FIONA MORGAN

fiona@amnews.com

The Boyle County School District’s general fund had a deficit of $1.2 million in the 2021-22 fiscal year. Reasons for increased expenses include construction projects, inflation, and no state funds for the influx of non-resident students.

House Bill 563, which allows students to attend other school districts, took effect this school year. While this bill had a minimal impact on other districts throughout the state, Boyle Schools gained 120 students across the district.

The district charges $500 tuition per non-resident student per year. However, the bill itself did not change funding for schools that received more or less students.

Superintendent Mike LaFavers said in the Board of Education meeting on Jan. 19 that they have spent more money to educate more students, but have not been compensated by the state. He said he’s spoken to people in Frankfort about getting this rectified.

“At some point out of fairness, the situation needs to change,” LaFavers said. “We’re educating the kids, they’re here, but someone else is getting the money.”

Funding for schools is always based on prior year attendance, but schools have been judged on outdated numbers due to the pandemic.

Finance Director Bobbie Brown said they should be compensated for extra students for the next school year.

“Obviously this speaks to Boyle County, I mean everybody wants to be here; we’ve just got to get the funding matched up,” Brown said.

The board discussed making slight changes to procedures for accepting non-resident students.

The main changes would be that students applying for enrollment should be in good academic standing, not have significant behavior events, and be required to be in good attendance. The term of enrollment would be one year, subject to annual review in compliance with the criteria listed.

The board may increase the cap for kindergarten at Woodlawn, going from four classes to five.

One local family who attended the meeting spoke about a need for an additional change. This family has a non-resident student at Woodlawn, and will have another child entering kindergarten soon.

They asked the board to consider adding a policy that siblings of current non-resident students have priority over new applicants. They said family logistics would be very difficult to have kids in two school systems.

The board said they would discuss the matter. They did not approve any changes yet, but may take action at their February meeting.

Other budget concerns

Other factors affecting the district’s budget are inflation, building maintenance and construction projects.

The board heard an audit report on their 2021-22 finances by Stephanie Abell with White and Company. The audit did not have any findings of noncompliance. However, it showed a lowering balance in the general fund.

The general fund’s beginning balance in fiscal year 2022 was $8,374,645. The ending fund balance on June 30, 2022 was $7,188,667. Revenues showed an increase of $1,126,501, while expenditures showed an increase of $2,401,546 from the prior year.

The district had $39.1 million in total revenue and $37.9 million in total expenses. Bond debt payments for fiscal year 2022 totaled $2.145 million in principal payments and $1.405 million in interest payments.

The general fund provided $439,476 for various construction projects during that year. Much of that money is from payments they made for the softball construction project at the high school.

LaFavers said about the other $800,000 of the deficit went toward staffing, which increased during the pandemic; maintenance at the old Woodlawn building, which has been costing about $150,000 per year; and inflation.

“$7 or $800,000 of that [deficit] was not construction, and that’s going to be an ongoing situation we’re going to feel this year too,” LaFavers said.

Total liabilities decreased $5,208,076 as compared to the prior year. But Abell said she expects liabilities for many districts to increase in the next year due to the market.

Finance Director Bobbie Brown gave a current general fund status update, which she said is looking tight.

With a beginning balance for fiscal year 2023 of $7,188,667, they are looking at an ending balance of $3.5 million. Brown said if they fully fund projects as is currently planned, their next general fund deficit will be $3.6 million.

However, the board has an option to get debt financing for the softball project.

Bonding the softball construction project

House Bill 678 currently allows districts to bond athletic projects, and the law is in effect for two years. By bonding the remainder of the softball project, the board can increase their general fund balance for the fiscal year’s end.

In addition, Brown explained that the same bond can also reimburse the general fund on payments they’ve already made on the project.

The maximum amount of the bond would be $3.5 million. The district has already paid about $1.1 million on the softball project, and still has $2.6 million left to pay.

However, Brown explained that the finance department could only apply to reimburse funds paid in the last 60 days from when the board passes intent to bond. Payments in the last 60 days from the Jan. 19 board meeting total $810,000. The board passed a resolution to allow them to possibly reimburse those payments.

The resolution does not lock them into a bond, or determine how much money to bond. The board can choose as little or much money as they’d like to bond.

If they bond the full amount of $3.5 million, the general fund would be at $7 million at year’s end. The board will have a working session to decide how much to bond.

“My goal is to reduce the strain on the general fund and our cash flow, spread those payments out over time, free ourselves up, and still leave bonding potential for future projects,” Brown said.

However, LaFavers warned that other factors and construction projects might decrease the general fund back down to $3.5 million in upcoming years if they can’t solve problems with the current budget.

“I think the argument to do it is that we’d be more comfortable next school year to have $7 million instead of $3.5,” LaFavers said. “Now the danger is that it does not incentivize you to make the harder cuts that will fix the general fund problem, and if you don’t do that, you’re just going to end up where you started again.”

LaFavers said they are not making cuts for the staff formula even though the budget is tight. He recommended they wait until next year to assess any staffing changes.

However, the board did cut 16 leadership stipends in order to help the budget, as well as communication stipends for every administrator, which were $500 per person.

The budget will not be affecting athletics or clubs.

The full financial report is available online at boyle.kyschools.us/Content/156