The West Salem School Board was surprised to discover Monday that the district had a $439,290 budget surplus in the 2016-17 school year.
The majority of surplus came from building projects budgeted for the academic year, which ended in June, that haven’t yet been completed, according to finance director Davita Molling.
Of the $400,000, she said, a little over $100,000 was for infrastructure improvements. These funds have already been earmarked for the 2017-18 school year. The remaining funds will be added to the district fund balance.
The surplus is only one piece of the district’s months long budget puzzle; however, Superintendent Troy Gunderson said the it will mean the district will likely grow its fund balance rather than spend it.
“When we look at fund balance, we were at 16.2 percent,“ Gunderson said. “This year we will be a little higher than that.”
However, Gunderson warned, if the district doesn’t make significant changes in how it does business, it will begin to erode its fund balance.
Because those changes would involve cuts to educational programming, the school board is considering holding an operating referendum to exceed it’s levy limit.
Gunderson said a $500,000 levy override would increase the tax rate by approximately 60 cents, and a $1 million referendum by about $1.14.
“I think those are all doable,” he said. “We were at $10.20 (per $1,000 equalized property value)”
Board member Jane Halverson said the district could increase its levy authority by $1 million and still keep the tax rate low.
“Even if they vote yes, they’re aren’t going to go about $10.20 (per $1,000 equalized property value),” she said.
Part of the reason the district can keep the tax rate so low is Gov. Scott Walker’s proposed budget, which calls for a $200 increase to per pupil spending in the form of categorical aid.
Categorical aid is given outside of the district’s levy limit does not all the district increase spending. It instead shifts the burden of running the school off the local tax payer.
“The governor’s move is to lower taxes,” Gunderson said.
Gunderson said projection has the district tax rate falling again this year to $8.50 per $1,000 of equalized property value if the district does not pass an operating referendum.
The state has yet to finalize the biennial budget, and it is subject to change.