District Financial Update
Based on Annual Financial Report
by Tom Mulligan
February 11, 2008
The Riverton School District recently received its annual financial report for FY 2007 (the 2006/2007 school year). The financial report provides a financial picture for the district’s finances through June 30, 2007. The district’s fiscal year is from July 1 through June 30 each year. The annual financial report provides information regarding the district’s expenditure and revenue activity during FY 2007. It also provides information regarding the district’s fund balances. The State of Illinois’ financial accounting system requires each school district to collect and expend money in various funds. Those funds include the Education Fund, Operations and Maintenance Fund, Transportation Fund, Working Cash Fund, etc. The district’s overall fund balance is the accumulation of all the district’s fund balances. The remainder of this section will provide some of the highlights from the financial report, along with other information about the district’s financial situation.
Actual district expenditures exceeded budget figures for FY 2007. Fortunately, revenue also exceeded budgeted amounts. The district ended FY 2007 by spending $336,933 more than it received in revenue (budget called for deficit of $348,871). In summary, the district ended the year in better shape than the budget had indicated. The main reason for the deficit budget in FY 2007 was related to construction costs that exceeded the $8,800,000 in the bond money the district received from the building bond referendum. The total cost of the construction project totaled around $10,000,000. In 2005, the district had used the cost estimates from their architect in drafting the bond resolution for $8,800,000. Once the question was approved by voters (over 75% approval rate), the district was informed that the cost of the original project had gone up over $1,000,000 due to substantial increases in material costs as a result of the 2005 hurricane that hit the southern costal areas and the Tsunami in East Asia. As a result, the school board made the decision to provide the community with the same project they had voted for in the referendum. To do that, the district had to use around $1,000,000 in fund balances to cover the additional costs.
This year’s district budget (FY 2008, which is the 2007/2008 school year) also sees the impact of the additional construction cost. The budget calls for a deficit budget of around $250,000 this year with around $150,000 of that deficit being caused by construction costs.
The financial report indicated that the district finished FY 2007 with a total fund balance (not including site and construction) of $5,207,687. This fund balance is inflated because of early tax money that was received in the FY 2004 budget year. The district received around $1,500,000 of additional tax revenue that year because the county clerk’s office began paying the district’s first tax payment in the month of June rather than July (as was done in previous years). As stated earlier, the district’s fiscal year ends on June 30. Receiving the tax money one month earlier caused the district’s fund balances to reflect the additional $1,500,000 in fund balances. The county clerk has continued the practice of providing the initial tax payment in June over the past four years.
As long as that continues to happen the district’s fund balances will remain inflated. If for some reason the county would provide the tax payment in July (which would only take a delay of around 20 days), the district would be under budget $1,500,000 for that budget year and that additional revenue would disappear from the overall fund balances. In all actuality, the district administration and school board’s approach to the district’s finances is that we have a total fund balance of $3,687,181. This figure (after removal of the inflated amount) is a more accurate picture of the district’s financial position.
The district’s financial report also indicates that the Riverton District is very dependent on funding from the State of Illinois to be able to provide programs for students. The state funding formula is basically a combination of local tax money and general state aid from state sources. Because Riverton has somewhat of a lower tax base and one of the lowest tax rates in the county, we must rely on the legislature and governor to approve funds for our district.
Another important financial indicator for a district is the Operating Expense per Pupil figure that is reported on the School Report Card. This year’s card reports that the district’s Operating Expense per Pupil in the 2005/2006 school year was $5,785 per pupil. The state average for Illinois is $9,488 per student. This state average figure would indicate that on average school districts around the state of Illinois spend around $3,703 more per student than the Riverton District spends. If we spend the state average annually on our students (operating expense is based on the district’s average daily attendance, we would spend $4,958,318 more annually on programs and facilities. The following is a short comparison of area districts of similar size to the Riverton District (General State Aid is based on annual Average Daily Attendance (ADA) figures – Riverton ADA for 2005/2006 was 1,339 students per day):
|
District |
Total Students |
Operating Expense per Pupil |
Difference per Student |
Additional Revenue for Riverton if same rate |
|
Riverton |
1548 |
$5,785 |
- |
- |
|
Rochester |
2188 |
$6,035 |
$250 |
$334,750 |
|
New Berlin |
810 |
$7,503 |
$1,718 |
$2,300,402 |
|
Williamsville |
1430 |
$6,955 |
$1,170 |
$1,566,630 |
|
Pleasant Plains |
1341 |
$7,593 |
$1,808 |
$2,420,912 |
|
Petersburg Porta |
1304 |
$7,036 |
$1,251 |
$1,675,089 |
What does all this mean for the Riverton Learning Community? The Riverton School District is in sound financial condition even though they have lowered their overall fund balance over the past three years due to construction costs. The district is very conservative, financially spending much less than most school districts in the State of Illinois. In order to meet the growing demands of education, the district will continue to be dependent on state legislature and state funding to be able to provide quality programs and services for students. The district will continue to be innovative, while maintaining a fiscally conservative approach.
