Spencer School Board allocates $800K district surplus

By Valorie Brecht Due to a number of factors, the Spencer School District ended its 2023-24 budget year with an $800,000 surplus, so at the last school board meeting, the board had to decide where to put that money.

At the July 17 meeting, District Administrator Jason Gorst explained how the district had arrived at such a surplus. For one, the school district’s revenue was about $190,000 more than what was budgeted for. The district also spent about $100,000 less on open enrollments out of the district than anticipated.

“We’re continuing to close that open enrollment gap that we’ve always had,” said Gorst.

The district also saved about $40,000 on health insurance, when staff members opted to take cash in lieu of benefits. With the mild winter this year, the district saved about $23,000 on gas and another $15,000 on snow removal and other services.

Gorst said the district was also able to offset its technology department this year, paying for it almost entirely with Elementary and Secondary School Emergency Relief (ESSER) funds, which had to be used by Sept. 30. That resulted in $60,000 in savings.

“We also offset other costs with other grant money we brought in for a total of about $40,000, and then from the earnings side, we earned approximately $135,000 more interest than we had budgeted for. So, all good news,” said Gorst.

The exact surplus amount was $800,695.39. Gorst offered three scenarios for what could be done with the surplus. One was to not transfer any money to Fund 46 (the Long Term Capital Improvement Trust Fund), which would create a mill rate of $9.89 (current mill rate is $8.03) and a fund balance of about 37% of total annual operational expenses. The second option was to transfer the entire balance to Fund 46, which would create a mill rate of $9.19 and a fund balance of about 27%. The third scenario was to transfer $125,000 to Fund 46, which would create a $9.30 mill rate and a fund balance of 29%. Any of those scenarios would still keep the mill rate lower than the $10.70 number that was provided as a projection during the school district’s last referendum.

School financial planners recommend districts maintain a fund balance of at least 15% of total annual operational expenses, so also in any of the above scenarios, the Spencer School District would be meeting that. The current fund balance is at about 28%. The state average is about 20%.

“Compared to our neighbors, we are higher than most when it comes to our fund balance,” said Gorst. “Currently our fund balance is high enough that we don’t have to do

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any borrowing for cash flow situations, which is good. It’s in a very healthy situation. In talking to the Baird analysts, they said that some schools will just make it a yearly thing just with cost of living raises, inflation and whatever, to just put slightly more into your fund balance, so that’s kind of the decision that’s at hand… When I talked to Baird, they said we could go either way with it; it’s just a preference thing.”

After seeing all the options, the board members were inclined to choose the second scenario.

“I would think the full transfer, just because we know we’re going to use it. And right now, we have a pretty steady referendum, we cut an FTE, like next year we might have to do something to get more state funding if we transfer it all, to offset,” said Becky Gorst.

“My gut’s telling me the full transfer too. Because let’s say next year we wanted to plan to put something into the fund balance, you could use the funding from Fund 46 to essentially pay for your maintenance budget,” said Jordan Buss.

“And we do have to think, what was it? Is it 15 years the dome roof will be up? The quote right now is over $300,000. I don’t know what it’s going to be in 15 years; I don’t want to think about it… This opens up more options to pursue things like that. The boilers are sitting in the back of everyone’s minds too. There’s quite a few big things coming up here. So you can hopefully alleviate some sort of capital referendum, if you can pay for it yourself,” said Director of Business Services Eric Craft.

The board chose the second scenario to keep the mill rate as low as possible. The board voted unanimously to transfer $831,881.55 from the General Fund to the Long Term Capital Improvement Trust Fund.

The board also voted to make a transfer from the General Fund to the Special Education Fund.

“That is the end-of-the-year transfer for Marathon County Special Education… It’s required by law but you still get to vote on it,” said Craft.

That transfer was for $999,251.07.