The vote to approve $210,000 in spending to refurbish the Octorara Track was held at the Board of Directors’ Meeting on Sept 21st. The agenda item caused information to surface that several Board Members had been asking for almost 2 years. A last minute modification to the agenda item also added a bit of a twist, However, before all that, lets talk about current district costs, expected deficits, and the 2016-2017 Budget process. Good times, right?!
Explaining Budget vs Actual Costs
The issues of actual cost and the budget were discussed in the Finance Committee meeting. However, my first observation comes from comments made during the Track discussion. It explains a lot about our current financial situation when there are Board members who—either actually or intentionally—don’t understand the difference between budgeted costs and actual costs, or the difference between coming in under budget and coming in under revenue.
How has the District, for the last 2 years, come under budget but still ended with deficits? It is easy to come in under budget when you inflate costs on paper. As an example, if you know your actual car payment is $250 per month, but on a written budget you pencil-in a cost of $300 per month, then on paper it looks like you are doing a good job saving. This is essentially what the District has done for roughly 10 years.
What we have today is a situation where the car payment is $250, we only have $240 to pay for it, but we still are showing $300 a month on the budget. On paper, we look like we are saving. In reality, every month that goes by, we are getting farther and farther behind. Did I explain that well?
Projected Actual Costs and Deficit
The current projected actual costs for the 2015-2016 school year are expected to create a deficit of $647,472. These numbers were given to us by the Business Manager. They are also based on the current Teachers’ contract, and do not include any projected cost increases associated with any potential new contract.
Mr Curtis is also projecting 2016-2017 school year actual costs will increase by $1.5 Million, with a deficit of $1.6 Million. These projections assume only a modest increase in revenue, without a tax increase, and they again do not include assumptions about costs associated with any potential new contract.
While not specifically discussed in the meeting, we can have a reasonable expectation that taxing to the Act 1 limit will only add roughly $800,000 in revenue. If the Board decides to take that path, the actual deficit for 2016-2017 could be a around $800,000.
2016-2017 Budget Process
Beginning next month, the Policy Committee meetings will be moved to coincide with Facilities. This is to ensure that there is enough time in Budget talks, and because of the seriousness of our financial situation. There may be a few Board members who will pretend there is nothing wrong in front of a crowd of parents, in a meeting being broadcast over the internet, but come to a Finance meeting.
Based on all discussions to date, it looks like we will be attempting to keep the budget flat year-over-year. However, remember budgeted costs are not the same as actual costs. The 2015-2016 Budget was $50.7 Million. I am hoping we can achieve a $50.7 Million 2016-2017 Budget. However, the current expect actual costs for 2016-2017 are also $50.7 Million, which will be an increase of $1.5 Million over this year.
This means, while a minor victory for Octorara taxpayers, keeping the budget flat does little to keep actual costs down. We will still have a projected deficit of $1.6 Million. Taxes will still need to be taken to the Act 1 index limit, and the additional revenue will still be short roughly $800,000.
Over the last few months, there has also been talk about cutting $300,000 in personnel, with most if not all of the cuts coming from teaching positions. If this is done, in combination with tax increases, it will decrease the expected 2016-2017 deficit to around $500,000. We can then start looking at what to do about the 2017-2018 year.
Track and Field Vote
During Visitor Comments, Joan Agen spoke on behalf of the Field Development Task Force. She stated that when these talks began, the Task Force agreed that they could raise $100,000 toward the refurbishing the track. They have raised $60,000, and expect the remaining $40,000 will take 2 more years. She urged the Board to vote to approve the spending on the repairing the track. Wait, what?
These statements took at least some Board members by surprise. Over 2 years, several of us, at different times, have asked how much the Task Force believed they could raise, and how long they expected it would take. The Board members asking for this information believed it to be crucial in determining if the project was even feasible, at least they believed it was important at one time. The only person, in the end, that it really was important to was me. There is no evidence this new information influenced anyone else’s vote.
After all the discussion by the Board, what was being voted on last night was approving an expenditure up to 50% of the track cost, not to exceed $210,000. The vote would also prohibited the work from starting until the Task Force raised $134,000. The Task Force also had to commit to raising another $75,000 within 2 years of the work, in order for a protective coating to be added. The total commitment from the Task Force was expected to be $209,000, not $100,000.
I’m not going to go into all the drama of the discussion here. Free free to visit The Cube and watch the video. However, in the end, the action was modified to state the terms of the agreement expired on June 30, 2017. There was modest agreement this arrangement should not exist in perpetuity. Future Boards can always renew, but they should not have their hands tied.
The spending was approved 8 to 1. I was the lone dissenting vote.
Last week, the Facilities Chairperson recommended the Board approve spending $250,000, with the project starting this Winter, and without the Task Force fully funding their portion. This week, the Board approved spending for 50% of the project cost, not to exceed $210,000, with the work not to start until the Task Force has $134,000, and that offer expiring June 30, 2017.