CARY – District 26 expects to run balanced operating budgets through the 2016 fiscal year, if funding comes in as anticipated from the state.
This includes adding 12 teachers next year to help bring back dedicated art, music and physical education teachers and going to 90-minute periods for middle school English. The staffing plan was approved Monday by the school board.
Administrators recently presented a five-year financial outlook, which takes into account having money available for technology upgrades, adoption of new textbooks, and setting aside money for facility upgrades and repairs, something the district had not been able to plan for in recent years.
The Cary-based district also is planning for a possible shift in pension costs from the state to the local level.
Over the next four years, the district has about 50 teachers retiring who are being replaced by younger teachers, who are lower on the salary schedule.
“We have natural attrition happening with our retirees,” Director of Finance and Operations T. Ferrier said at a recent finance committee meeting. “That attrition has helped offset the decline in revenue we’re seeing every year.”
However, there are additional costs that could help drive a future deficit such as health insurance requirements under the Affordable Care Act, special education costs increasing faster than the rate of inflation, and continuing cuts in state funding.
“Ultimately, the amount of the budget gap will depend on our ability to negotiate and to maintain cost-effective expenses from here going forward,” Ferrier said.
Board member Jason Larry said last week that he has concerns about the small differences between revenue and expenses the district is projecting.
“Although we have demonstrated the last couple of years our administration is able to manage razor-thin margins, this shows zero surplus, so any hiccup could potentially change this chart,” Larry said.
Ferrier said revenue from corporate property taxes and general state aid can be moved to operating from capital funds, or the district could cut back on technology or textbook purchases.
“Should we get in a situation where the razor-thin margin looks like it’s going to go red, then we could pull some of that general state aid or the corporate property taxes into the operating funds to cover that deficit,” Ferrier said.
“Another thing is how we continue to conservatively budget,” Ferrier added. “We generally budget on the conservative side, so we don’t put ourselves in a situation where we could potentially fail.”
With the five-year outlook, the district will be able to forecast future problems and begin to look at possible solutions.
At a recent Finance Committee meeting, board member Scott Coffey gave an example of possibly looking at benefit structures for employees.
“Those are the kinds of things where you could take action now ... change the benefit structure to the employee base, in [fiscal 2014] or somewhere along the continuum,” Coffey said. “Those are the kinds of discussions or changes you have to have to change a number.”
Superintendent Brian Coleman said previous forecasts had the district running deficits in the 2014 fiscal year.
“We’ve made huge progress with that,” Coleman said. “That’s five years out, we are looking at a deficit. Many districts are looking at a deficit now. I think the district is in great shape as we move forward. If you look at those year to year, and try to determine where you’re at. There is a lot of changes that can occur between now and fiscal year ‘17.”
Projected operating budgets
Fiscal year 2013
Revenues: $28.7 million
Expenses: $28.2 million
Difference: $500,000 surplus
Fiscal year 2014
Revenues: $29.3 million
Expenses: $29.3 million
Difference: $0
Fiscal year 2015
Revenues: $28.9 million
Expenses: $28.9 million
Difference: $0
Fiscal year 2016
Revenues: $28.7 million
Expenses: $28.7 million
Difference: $0
Fiscal year 2017
Revenues: $28.9 million
Expenses: $29.9 million
Difference: $1 million deficit
Source: Cary District 26
