After cutting $2.6 million from its operating budget for the 2008-09 school year, the Kent School District is facing further cuts in the future as expenditures outstrip revenues and the district’s fund balance continues to shrink.
With a presentation subtitled “Living Within Our Means,” John Knutson, the district’s executive director of finance, painted a gloomy portrait of district finances in his multi-year budget forecast during the Sept. 24 Kent School Board meeting.
This past year, the district had to rely on the unreserved fund balance for $4.5 million to help balance the books. Without expenditure cuts, drawdowns to the fund balance of nearly $6.3 million will be necessary, forcing it below the 5 percent mandated by board policy, according to Knutson.
“No district can survive a continuous drawdown of fund balance,” Knutson told the board.
He said the fund balance is designed for emergency costs, not continuing costs. This year, for example, the district had to cover a $655,000 investment loss.
The fund balance also contributes to the district’s bond rating.
According to Knutson, the decline in revenues is due to cost increases that outpace local levy funds, cost-of-living increases in salaries, benefits and pensions, and a decrease in revenue from Initiative 728 funding, a statewide measure passed by voters in 2000 as a way to reduce class sizes.
Knutson said numbers provided by the state indicate that cost-of-living allowance rates over the next three years will be 3.4 percent, 2.4 percent and 2.5 percent, though they may change due to a “gloomy state revenue forecast.”
Though state money will pay for increases for most teachers, those hired by the district on local levy dollars also will receive the increases. However, the district levy is at the legal limit, meaning cuts are the only way to balance the budget, Knutson said.
The board’s next step is to begin meeting with the community to discuss possible cuts to make in the budget. “We definitely have our work cut out for us,” said board member Debbie Strauss.
Knutson agreed, noting, “We don’t want to paint a worst possible case of doom and gloom, but this is pretty bad.”
