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ICCSD financial state declined in 2013-2014

Personnel costs climb, key challenges lie ahead for district

IOWA CITY– The Iowa City Community School District’s (ICCSD) is in financial decline.
Those words weren’t heard Tuesday, Oct. 14, at the school board meeting, but buried in the 353-page board packet was the observation, written in the executive summary of the district’s annual financial report. “The district’s overall financial condition declined during Fiscal Year 2013-2014,” the report stated.
During his report to the board, District CFO and board secretary Craig Hansel tried to be brief.
“Tonight we will go through some key learnings because our board president wants short, concise reports,” Hansel began. “Both revenue and expenditures ended the year as projected. No surprises in that.”
Special Education and English Language Learner (ELL) student needs rose last year to $5.1 million and $1.1 million respectively, causing budgetary pressure as the district provided needed services. According to Hansel, 24 months ago, Special Education expense was $2.6 million and ELL was $300,000. “Our budget is under considerable change in those two general student need areas,” he said.
The district submitted a request for a special education supplement to make up the $5.1 million deficit in special education spending. The state’s School Budget Review Committee (SBRC), a non-partisan body established by the legislature with authority and responsibility to equalize educational opportunity, is expected to consider the request. The school board made necessary approvals of the request at the meeting.
Perhaps another non-surprise is that the district’s biggest expense is personnel.
“Personnel costs climbed,” Hansel said. “It is a little bit on the higher end of the scale.” In his written report, Hansel indicated the employee-cost ratio (the result of dividing the sum of wages and benefits by total general fund expenditures), had risen each year since 2011 from 80 to 82 percent at the end of last fiscal year.
“We really need to keep that employee-cost ratio around the 80 percent mark,” he added.
General Fund cash balance also declined, the direct result of pressure from increases in special education and ELL spending, according to Hansel.
Unspent spending authority declined. The district ended the year at 2.3 percent because of more special education expenditures than projected, with the recommended range being 5 to 10 percent of discretionary authority.
“Here’s the key,” Hansel said. “100 percent of the unspent balance is made up of categorical funds. The district currently has zero discretionary unspent balance carried over from 2014. It’s not a particularly good situation to be in.”
Hansel then looked toward the challenges ahead.
The first is implementation of the budget reductions outlined this spring. That is going well according to Hansel.
“Legislatively determined allowable growth. The more I hear, the more depressed I get,” Hansel said. “But at the same time, chances of us knowing what our allowable growth will be for budget year 2016, it will not happen in the first 30 days of the legislative session. We’re going to be budgeting on hypothetical models this year.”
With an election between now and the next legislative session, local lawmakers are aware of district issues with timely determination of supplemental state aid, also called allowable growth.
Two Johnson County legislators weighed in on the state supplemental aid and the related delay that vexes school districts during budget time.
“With Democratic majorities in both houses, we will do allowable growth as soon as possible,” said State Senator Bob Dvorsky (D-Coralville) in a text message response. “If we have split control, it will happen, but not as quickly.”
Democrats currently hold a majority in the Iowa Senate, and Republicans hold a majority in the House of Representatives, hence the term, “split control.”
“It is my intent and determination to push for school aid to be set immediately when session starts,” said State Representative Bobby Kaufmann (R-Wilton). “There’s no excuse to keep our schools waiting.”
The district is also facing a rapidly-growing student population, opening Alexander Elementary School, and adjusting the cash reserve levy as key financial challenges during the coming year.
“Personnel remains our single greatest cost center and we need to be actively managing both the numbers and cost in that area,” Hansel concluded.
Results of an audit of the district’s annual financial report are expected to be presented to the board in December.
In other business, Board President Chris Lynch recognized West High School Principal Jerry Arganbright for the manner in which the school handled a student who was carrying an unloaded handgun and a box of ammunition in his backpack on school property on Oct. 10. Charges have been filed against the student in juvenile court.
The next meeting of the ICCSD school board is Tuesday, Oct. 28, at 6 p.m.