special education cross subsidy.
In the second scenario, the district is facing a $982,400 surplus in FY 2024 and an $8,711,910 deficit in 2025 in the operating fund.
If this scenario played out, the district would again be “looking at budget modifications, reduction or revenue generation to cover that $8.7 million,” Vargas said.
In the third scenario, the district is assuming that the governor’s budget has the state pay for the special education cross subsidy. That change would be reflected in a $15,982,400 surplus in FY 2024 and a $6,288,090 surplus in FY 2025.
In that scenario, board members would need to make decisions on how to spend the money, and Vargas noted that contract negotiations will be coming up.
“It gives you some breathing room with that,” Vargas said.
For all three of the scenarios for fiscal year 2024, the district is making the following expenditure assumptions: salaries will increase by 2.5%; benefits will increase by 5%; 52.5 full-time equivalent employees will be added for special education; transportation contracts will increase by 2.55%; utility costs will increase by 3%; and there will be a reduction of $11.2 million in strategic investment facility projects.
“These are all just considerations as we’re looking at building and looking at our two-year budget,” Vargas said. “Just giving you an idea of these what ifs, and what type of fund balance where we could be looking in July.”
Board members thanked Vargas for distilling the complicated information into an understandable format.
SOURCE: Hometown Source
