Independence school board sets financial plan for 2024-25

The Independence school board could see more money in its operating budget than last year and still have enough left over to push its Fund 46 balance over $1 million next school year, according to school board discussion last week.

District administrator Paul Franzwa presented the district’s current financial picture at the July 9 school board meeting.

Once special education funding is squared away each year, the district needs to decide how much money to keep in Fund 10 and how much to move into Fund 46, or the capital improvement fund that Independence started two years ago.

Money in Fund 46 cannot be used until five years after the account is opened, meaning Independence has three more years before it is accessible and can be used on any infrastructure costs.

The district hoped to rebuild its Fund 10 balance after its successful operational referendum in 2022. The district’s total operating budget sits at $8 million, and its target is for Fund 10 to represent 20 percent — around $1.6 million — of that budget.

Franzwa floated an example for 2024-25 where Fund 10 sits at $1.8 million. The board discussed moving $800,000 to Fund 46 to get that account over $1 million total and leaving Fund 10 at $1 million, which would still be a $300,000 increase from this school year.

The board will know final numbers after an auditor visit in August.

“I might consider moving $800,000 to Fund 46 which would put us over $1 million in Fund 46, which is good because instead of going to referendum for things, we can access the Fund 46 dollars down the road,” Franzwa said.

In July 2023 the district had $1 million in Fund 10 after the special education balance. The district kept $700,000 in Fund 10 and put $300,000 into Fund 46.

While the district could have kept the full $1 million in Fund 10, that increases the burden on taxpayers, Franzwa told the board. Instead, moving the $300,000 to Fund 46 was considered an expense for the district.

“If I was to say, ‘Hey, forget about Fund 46. Let’s just leave that $1 million in here because we’re getting closer to our target of 20 percent of our operating budget.’ That works against us because the way the funding formula is set up, the more you spend, the more you get aided on. The more aid we get, it keeps our mill rate down. The trick of the game is they sort of push and pull against each other. If I was to leave all of that money in fund 10, I wouldn’t have been able to claim that $300,000 in expenses and it would have brought our mill rate up.”

Board president Joe Bragger spoke in favor of building Fund 46. There is no limit in the amount of money that can be put into the fund.

“Once we hit our timeframe, we can tap into that anytime. It’s kind of like building our Fund 10 up but not right now,” Bragger said. “But if we build our Fund 10 up really fast — that’s the problem with when you dip into it, when that gets low and you want to rebuild it — it gets costly because you’re not aided on the money.”

For the 2024-25 school year, Fund 10 will be between $1.5 million and $2 million after the special education transfer—at least $500,000 more than last school year. Part of that increase is tied to the state biennial budget increasing school aid by $600 per student, ESSER funding, reduced insurance costs and not replacing all teachers, Franzwa said.

The district was not aware that state aid increase was coming in 2022 when voters passed a three-year operational referendum ask that boosted taxes by $900,000 each year.

Bragger said saving money with Fund 46 is important.

“Hopefully we continue to watch ourselves so that down the road when we have a roof repair or we need to add something on here, we have some funds to do that instead of going for 100% referendum for that purpose,” Bragger said.

Franzwa planned to report back to the board at a future meeting on how the final numbers affect the mill rate after the auditor finalizes the numbers in August.

“We’re trying to build Fund 10, we’re trying to put money into Fund 46 that will count as an expense which will increase our aid and keep our mill rate down. We’re trying to do both so we can build this (fund 10) up but we can also put money in there (Fund 46) that will keep things consistent,” Franzwa said.