PORT ANGELES — Port Angeles School District officials concerned about going over budget this year and reduced income from local taxes next year said the district needs to reduce its budget.
“Personally, I think we should tighten our belts,” said School Board Director Cindy Kelly during the board meeting Thursday. “Next year’s budget needs to be less than it is now.”
David Knechtel, director of finance for PASD, said the district is tracking to go over budget this year by $451,955, leaving the district’s rainy day fund balance at an estimated $3,231,469 at the end of the fiscal year.
The district, tracking for a $1.2 million deficit this year, had budgeted to have $4.6 million left over at the end of August, but that was based on starting the year with $5.4 million — which Knechtel said didn’t happen.
He said revenues from the now-closed North Olympic Peninsula Skill Center had been double counted in prior years, causing about a $500,000 hit against the fund balance.
“If you look at the last three years … we definitely see that things look a little upside down,” he said. “We need to examine that a little more closely in the next couple months as we set up our next year’s budget. To me, that’s a warning flag.”
Though the district’s policy requires a budget that leaves about $2 million in reserves, school board members said they would like to see at least $4 million left over each year.
Directors said they had discussed policy forcing the district to leave $4 million each year as a rainy day fund, but never took action.
“I feel like we’ve had this conversation over and over and over that we need a minimum of a full month of salary and benefits,” said School Board President Sarah Methner. “Haven’t we had this conversation like 12 times?”
Officials said $2 million would only cover about two weeks of salary and benefits.
Director Josh Jones said the district will need to consider saving even more money because construction levy and bonds continue to fail.
“I think we heard loud and clear from the voters we need to expect not to have any new buildings, so our old buildings are going to continue to age and we’ll need to continue to put more and more money into our rainy day fund for when we have critical system failures at most all our schools,” Jones said.
District officials also expressed concern over the state’s $1.50 per $1,000 valuation cap on school levies, which will drastically cut the district’s income from local taxes. The district can collect $9.1 million this year, an estimated $3.30 per $1,000 valuation.
Starting Jan. 1, 2019, the $1.50 cap will kick in, he said, resulting in a loss of about $3 million in the 2018-19 year and about $1.5 million more the following year.
Knechtel estimated an increase of $4.7 million in state general purpose revenues to help pay teacher salaries and benefits.
With a bump in state funding, Knechtel is forecasting a $176,744 deficit next year, an amount that is based on this year’s budget and spending patterns.
The estimate includes step increases in salaries the district has already promised to employees who stay with the district for multiple years, but does not include cost of living increases.
“What we pay the teachers is a lot more than what we’re getting funded at,” he said.
State funding for teachers would be short about $3 million next year, he said. That’s an amount the district would have to pick up on its own.
Knechtel said among the reasons for that is about 80 full time equivalent positions are already at the highest salaries they can receive.
“We have a primarily seasoned staff,” he said. “That’s not a bad thing, because we get more experience with seasoned staff. Better teaching is the theory, so it’s not a bad thing, but it’s something we need to be cognizant of.”
Reporter Jesse Major can be reached at 360-452-2345, ext. 56250, or at [email protected].