It’s time to look back at the previous fiscal year’s finances and ahead at what this year is expected to bring. In a real twist in public school district land, I can actually say we are currently in great shape financially and will start FY2015 with over $2 million in the bank more than projected! This is due to a combination of conservative & responsible fiscal management; increased revenue that was not expected from places like the state funding formula and property tax collections; and changes to how we do “business,” resulting in about 9.5% of receipts from local revenue (this is up from less than 2% in 2006).
Even with the new contracts approved by the board, our next few years look very stable. We will be examining the five-year forecast next month, but we fully expect to be able to stretch levy funds for at least four years. At some point, we will need to run another operating levy to keep up with growing expenses. Property taxes, which are slightly over 60% of our revenue, are not permitted by law to increase over time (this is actually more complicated than my statement suggests, but it’s the general idea for Milford’s situation). This means that as your property values increase, the levy money you pay to the school district actually decreases – the levy funds are a set amount, divided over all the households in the district.
Because of this, even if the other 40% of the district’s income grows in line with inflation, the majority of our funds are not keeping pace with increasing costs. One way to look at levy funds is that they are at least in part an inflation adjustment implemented in one large chunk that covers several years.
But back to our current budget: we have built in conservative yet “safe” increases in all areas. Each department head has examined his/her budget very carefully, estimating what will be needed and what current projected costs will be. Some things, such as health care increases, cannot be projected with any certainty; but we believe we have been conservative yet realistic even in these areas.
Each year, we also look at what we projected last year for this year’s budget, versus what we are now appropriating (a confusing statement, I know! If you want more explanation, let me know). We do this to make sure we are in line with expectations, and not just projecting low numbers but in reality adding to the budget each year. As for the past several years, this analysis shows we are right in line with what we said we were going to do last year.
Each year we also look at grants. The district’s philosophy is not to automatically keep any items paid for by grants when that grant is finished, unless a strong case can be made for the benefits that item provides our students.
Once again in 2015, we expect to spend less than we take in. For a district like Milford, where revenue is tight and usually shrinking, this is a huge accomplishment. Thank you to all our staff, and especially our dedicated administrators, who are vigilant with their budgets to make this happen.