Friday, September 6, 2024
By Bert Lehman
The Clintonville School Board approved a preliminary budget for the 2024-25 school year that includes a deficit of $136,573.
The board approved the budget when it met June 24. Board member Glen Drew Lundt was absent from the meeting.
Superintendent Troy Kuhn told the board that changes are still being made to the budget as the district continues to fill out its staff for the upcoming school year.
Nick Curran, of CESA 8, who has helped the district prepare the 2024-25 budget, said the district doesn’t have all the information needed to finalize the budget. He added that some numbers from the state of Wisconsin are not finalized until after the start of the fiscal year.
“Until all that information is available, this is how accurate the preliminary budget can be, but it does give you a good baseline and good understanding of what we’re looking at for the next fiscal year,” Curran said.
When looking at the annual budget, Curran said the goal is to create stability and awareness.
“There’s always going to be certain challenges, but what I mean is, lets create awareness through this process, so when Troy (Kuhn) has an administration meeting, when he’s talking to his administrators and with you, nobody is surprised by what the results are going to be and where we’re at,” Curran said.
Curran added that it is important for districts to maintain their fund balance, and in Clintonville’s case, increasing its fund balance to get it to within board policy should be a priority.
Board member Jason Moder asked Curran how confident he was with the budget numbers being presented to the board.
Kuhn said the biggest unknown is the staffing in the district. He added that during the process of filling vacancies in the district, multiple candidates have not accepted job offers from the district because the district was staying within it’s budget limits.
Kuhn asaid there are positions that no longer exist, that are included in the budget.
Curran said the district’s Fund 80 year-end balance will be approximately $3 million, which he said is high.
“I recommend that you strategically reduce that fund balance to less than $500,000, and quite frankly, I’d probably recommend quite more significantly less than $500,000,” Curran said. “Typically, Fund 80 for most districts is money in, money out type of situation. You tax for the money you need for that year. You don’t typically pool a fund balance.”
He recommended the district invest a majority of the funds currently in Fund 80 into a “CD ladder.”
“The goal there is to maximize your interest,” Curran said.
In a sample scenario Curran presented, the district could make around $185,000 in interest over the course of three years.
If the district would go this route, Curran said the district would not have to levy as much for Fund 80, which would allow the district to either reduce its tax rate and tax levy, or increase its funding in another fund.
Curran also told the board that rather than the district keeping its tax rate stable at $10.74, that it determine its levy based on total dollars instead of tax rate.
He made this recommendation based on the trend of increasing property values in the district. When the property values are increasing, taxes are also increasing for property owners.
“You can have a flat mill rate, but if you’re having those types of (property value) increases, your property taxpayers are going to pay more taxes,” Curran said. “It’s not necessarily your fault, because you are keeping your mill rate flat, but ultimately at the end of the day, because your having increases in property values, based on school funding, you’re getting more dollars as a district, but the taxpayers are also paying more.”
If the district would decrease the levy for Fund 80, it could move to increase the levy for Fund 39, which is the debt for the district’s buildings. The annual debt payment for Fund 39 is around $2 million, Curran said.
By increasing the levy for Fund 39, the district could pay off the debt early, which would save the district in interest costs.
“There’s potential to do a significant over-levy of Fund 39, pull that debt forward through defeasance, save interest costs, and set yourself up for a better place if you have to have an operational referendum,” Curran said.
Curran presented the board with a budget forecasting model for the district for the next several years. While presenting the model he said the numbers will change.
“No matter how we tweak the forecasting, you’re going to have a shortfall you’re going to have to deal with,” Curran said.
In a follow-up interview with the Clintonville Tribune-Gazette, Kuhn said the preliminary budget that was approved a year ago for the 2023-24 school year had a deficit of $1.2 million. Since that time the district has worked with CESA 8 and other financial experts to help develop a budget plan into the future.
“We don’t just want to fix the budget for this year, we want to fix the budget moving forward, therefore we need to make sure our forecast model is correct,” Kuhn said.
He added, “Right now we proposed about a $130,000 (deficit), but we have to finalize staffing. I’m not necessarily concerned about the $130,000 because we have to fill positions. If we don’t fill those positions, then it’s really easy to make up $130,000. But the negative is, when you don’t have the people, everybody else has to do the work. The work doesn’t go away.”
The Clintonville School Board received information about a budget forecast model that included an operational referendum.
Presented on June 24, the forecast model was for discussion only. No decisions have been regarding the referendum.
Nick Curran and his team at CESA 8, which has recently helped the district with its budgets, developed the budget forecast model that included an operational referendum for the 2026-27 budget.
For a variety of reasons, he said the spring of 2026 would be the first optimal opportunity to put an operational referendum before the district’s voters.
“Unfortunately, I think you knew this already, but I do think based on the numbers and forecasting, an operational referendum is in your future,” Curran said. “It would be wise, at a minimum, to at least start preparing for the idea there might be an operational referendum and what that might look like.”
School Board President Ben Huber said an operational referendum would need to be announced to the public six months prior to the referendum being on the ballot. That would mean about this time next year, the board would need to decide if it wanted to present an operational referendum to the district’s voters on the spring ballot in 2026.
Curran warned that if the district decided to have an operational referendum and it was approved, it would be difficult to stop having operational referendums in the future.
“Once you start going down this path, it will be harder to get out of that path,” Curran said.
At that point, because operational referendum funds would have been in the budget, the district would need to have another operational referendum or cut its budget.
In a follow-up interview, Superintendent Troy Kuhn said, “What we’re really doing with this forecast model is trying to predict how we can use our extra money in Fund 80. Invest that. And what we can do then is reduce our mill rate in Fund 80, increase our mill rate in Fund 39 to help pay off the deficit of our loans quicker, which in two to three years would result in us being able to possibly go to an operational referendum, and keep the mill rate the same, or even make it less, depending on how the market is the next couple of years.”
