In spite of the difficulties incurred from the pandemic, the financial forecast for Rochester Public Schools is looking a little less dire than expected earlier in the year, partly due to a new round of funding from the federal government.
The Rochester School Board received an update Tuesday about the five-year financial forecast for the district as well as information about the budgeting process for 2021-22.
"It's now looking like we probably don't need to go through a dire budget-cutting process this spring for next fall," RPS Finance Director John Carlson said. "I would say we're in a better spot than what we thought we were going to be in."
Part of the reason for that is because the district recently received a little extra relief. Carlson said he was just notified that RPS should receive an estimated $9.2 million in federal relief funding that it had not originally counted on.
However, the presentation did include some negative news. Carlson said they're assuming the district will get a 1% increase in funding from the state over the next two years instead of the 2% it would normally expect. The district also has lost funding because this year's enrollment was down by more than 800 students.
Although the district doesn't have to worry as much about the immediate future, it will have to address a shortfall coming down the road. According to Carlson, the district's unassigned fund balance, which essentially acts as its reserve, will be 8.2% of the budget for 2020-21. Two years down the road, that percentage is expected to decrease to 1.3%. The year after that, according to the projection, it will get into negative territory.
Carlson, however, clarified that financial forecasts usually appear more dire than those years actually end up being.
"Forecasts are usually negative because they assume the budget is on autopilot," Carlson said. "That would be irresponsible just to let the budget be on autopilot; we have to make decisions day by day, month by month on what we're going to do."
One of the board's options would be to implement an operating levy override, which provides a given dollar amount to the school district every year from taxpayers.
The school district currently has an operating levy that provides $781 per student. If voters approved it in a referendum, the district could increase that levy to $1,779. Operating levies have become a common form of school financing since the school funding formula from the state has not kept up with inflation.
Greg Crowe with Ehlers Public Finance Advisers, informed the board members that another option would be something called a "capital project levy." Like an operating levy, it would provide funding to the district from taxpayers, but not on a per-pupil basis.
The School Board did not make any decisions Tuesday about whether to put either option before voters.
"Since I've been here . . . we have always finished every year better than we projected, and that has a lot to do with what we do on the management side of things," RPS Superintendent Michael Muñoz said.