• Brookings board wants to move capital outlay money to the general fund
BROOKINGS – Like nearly every school system in the U.S. right now, the Brookings School District is unsure how much money it will have to educate students in the future.
What the school board is sure of, however, is that enrollment will rise and that its two K-3 school buildings will soon be overflowing.
With those and other factors in mind, the school board agreed during a work session Tuesday that it wants to move $1.3 million from its capital outlay fund to its general fund between now and July 2014. The transfer is allowed by a short-term exemption to state law.
The board hopes by cushioning the general fund, the district will be better prepared to ride out the financial storm, especially if relief does not come as hoped this November.
State law allows for move
A South Dakota law in effect from July 1, 2009, to June 30, 2014, is allowing school districts to use money in their capital outlay funds to purchase certain things usually covered by the general fund: Property and casualty insurance, energy and utilities, and expenses related to transporting students.
Districts can spend no more than 45 percent of the total tax revenues deposited in their capital outlay fund during the current fiscal year. For Brookings School District, that is just under $1.67 million.
The two funds pull in separate tax monies, and state law dictates how districts can spend capital outlay funds.
Brian Lueders, district business manager, said the capital outlay fund currently holds about $1.7 million and the general fund about $3.7 million. (The general fund balance also will increase by about $200,000 this year, Lueders said, due to the utilities and snow removal savings of a mild winter.)
He recommended that, if the district moves money, capital outlay not be allowed to drop below $1 million. Taking money from that fund would limit repairs and the purchase of vehicles, computers and equipment for the next two or three years, Lueders said.
But by growing the general fund, the district would ready itself for projected student growth and future building needs. The general fund has been hurting since the state cut school funding by 8.6 percent in early 2011.
The board discussed Tuesday that, when it builds a new K-3 school sometime in the future, it will cost the general fund about $363,000 each year for operating costs – and that’s without hiring any additional teachers.
The board talked about taking initial steps toward a new school, but decided Tuesday that doing so could convey the wrong message before voters decide in November whether to approve the new penny sales tax funding source.
Board president Steve Bayer said the district’s financial future depends on several factors, including the November public vote on Initiated Measure 15.
The measure would add one penny to the state sales tax, raising about $175 to $180 million per year to be split evenly between K-12 public education and Medicaid. If passed, the tax would provide about $2 million per year to the Brookings School District.
But the district is also dependent on funding decisions by the South Dakota Legislature.
“If the penny passes, we’ve got a good, stable base and we can move forward feeling comfortable spending those new revenues and not feeling like we need to hold some of those back in case, as Matt (Vukovich, board member) said, what happens in a year if they change the laws on us in Pierre?” Bayer said.
“If relief doesn’t come in November, we’ve got enough war chest to hopefully ride out the storm,” Bayer said. “We’ve talked about this before – we’re not in great shape but we’re in better shape than most districts in the state financially. And, unfortunately, I do believe the outcome that, if the penny doesn’t pass and/or Pierre shifts it, is enough districts will struggle and fail over the next few years that, if we’ve got enough in the war chest to survive it, eventually there’ll be new blood in Pierre and eventually this tide will turn.”
Bayer said he and board member Larry Rogers had asked Lueders what amount would be responsible to transfer, and Lueders said Tuesday he was very comfortable with taking the $1.3 million.
Outgoing board member Tom Yseth said he believes the capital outlay fund is important to maintaining and reinvesting in assets. But, he said he was also comfortable with moving the $1.3 million. The board agreed that Lueders should work the transfer into the 2012-2013 and 2013-2014 budgets.
“We have a way to responsibly build that fund balance,” Bayer said.
Contact Charis Prunty at cprunty@-brookingsregister.com.