The Hillsboro R-3 School District is expected to spend $9,650,113 more than it brings in during the 2024-2025 fiscal year, primarily due to larger than normal debt payments, school officials reported.
Hillsboro Board of Education members voted unanimously June 27 to approve the new budget, which began July 1 and runs through June 30, 2025.
According to the budget, the district projects expenditures this fiscal year at $53,942,610 and revenue at $44,292,497.
The district will use approximately $600,000 from its debt service funds to cover part of the deficit spending, but the bulk of that spending will be covered with funds from an escrow account set aside to pay off debt, said Kelly Genge, chief financial officer for the district.
“The district is scheduled to pay off a large portion of our remaining debt with funds that have been accumulating in an escrow account” created specifically to collect revenue generated from local property taxes for the purpose of debt repayment,” Genge explained in an email.
Debt service expenditures will nearly double from the 2023-2024 fiscal year, with the district set to pay $10,388,952 toward debt this fiscal year. In the 2023-2024 fiscal year, Hillsboro paid $5,388,060 toward debt.
Genge told school board members in June that two large bonds are due to be paid off this year, accounting for most of the large bill. The Qualified School Construction Bond and the Qualified Zone Academy bonds, taken out in 2010, funded the district’s repair and remodel of the Intermediate School.
“This payment is a very large piece of our overall deficit spend,” Genge said.
She said Hillsboro is projected to start the year with about $17.1 million in reserves – officials are still finalizing numbers from the 2023-2024 fiscal year – and the district expects to end the year with $16,953,206 in the reserve fund.
Genge said the district tries to maintain 18-22 percent of its operating budget in reserve funds, but will have about 45 percent at the end of this school year.
“We have higher than normal balances currently as a result of ESSER (Elementary and Secondary School Emergency Relief) funding and have been in the process of strategically spending down those balances,” she said.
Operating budget
The new budget projects the school district will bring in slightly more than it spends in its operating fund, which covers employee salaries and other general expenses.
According to the budget, the district will collect $40,793,786 and expend $40,145,842 in the operating fund.
Staff salaries account for 54 percent of the overall operating budget, totaling $23,658,802. Genge said the district raised its base salary for teachers by $1,500, resulting in raises ranging from $1,650 to $3,000 depending on where a teacher falls on the salary schedule.
Benefits for staff members are expected to cost $7,288,035 this year, up approximately 7.9 percent from last fiscal year.
Genge said the increase is due to a new wellness program the district is offering staff members.
“The district is adding an Employee Well-Being and Self-Care benefit where district employees will be reimbursed for up to $150 annually for gym memberships and approved wellness or physical fitness program coaching,” she said.
Together, staff salaries and benefits comprise 77 percent of the district’s operating budget. The remaining 23 percent goes toward purchased services and supplies, like utilities; technology; classroom and instructional supplies; test materials; bus parts; legal services; insurance and more.
Genge noted that the Hillsboro School District is the most affordable for Jefferson County residents.
“Hillsboro residents can take pride in knowing that their community has the lowest overall tax rate in Jefferson County,” she said. “Currently set at $3.8941 per $100 assessed valuation, this rate ensures that Hillsboro remains the most affordable in the area for funding education.”
Capital projects
The new budget calls for $3,407,816 to be spent on capital improvement projects.
“We are utilizing existing balances from the capital projects fund … primarily generated from the local tax levy designated specifically for capital projects, which helps maintain district facilities,” Genge said.
About $739,900 of those funds will go toward completing the renovation of the Ridge Learning Center, an alternative learning program that is moving into the old Logo Daddys building at 144 N. Seventh St., directly across from the center’ former location.
Genge said the district expects renovations there to be completed by the time school starts.
The district bought the building “to allow for space and grade realignment throughout our existing attendance centers as we prepare to open up and implement an Early Childhood program within the district,” Genge said.
The district is shifting some grade levels to different buildings this school year in order to accommodate the preschool at the Primary School that is expected to open during the 2025-2026 school year.
When school resumes this month, second-grade classes will move to the Elementary School and fourth-graders to the Intermediate School.
Other capital projects budgeted for this school year include upgrading sound and lighting equipment in the High School theater, as well as roofing and asphalt maintenance. Lease-purchase payments and bus purchases are also paid for with capital projects funds.
Genge said the district plans to transfer some reserve funds into the capital projects fund at the end of this fiscal year for anticipated project costs.