The end-of-year reports are in and the Kent School District appears to have weathered this past year’s financial storm in pretty good shape, which has prompted officials from the Kent Education Association to chastise the district for not spending money it had allotted.
According to Financial Director John Knutson, who gave a presentation to the Kent School Board at its Oct. 28 meeting, the district ended the 2008-2009 fiscal year with an ending fund balance of $22.6 million, an increase of $4.3 million from the year before.
In a phone interview Friday, Knutson said the increase was due mostly to the district’s $2.5 million in budget cuts last year, as well as staff response to a request to slow spending and cut back on equipment purchases and travel expenses.
Kent School Board President Jim Berrios declined to comment Monday, except to say the fund balance checks out with the board’s 5 percent policy. Under the school board policy, 5 percent – equal to 10 days of the district’s operating budget – must be retained.
Knutson said while employee-related expenses such as salaries and benefits increased by 7 percent in the 08-09 fiscal year, non-employee costs saw a 10 percent decrease, from $45.2 million to $40.6 million.
“That was the variable,” Knutson said. “It really shows the responsiveness of our staff to those requests.”
In addition, Knutson said the money was put aside because the district knew there would be state reductions, as well as salary increases due to a new teacher contract.
Knutson also said the district took in an additional $1 million more in revenue than expected, but added that the amount represents less than 0.5 percent of the budget.
“In budget terms, we nailed it,” he said of the revenue projection.
According to Knutson, revenues this year were more difficult to predict because of cuts at the state level, which were plugged mainly through the federal stimulus dollars received by the state and passed on to school districts.
As part of his presentation, Knutson also provided a breakdown of the district’s $22.6 million fund balance, which includes $9.8 million in designated funds (including inventory, carryover costs, insurance and “other items,” including money for flood preparation) as well as $12.768 million of undesignated/unreserved fund balance.
According to Knutson, that equates to $31,594 more than the 5 percent required by board policy, which represents 10 days of operating budget. He also said the money gives the district a “cushion” for things like flood prep, as well as additional money to meet costs, claiming some other districts with lower fund balance percentage requirements are in “trouble.”
“Some of them are borrowing money to make payroll,” he said.
KEA officials at the meeting and again Friday in a phone interview chastised the district for not spending as much money as it had budgeted, pointing to budget projections that showed an ending fund balance of $6.6 million, a far cry from the $22.6 million the district actually finished with. KEA Uniserve representative Mike McNett, part of the union’s bargaining team earlier this year, said staffing figures show the district budgeted to hire 43.81 more teachers than it actually employed, which he said would account for $3.3 million of the fund balance increase.
“We were disappointed the district failed to fill these positions,” he said, adding that it’s “secret to no one that class sizes are too large.
“If their priority is educating children, that’s where their budget should go.”
McNett also accused the district of “crying poverty” earlier this year while actually increasing the fund balance.
“The whole thing seems somewhat misplaced,” he said, adding that it “seems like gross financial mismanagement.”
Knutson said the district purposely budgets for extra positions each year to give the district more leeway, as opposed to having to do budget amendments during the year.
“The budget is not a plan on exactly how much we are going to spend,” he said, adding that the Kent School Board only authorizes a certain amount so the district purposefully pads it each year, just in case.
Knutson also said the savings the district made this year seem to “counterintuitively” make it look like the district has additional money.
“When you make budget reductions and they are effective, you will end up with more money at the end of the year,” he said, adding that the district was not “socking away huge amounts of money.”
“We try to keep ahead of it,” he said of difficult financial times, adding that “federal stimulus funds have really kept us afloat this year and next year,” but there is no guarantee there will be additional federal money after that, leaving the district’s finances in the the state’s potentially shaky hands.
“We have not drained our resources and we are prepared for some tougher times,” he said.
McNett said none of that changes the fact that the district has a fund balance of $22.6 million.
“I can’t say the future doesn’t have some uncertainty to it, but I don’t think that means the school should be claiming poverty over last year,” he countered, adding that the district did so “while, in effect, turning a profit.”
“They could have done better than they did with the resources at hand but instead they chose to accumulate money rather than adequately staff their schools,” he said.
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