St. Marys Area School District Superintendent Ann Kearney reviewed the proposed budget for the 2011-12 school year during the SMASD Board of Directors workshop held Thursday evening.
Kearney began by explaining the reserve funds, specifically why the district's budgeted numbers and actual numbers may be different.
"We don't have the exact numbers because the state changes them and we have to estimate our earned income," Kearney said.
She said the budget is a district's projected revenue and expenditures, while the "actual" figures represent the year-end listing of the final numbers in each category after all savings and cost-cutting measures have been realized.
"Good financial management would always want the actual to be less than budgeted - thus saving money and planning on its use in future budgets," Kearney added.
For the 2010-11 school year, the amount budgeted to the general fund was $24,033,023, with the actual funding from the general fund to be determined.
In 2009-10, the district budgeted $23,800,000, with the actual funding from the general fund being $22,064,000, a difference of just over $1.7 million.
For the 2004-05 school, year the district encountered a negative difference of $291,000 between the two funds and another negative difference of $984,000 in 2005-06.
These were due to the district expanding its kindergarten program from half-day to full-day. In order to do this, the district added four new classrooms to South St. Marys Street Elementary School. In May 2005, the district began a capital improvement project out of its fund balance. Because the project was unbudgeted, the result was a negative difference in both the 2004-05 and 2005-06 school years.
It was explained that, like a household, the district has both fixed costs as well as those which can fluctuate, both of which are also true for revenue. In order to account for this, the district projects its income and expenditures as best as possible, then goes about building the remaining budget to support its programs and initiatives.
"By using the prior year's budget numbers, rather than actual numbers, the district ensures that the influence of inflation and cost-of-living increases are included," Kearney said.
According to Kearney, any savings the district has is budgeted in three ways: putting it in a reserve fund in a separate account for capital projects, retirement and technology; putting it toward next year's general fund budget to reduce the tax impact; or putting it in the general fund balance as a reserve for early-year expenditures and late emergencies.