Gearing Up for Budget Season

Gearing Up For Budget Season
Posted on 01/17/2018
S Norris Picture

Gearing Up for Budget Season

by Stephanie Norris, Business Manager of Mexico Public Schools

Every year the Mexico Public School District prepares a budget to account for the revenue and expenses it anticipates for the coming year.  Per State Statute, the final budget is to be in place and approved by the School Board by June 30th.  However, the process begins well in advance of this date.  So while accountants are in the height of Tax Season, the District is in the height of Budget Season.  

The budget planning process usually begins with reviewing where we are and what has happened in the past.  The District has years’ worth of data that we analyze to determine trends.  It aides us in making estimates going forward, particularly in revenue growth.   For instance, for the past several years our assessed value has remained relatively flat.  However, it appears that it is now on the rise as it has had significant growth in the last 2 years.  This is very promising for the District as Local and County taxes account for 50% of our operating revenue.  

Another tool the District uses at this stage for budgeting revenue is to gather information from agencies and governments providing that revenue. For instance, the funding that we receive from the State is based upon State legislation and the State budget.  The most current information we have on the State budget at this point in time is that it is projected to run $200 million dollars short this fiscal year.  There has been no definitive answer as to how this will effect school funding for next year; however it is sure to have an impact.  Last year the District saw an increase in State funding.  This year it still remains to be seen whether the State will meet its educational funding target and fully fund the Foundation Formula, which is the formula that determines what state monies each district will receive based on their enrollment and local tax revenue.  With 38% of our operating revenue coming from the State, this is something that we follow closely.

The largest portion of the District’s operating expense budget, as with all school district budgets, is based in salaries and benefits for faculty and staff.  This includes the expense of health insurance for all full time employees.  On average, this tends to represent 80% of our operating budget.  These are expenses that are not easily reduced without making personnel cuts or changing benefits.  One portion of this which is a hot topic right now nationwide is the increase in health insurance premiums.  This year the insurance premium cost paid by the District increased by approximately $100,000. It appears at this time that rates will continue to rise in the foreseeable future.

Once the District has gathered all of this information, the end goal is to form a budget that utilizes our resources in such a way as to make the most impact on our students while keeping the District fiscally healthy.  We take great care in assuring we have adequate cash flow throughout the year to meet expenditures in lean months before our large tax revenues are received.  In the last several years, we have made significant cuts in expenditures in order to avoid deficit spending when revenue growth has not kept up with inflation.  The great news is that all of these efforts have made an impact and going in to this Budget Season, the District is in a financially sound position.