For school districts, the number of students – and subsequent funding – can fluctuate year to year, changing dramatically over time.
In response, districts typically build in reserve funds. Unlike other levels of local government, such as city councils, school districts do not directly levy local ratepayers. Their funding is determined at the provincial level, based on enrolment numbers and a number of other criteria. While districts direct funds to classrooms and specific budget areas, they can move leftover funds from parts of the budget into reserve funds.
At this point, School District 72 is showing a shortfall, secretary-treasurer Kevin Patrick told the trustees at a board meeting earlier this month.
“We actually had a deficit,” he said.
It is not entirely bad news, Patrick suggested, because at about 1.4 per cent of the total budget, the board was closer to balancing when compared with a projected deficit of four per cent.
“It’s good because it means the board’s targets for spending have been closely met,” he said.
This is where surpluses or “reserve” funds come in as far as maintaining stability.
“The good news is there still is a reserve,” he added.
This reserve funding is partly internally-restricted funding, which is money directed at particular expenses – such as programming and resources – but is also able to balance the budget, as districts are required to do. For the year, the amount presented to the board to include in this year’s financial plan is $3.9 million. (The board was presented with this plan at the Sept. 25 board meeting after this story went to press.)
Some of the more substantial items earmarked on the list of internally-restricted reserved include $1,082,737 for operational needs and contingencies, $422,461.58 for the district’s international program, $300,000 for implementation of the district’s strategic plan, $262,895.61 for school supply accounts, $218,714.41 for Aboriginal programs and $175,000 for learning resources. The list also includes the $735,264 of previous surplus funding to balance the budget.
There is also an unrestricted contingency reserve worth just over $3 million, giving the school district a total almost $7 million in reserves.
“The board has had reserves for a number of years,” Patrick told trustees, adding, “The total surplus is still quite healthy.”
The Ministry of Education, he said, is putting pressure on boards to have a policy in place on how to use reserves.
“They want to make sure it’s transparent…. It’s clear that it’s understood by trustees,” he said.
One of the considerations is for the internally restricted list to include one-time items and not be part of ongoing program. Typically, some items do show up year to year, though the plan now is to reduce the number on this list. Patrick said that while there are still many items, the current list is shorter than in the past, adding that the one item on the list required by the province is the Aboriginal programming.
“We are identifying items we think should be in the operational budget,” he said,
On the issue of reserves, trustee Daryl Hagen emphasized the importance of surplus funds in having some extra money for those years when enrolment and operating funds might be down.
“We have had some very good financial years in being able to draw on our reserves,” he said.
Hagen also said he has been on the board at times when the district was looking $3-4 million cutbacks and eliminating funding for whole programs such as special needs.
“Boards have consistently said, ‘We have to have some reserves,’” Hagen said. “When governments change, when ideas change… we have these reserves to be able to pull upon…. I’d rather do it this way than making massive cuts to whole programs, to people’s lives, laying people off…. This is a good transition, and it’s part of the reason we have good stability moving forward in this time of change and we have extra money to put forward.”
Trustee John Kerr referred to a new funding formula expected from the province and wanted to know whether this could have an impact on how district reserves. At this point, Patrick responded, the district does not know.
The board passed a motion to accept the current schedule of internally restricted reserves.