Sales tax revenue seen as rescuing school budget
While the St. Mary Parish School Board projected $3.85 million in expenses over revenues for the current budget year, sales taxes are on track to make up for a sizable portion of that, according to the school system’s chief financial officer.
At six months into the current fiscal year, the School Board was $1.9 million or 21 percent over budget projections for sales taxes.
“If the sales tax continues, we might make $3 million over budget,” Alton Perry said.
That would put the projected budget deficit around $850,000, some of which, Perry said, would be made up from designated funds for insurance increases and possibly the rest in Minimum Foundation Program money from the state if an increase is approved.
While the school system received an “unmodified clean opinion,” the highest ranking it can receive, from its independent auditor, it was included in an audit overview roundup by the Louisiana Legislative Auditor’s office.
Joy Irwin, director of local government services in the Legislative Auditor’s office, said the board is spending more than it takes in, but she sees no red flags because of the sizable fund balance it carries.
“They’re definitely spending more than they’re taking in … they’re overspending a tad, but they’ve got a healthy fund balance,” Irwin said.
The losses, Perry said, come from a $1.1 million increase in retirement, $400,000 increase in health insurance and $650,000 of annual pay increases for personnel. The pay increases include about $150,000 over normal because of a state-mandated salary conversion, he added. The increase is a one-time cost.
On the revenue side, where interest earnings used to run 5 to 6 percent, they now run 1 to 1.5 percent. That, combined with Section 16 property income decreases, adds up to a $750,000 loss per year from the height of collections.
Of the three to four years of projected budget deficits, the system has never had to dip into its fund balance, essentially a savings account that governmental agencies keep on hand that has money both designated for several purposes and undesignated awaiting a use, Perry said.
Perry said he always budgets conservatively because there is no way to know how well the district will do with sales tax collections.
According to the management discussion in the audit of the 2012-13 fiscal year, “this budget reflects a decrease in anticipated sales tax collections as well as a decrease in interest earnings attributable to the very low yields available for investment of funds. It also reflects a decrease in various revenues received from the state including MFP funding and various other grants. As far as expenditures are concerned, this budget reflects the annual salary step afforded to all employees. It additionally reflects an increase in employer contributions to the system’s two largest retirement plans and the health insurance plan. It also reflects a reduction in staffing of numerous administrative, teaching and support personnel positions.”