The De Soto Board of Education recently approved a budget that calls for cautious spending but gives staff a small raise and includes funding for several 2023 bond issue projects.
According to the new budget, which began July 1 and runs through June 30, 2025, the district is projected to bring in an estimated $31,702,696 in operating revenue and spend $35,205,532 in operating funds, resulting in a $3.5 million deficit.
However, Ron Farrow, who took over as superintendent on July 1 following the retirement of Josh Isaacson, said since the district ended the 2023-2024 school year $1 million better than anticipated, district officials expect to end the 2024-2025 school year with a $2.5 million deficit.
“I do not anticipate the district deficit spending ($3.5 million),” he said. “I still put us on the same projection that we had in our June budget message (at $2.5 million). And we may end up in even better shape based on increased revenues from what we were projecting.”
Farrow indicated that district officials budget conservatively when it comes to revenue.
“When we do a budget update in October, it will give a clearer picture of where we are with current revenue and expenditures,” he said.
The district will cover the 2024-2025 deficit with reserve funds, leaving an estimated $12,473,118 (or $13,613,655 before restricted funds are taken out) in reserves, which is 35.43 percent of the district’s operating budget, at the end of the fiscal year, Farrow said.
The district started this fiscal year with $15,743,895 in the reserve fund, or about 45 percent of the district’s annual operating budget.
Farrow said he is happy with the money the district has built up in reserves.
“It’s a good, healthy number,” Farrow said. “Those healthy reserves are going to help us as we make adjustments to get back to that balanced budget.”
He said the district will continue to look at areas to save money and balance the budget over the next few years.
In addition to operating funds, the district has a debt service and capital projects funds, and the district is projected to bring in a total of $47,834,852 in revenue and $36,402,876 in expenditures.
Farrow said the district has budgeted $22,822,123.18 for employee salaries and benefits this school year. The starting salary for teachers is $41,000, up $500 from the year before.
“The board was able to provide a slight increase of $500 to base salaries for nearly (all) employees,” Farrow said. “While not quite to the level of the CPI (Consumer Price Index) increase for inflation, this provides some support for staff while limiting the increase to deficit spending.
“The only employee category that is not included in this raise is our transportation employees as they have their own separate salary negotiations and are currently in the middle of a three-year term.”
As part of the new budget, the board increased pay for building maintenance positions from $14.55 an hour to the former lead maintenance rate of $20.17 per hour, and lead positions were increased to $20.75 an hour.
The budget includes $6,571,701.19 in capital improvement expenses, with $5,674,400 of that to be funded with revenue from the April 2023 bond issue.
Capital expenses not associated with the bond issue include $53,673.73 for payments and interest for loans; $128,000 for furniture and instructional equipment; $35,000 for improvements to parking/grounds; $301,027.46 for two new buses; $35,000 for maintenance vehicle; and $200,000 for building improvements. Also included is $144,000 for safety and security.
“The capital expense in safety and security is earmarked for the high school safety and security vestibule at De Soto High School,” Isaacson said last month.
Capital expenses funded by the bond issue revenue include $828,500 for technology upgrades; $900,000 for replacement of the bleachers/press box; $500,000 for increased exterior lighting; $50,000 to replace third and fourth grade classroom doors at Athena Elementary; $1,253,000 for the first phase of HVAC replacements/repairs; and $1,620,600 for the first phase of roof replacements/repairs.
Due to the May 8 flooding that damaged De Soto High School’s football field and track at JC Culwell Stadium, the district will save some money on planned improvements there because insurance will cover turf replacement. The district originally budgeted $522,900 in capital expense funds from bond proceeds for turf replacement but will pay far less now.
“Due to flooding damage, $499,000 of the turf replacement was covered under insurance after our $1,000 deductible,” Farrow said. “So, the district will pay the remaining $23,000 from bond funds to complete the scheduled bond project. The remaining budgeted bond funds will remain to ensure the other scheduled bond projects are completed as designed.”
ATG, which installed the original turf, replaced the turf in late June and early July at a cost of $522,000. ATG will repair the damaged track at a cost of $159,900 in October during an away game week.
Declining enrollment
Enrollment decline has been an issue for the district.
“Future enrollment projections show a potential of continual decline as large classes exit the school system,” according to the budget summary. “The district will need to be cautious in replacement of staff and general expenditures to absorb the cost impact of reduced state and federal funding, especially after fiscal year 2024.”
While inflationary costs for items such as fuel, energy and food have stabilized, wage inflation and the mandatory state employee minimum wage of $15 an hour impacted the district last year and may still have lingering effects in the coming year, the budget message said.
“Schools were already behind in pay, and private sector wage inflation resulted in the district needing to make adjustments to classified salaries in order to have sufficient staffing to operate safely,” the budget message said.