Fox C-6 officials have scaled back capital improvement projects this summer at Seckman High School and Fox Elementary School to keep down spending.
Board of Education members voted 6-1 last month to spend $1,613,810 to fix the HVAC systems in Seckman High’s library and math wing and to repair the HVAC system and roof in the observatory wing. The work at Seckman High is the fourth phase of a six-phase plan to overhaul the school’s HVAC system.
The board also voted to spend $1,806,529 for HVAC system and roofing projects in the third-grade and fourth-grade sections of Fox Elementary.
The $3,420,339 total for the work at the two schools is $477,466 less than the estimated $3,897,805 it would have cost the district to complete all the administration’s recommended improvements.
The board decided against spending the additional funds to replace Fox Elementary library’s HVAC system and to complete minor improvements in the school’s fifth-grade wing.
The cost of the summer projects will be paid during the 2021-2022 budget, which runs from July 1 through June 30, 2022.
Board member Krystal Hargis cast the lone no vote against the expenditures, saying she was concerned about spending money the district had not yet collected and tying up money before the 2021-2022 budget is set.
“While I am in full support of completing the projects at Seckman High School and Fox Elementary School, I am intensely aware of the need to approve the 2021-2022 budget prior to approval of any expenditures,” Hargis said. “Earmarking funds for capital project expenses from an unestablished budget means the district cannot access those funds for any other purposes and potentially could cause an unforeseen deficit in other areas. Due to the fact that funding is already tight and we are unsure if the state is planning further budget cuts, we should exercise a great deal of fiscal conservativeness when making these decisions.”
Board members voted unanimously March 16 to buy $641,726 in equipment needed to complete the work on the HVAC systems at the two schools.
Typically, equipment is not purchased until after a contractor is hired to perform the work, but Fox administrators said in district documents that due to the current long lead times for the delivery of mechanical equipment, it is imperative the order is placed now, improving the likelihood the equipment would be delivered when the contractor is ready to install it.
Superintendent Nisha Patel said it is crucial for the improvements to be completed at Seckman High and Fox Elementary to provide the best environments for optimal student learning.
“It is important for the board to look at all perspectives and our financial outlook and make decisions accordingly,” she said.
Budget woes
Since January, board members had delayed making a final decision on the summer capital improvement projects because of budget concerns. The district is projected to have a negative operating fund balance by the end of the 2024-25 fiscal year if spending or revenue does not change.
Board member Michelle Chamberlain, however, made a motion at a January meeting to complete all the work at the two schools that originally had been recommended, but the motion did not get a second and no vote was taken.
“I am happy that most of it is getting done,” Chamberlain said after the February meeting. “I think both schools are getting projects that are the most important.”
Board member Judy Smith made the motion on Feb. 2 to do most of the recommended work after the board looked over eight plans for possible summer capital improvement projects. Jim Chellew seconded the motion.
“We let (the administration) tell us what was the most important,” Smith said. “It was a matter of looking at the money and not overextending ourselves more than we already are. Just looking at it, that put us in a ballpark figure so when the money comes in the capital improvement funds, we can fund that in the 2021-2022 budget.
“Hopefully, we will still have a little left for other emergencies that come up,” Smith said.
Chief Financial Officer John Stewart said the district hopes to solicit bids for the work at the schools and seek contract approval from the board this month.
He said it could be difficult to find a construction company to perform the work at the projected costs, because Fox will be looking to hire a company at a time when many construction crews have committed to other district’s summer projects.
“As people have less time and have allocated their staff out, they either have to hire additional crews or pay overtime, and that could increase the bid,” Stewart said. “We are hopeful we are able to get something that fits the estimated budget. If not, we will have to have more discussion.”
By spending a little less on summer capital improvement projects, board members may be able to divert more money into next year’s operating budget for 2021-2022.
The district will need to put an estimated $4,797,805 into the capital improvement fund next budget year to cover the work at the two schools, as well as to replace buses and district vehicles.
Stewart said the board could alter how Fox handles the tax rate and put more of the district’s tax earnings into the operating budget. Fox collects about $4.5071 per $100 assessed valuation, and 62 cents of that is diverted into the district’s capital improvement fund. The district typically has about $6 million to spend on capital improvement projects at that rate.
Stewart said it will be up to the board to decide how the district allocates its tax revenue, and he said he will present board members with a way to direct more money to its operating funds since the summer project spending has been cut back.
“It also depends on where we’re winding up at the end of this fiscal year,” said Stewart, who pointed out that Fox’s current budget got a boost from the more than $4 million the district received in CARES Act funds.
Smith said putting more money in the operating budget and finishing fiscal years with a slightly higher surplus in operating funds than in recent years is needed at Fox.
“The district has been in the habit in the last few years of doing things and then paying for it,” Smith said. “We need to move back a little bit and build our reserve a little bit. If we had been saving just a little bit each year, we would be in a better position right now.”
Stewart said cutting back on capital improvement spending and diverting more of the tax levy into the operating fund can help in the short term, but it will not solve all the district’s financial woes.
“It would help, but it is not a good long-term solution,” Stewart said. “It is a Band-Aid at best, and it will wash off in the rain.”