School corporations every fall are tasked with developing a budget for the next year.
It’s a complex process that requires a good deal of hypothesizing, such as estimating how many students will be enrolled the next school year.
School budgets are approved by school boards. It’s the most important job of a school board, aside from hiring (or firing) the superintendent. The budget approval process takes place over at least two meetings.
Sitting at a school board meeting last fall, you were likely to hear about cost increases and assessed values.
Both made planning school budgets more difficult for school treasurers and business managers.
What follows is an overview of each Howard County school districts’ budget for 2023, along with some notable aspects of each, taken from information provided at school board meetings and interviews with school treasurers.
The purpose of this article is to make school budgets, and what impacts them, easier to understand.
Eastern Howard School Corporation
A school’s largest fund, the education fund, is based on student enrollment. Schools record the number of students enrolled on one day in September and again in February.
The September figure determines the amount of funding a school receives from July to December. The February count is for January through June.
Until those count days occur, schools receive funding based on estimates from the previous year. For example, schools have to estimate what they think their fall enrollment will be the spring prior.
Once the actual enrollment figure is calculated, the state readjusts the amount schools receive in November and December.
Eastern Howard School Corporation recorded 1,615 students last fall, its highest ever count day. That figure exceeded the school district’s own estimates.
“It probably increased more than we anticipated,” said Travis Hueston, business manager.
And it nets Eastern more money. That money goes toward teacher salaries.
Penciled into Eastern’s budget for the coming year are a number of capital projects. They include restriping parking lots, replacing office computers and upgrading classrooms with new desks, blinds and flooring.
Capital projects are afforded out a school’s operations funds. These projects are the non-flashy ones that don’t garner conversation or public hearings at school board meetings.
What a school can accomplish with the money in its operations fund — things like new school buses, computers and freshly lined parking lots — is dependent on property tax rates.
Assessed value of properties have risen in recent years. That’s good news for taxing entities, such as schools and libraries, who will get more revenue. However, due to Indiana property tax caps, that extra revenue is limited.
The more property values increase, the more revenue schools miss out.
“As a homeowner, I don’t mind, but as a financial guy for a school it kind of stinks,” Hueston said.
Kokomo School Corporation
Assessed value in the Kokomo school district is up 10%, “one of the largest increases we’ve ever seen,” former business director Michelle Cronk said in September.
While AV is not increasing as fast in Kokomo compared to other localities in the state, it’s still a welcome sight.
For the first time in a long time, the budget for Kokomo schools increased less than assessed property values. This means less property tax cap (circuit breaker) losses.
Property taxes fund the operations budget, along with any debt payments a school has on its books.
About 57% of Kokomo school’s operations budget goes toward the salaries and benefits of bus drivers, maintenance workers, certain administrators and other non-teaching staff.
That percentage is even higher for the education fund, which pays teachers. Ninety-two percent of the budgeted $41.19 million education fund is earmarked for teacher salaries.
Schools received $248 more per student in 2022. When the per pupil funding increases, it can soften the impact if a school district’s student population decreases.
The per student amount will increase again when the state legislature sets the bi-annual budget in 2023.
Northwestern School Corporation
There are a number of expenditures schools have that are unavoidable.
Food, fuel for buses and cleaning supplies are just a few things schools must have all the time.
They’re purchases schools can’t put off even if prices increase.
Whereas a private citizen can limit where and how often they travel when gas prices spike, schools don’t have that luxury.
If diesel fuel is abnormally high, schools must pay that price because buses need to be on the road each day.
The increase in property values — and the tax revenue they generate — helped offset some of those costs, according to Camden Parkhurst, director of finance for Northwestern School Corporation.
Assessed values in 2022 were up 12.1% in the Northwestern school district, compared to 2021. The increase averages out to about $8,000 more per penny taxed.
In simple terms, if the tax rate is $1, every penny of that $1 would net Northwestern an additional $8,000.
“It allows us to raise the money we need without raising the tax rate,” Parkhurst said.
Northwestern will begin payments in June on a $5.5 million bond related to a corporation-wide improvement project.
The school board opted to take out the smaller loan this fall to kickstart the project. The $5.5 million loan will cover early ordering and architect fees. Northwestern is holding off taking on more money due to the expected wait time on materials and issues with supply chains.
The total cost of the project, which will see improvements to every school building, is $51 million, the most Northwestern can take on in debt without impacting the tax rate.
Not taking on the entire cost of the project at this time minimizes the amount of interest Northwestern will pay on its debt bonds, meaning more money can go toward actual construction.
Penciled into the $51-million price is routine maintenance, such as painting classrooms. That work would normally be part of a school’s annual capital projects list, included in the operations budget. However, lumping it into the bond project frees up operations money for other purchases, Parkhurst said.
“We think that is going to relieve some of the burden,” he said.
The finance director said making sure wages keep up with cost-of-living increases will be a long-term challenge.
Taylor Community Schools
The budget a school corporation submits for approval at a fall school board meeting also needs approval from the Department of Local Government and Finance.
The DLGF gives final approval for school and local government budgets across the state every year.
The budget a school submits to the state is essentially a request. A school asks for a certain amount of money.
The DLGF turns around and either approves or cuts down the budget amounts. Schools tend to estimate high for this reason.
For example, Taylor Community School’s Business Manager Renae Adams increased the school’s 2023 budget 10% across the board, knowing her figures will likely be decreased by the DLGF.
But that wasn’t the main reason.
“All of our costs are going up,” Adams said.
By November, Taylor had paid more for diesel fuel than all of 2021. Schools pretty much pay market rate for fuel, even though they buy in large quantities.
Schools might appropriate additional money to its operations fund to cover scenarios like paying more for fuel than expected, or a school might cut back different line-item expenses to afford more fuel.
“It’s moving and shaking a lot,” Adams said.
Adams submitted an operations fund of $4.9 million to the DLGF but expects to only get about $3 million.
Operations funds come via property taxes. Circuit breaker, or property tax caps, usually range between 20% and 22%, Adams said.
But how much a school misses out on is actually higher when factoring in how many people don’t pay their property taxes.
The few million dollars in an operations fund pays for a lot. Maintenance, utilities, the salary of the superintendent, board member salaries, supplies, fuel and more.
This is where the moving and shaking, the cutting one expense to afford another, factors in.
“I promise we are using the money in the most responsible way,” Adams said.
Western School Corporation
Western School Corporation has a cash balance of about $2 million in its rainy day fund. The school district will appropriate about $400,000 of for the next budget cycle.
It doesn’t mean Western will spend the entirety of $400,000, it just means that amount of money is available to spend.
The rainy day fund is a school’s savings account, a chunk of money on hand in case of emergencies. An appropriation requires board approval, a hearing at a public meeting along with an “OK” from the DLGF.
That process takes a little while, which is why schools appropriate the money ahead of time. No superintendent wants to be jumping through bureaucratic hoops if the HVAC fails.
“It’s kind of a way to protect the school in case … some emergency happens and we need to spend some money,” Brandon Penrod of Education Equitable Solutions said in August. “If we need to spend it, it’s sitting there. We have the authority to do it.”
Penrod helped Western officials work through the budget process this year.
There’s no limit to how much schools can keep in its rainy day fund, however stashing large sums away each year probably isn’t best practice.
“The cost of doing that (having an inflated rainy day fund) is not keeping up your facilities, not paying your people enough not spending money on students, not doing some of those thing that need to happen in a school to make it a good place to learn and good work environment,” Penrod said.
Included in Western’s operations fund is $339,000 for three new school buses.