The Park City School District has reported a $2 million dollar deficit in the proposed budget for the 2006-07 fiscal year.
“This is a very big concern for the board,” said member Vern Christensen, former financial officer for the Park City Education Foundation.
Before launching into budget explanations Christensen said the proposed budget is configured based on actual numbers through the month of February, and projected numbers through the end of the fiscal year on June 30.
According to the proposed budget, expenses for the upcoming year amount to $35,258,088. Approximately 85 percent of that will go toward salaries and employee benefits with the remaining portion being spent on student services, building operation and management, and transportation.
The budget shortfall can be found in the $33,215,515 revenue, made up from local, state and federal sources. According to Christensen expenditures have increased by 9 percent while revenues have only gone up by 7 percent.
To compensate for this the district will draw money from what Christensen refers to as the “rainy day fund,” or the undesignated fund. During the 05-06 fiscal year $2.6 million was available in that fund, which will be drained to $46,456 in the proposed budget for next year.
“Our rainy day fund should be for rainy day expenses and not for everyday expenses,” Christensen said.
He added the danger in using that money now lies in unforeseen expenses during the 06-07 fiscal year.
For example, this year the amount spent on utilities increased, with gas, water and electricity prices increasing unexpectedly, said Christensen.
“When you’re a big school district and running a big building you get hit pretty hard by that. Typically that is what the rainy day fund is being used for,” Christensen said.
The school board is in the process of weighing a number of options.
“You can either increase revenue or you can cut back on expenditures, the only revenue that we can increase as a taxing body is the voted leeway component,” Christensen said.
Voted leeway is one of several property taxes the district can levy. While there is a cap on how much can be collected, the district is not collecting the full amount it can under that state mandated cap. To collect more, a Truth in Taxation hearing would need to be held.
Another source of incremental income for the district is tied to the construction of new buildings and homes, this might generate enough revenue to cover part of the deficit.
The board is also looking into various methods to reduce expenditures, one way to do that is to add one student to every class.
“We have a 23:1 classroom size, if we increase class size we would have need for fewer people,” Christensen said, noting again that the majority of expenses is tied to salary and benefits.
The district pays approximately $2.5 million for employee health benefits.
“Many companies have their employees participate in health insurance, one way (to reduce the deficit) would be to have the employees participate in their own health insurance,” Christensen said.
These options and others will be discussed at the next board meeting on Tuesday, June 20.