Independence schools boost capital fund, Fund 10 to keep mill rate stable

The Independence School District’s capital projects fund is now over $1 million after a budget transfer last month, a move district staff said also serves to maintain a consistent mill rate and build the district’s day-to-day operations fund.

If preliminary numbers hold, a projected 2024-25 mill rate of $8.48 would see the owner of a $100,000 home pay $848 in property taxes to the school district. The mill rate for 2023-24 was $7.95.

The Independence school board last Tuesday heard from bookkeeper Kari Pedersen, who continued the district’s July discussion on finance plans.

The district needed to finalize its budget situation for the 2024-25 school year by July 30. The board discussed their preferences in July, and Pedersen finalized the numbers alongside superintendent Paul Franzwa and a representative from Baird, the finance company that advises the district.

Pedersen explained that the district had a $1.3 million surplus from 2023-24, a result of an unexpected $300,000 state aid boost in the biennial budget combined with the final year of ESSER funds.

“We had ESSER money, then the state aid formula went up so we had some extra money. And also we’ve been very frugal with our spending. We’re really careful with how we spend money across the board,” Pedersen said.

The district moved $750,000 of that surplus to Fund 46, the account districts can use for capital improvements such as facilities, parking lots and vehicles. The remaining approximate $550,000 was put into Fund 10 to still help with day-to-day spending.

Fund 46, which was started by Independence in 2022, cannot be used by a district until five years after the fund is started–Independence can begin using these funds in October 2027. With the July contribution and a $300,000 transfer in 2023, Independence now has over $1 million in Fund 46.

The district considered two other options with the $1.3 million surplus, including leaving all of that money in Fund 10. This option would have “tanked” the state aid given to Independence, Pedersen said Tuesday, while also “skyrocketing” the mill rate to $10.93 per $1,000 in assessed value.

The third option was putting all $1.3 million in Fund 46, which would have increased state aid to the district but dropped the mill rate to an unsustainable number.

By transferring $750,000 to Fund 46, Independence likely increased its state aid for 2024-25 while also keeping a steady mill rate of around $8.48, Franzwa said. This rate is not a guarantee, as the Department of Revenue only gives schools an estimated Equalized Value in July for planning. 

The data is not finalized until Oct. 15 when the state gives districts their final state aid and equalized value numbers. Mill rates will be finalized by November.

Pedersen said she and Franzwa met continuously regarding ESSER dollars and were careful to use it on one-time spending such as a new playground so that they wouldn’t have to find ways to cover added costs when ESSER ends.

The move, which board member Jen Rombalski called “very proactive”, will help Independence as it prepares for next steps when its operational referendum ends after the 2024-25 school year.

“We said we were going to do three things with our last referendum, which was approved in August 2022. It will be done in June of 2025, so we’re entering our last year of it,” Franzwa said. “We were going to maintain educational programming. … we were going to address our staff compensation in an effort to attract and retain staff. … and the last one is to rebuild our Fund 10 to avoid short-term borrowing. With putting money in Fund 46 and leaving some in Fund 10 we’ve done that to an adequate amount. We’ve done all three things that we said we were going to do.”