The Vernon school board pushed back against insinuations that it is out of compliance with state statute and misusing its fund balance.
On June 30, when the fiscal year ends, the district will have a total fund balance of $11 million, said business administrator Theresa Linskey at the board’s April 22 meeting.
Of that $11 million, $675,000 was used for purchase orders that have not yet been paid.
The district also had a restricted excess surplus from last year of about $2.9 million, which came from savings because the district was closed for three and a half months, from March until June, due to the Covid-19 pandemic. That money will be rolled over into the 2021-22 budget, in compliance with state statute.
“Covid was horrendous, but it gave us a surplus,” Linskey said.
She also suggested moving $3 million into the capital reserve fund to repair and maintain the district’s buildings. The windows at Vernon Township High School need work, in one example. She said the district will receive a free energy audit, provided by the state.
Board member Raymond Zimmerman said he favored being proactive, to prevent the district from having to do even more costly repairs in the future.
The district is in the third year of a six-year span in which it is losing $10 million in state aid. Capital projects have taken a back seat during this time.
School board president Justin Annunziata said if the $3 million isn’t put into capital reserve, it would become part of the district’s surplus and added to the 2022-23 budget.
“We should talk about the $3 million, but we should wait for the state audit,” said school board member Joe Sweeney.
Linskey also suggested putting $2,500 in the maintenance reserve fund.
Senate Bill 2691 increased the maximum unassigned balance a district can carry, from 2 percent to 4 percent. The district plans to carry $2.5 million in its unassigned fund balance, which is in effect the district’s savings account.
The budget’s total revenue is projected to be $66.7 million. The tax levy increase is 3.03 percent, due to about $442,000 in banked cap on top of the approximate total tax levy of $860,000.
The district will have no banked cap going forward. Revenue is expected to drop by about $1.55 million in 2022-23 and about $1.64 million in 2023-24
“If we don’t use the 3 percent tax levy, we either have to cut $1.3 million or draw down fund balance,” Annunziata said. “Both sets us up for failure in 2022-23.”
Linskey projects the district will have about $1.9 in excess surplus on June 30 that will be used in the 2022-23 budget.
The school board will hold a public hearing on the budget at Thursday’s meeting.
“The insinuation that there is $11 million in unassigned fund balance, and that we’re not in compliance with the statute is not true,” Annunziata said. “I don’t want that to be out there in the community. Our budget is audited. Our auditors say we’re doing a very good job directionally with managing the decline in state aid, and the county approves our budget every year. They don’t approve it with a blank check.”
“If we don’t use the 3 percent tax levy, we either have to cut $1.3 million or draw down fund balance. Both sets us up for failure in 2022-23.” Justin Annunziata