[Update – the original post excluded a review of the FY11 budget – the current BOE did in fact pass the FY11 budget in the second quarter of 2010 and the post now includes a review of the FY11 information. My thanks to a BOE candidate that pointed this out.]
The current Board of Education assumed office on January 1, 2010 (except for Amos who joined on January 1, 2012). During their terms in office, each year they have passed an original budget and then subsequently amended it.
The current BOE inherited the FY10 budget, so let’s take a look at their record from FY11 forward.
FY10-11 – Upon entering office, the BOE made an effort to bring the budget into balance and passed an original budget with a zero deficit. However, during the year, the BOE approved an additional $36.2 million in expenditures and adopted an amended budget with a $32.3 million deficit.
The actual results ended up with a slightly higher level of revenues than originally budgeted and lower expenditures than the amended budget ($610.0 versus $625.2 million). The net result was a budget deficit of $18.2 million.
FY11-12 – Revenues in FY12 were anticipated to be down by 5% from the prior year and the BOE determined that they could not flow the entire decrease in revenue through expenditure reductions. As such, the BOE passed the original budget with $580.0 million in expenditures and a deficit of $17.9 million.
Subsequently, the BOE amended the revenues upward by $6.6 million and the expenditures up by $28.4 million (5%), resulting in an amended budget deficit of $39.7 million.
After the final budget amendment, an additional $25 million in “one-time” TAD revenues was received, bringing the total actual revenue for the year to $601.2 million. The incremental revenues reduced the anticipated deficit significantly and the actual deficit for the year ended at $3.4 million.
FY12-13 – In FY13 revenues were originally projected at $556.4 million. If we exclude the “one-time” TAD revenues in FY12, regular recurring revenues were expected to come down another $20 million or 3% from the prior year. However, the BOE determined that it would not be able to cut expenditures down from the $604.6 million incurred the prior year to a level required to reach a balanced budget. The BOE approved expenditures of $580.0 million which resulted in an original budget deficit of $18.4 million.
Subsequent to approving the original budget, the budget was amended to include an additional $6 million in expenditures, resulting in an amended budgeted deficit of $24.0 million.
Current projections for FY13 indicate a higher level of revenues ($10.5 million) than originally budgeted. Expenditures are expected to be $577.3 million or $2.5 million above the original budget. Given the changes, the current deficit for FY13 is estimated at $10.4 million.
FY13-14 – Revenues are projected to be $569.8 million which is approximately $8.8 million (1.6%) higher than the prior year. Included in the revenue projection is $8.9 million in real estate sales. The $8.9 million includes $6 million for the sale of property to the Atlanta International School (which remains controversial and potentially in doubt).
Expenditures are projected to be $594.7 million – up $13.8 million (2.4%) over last year. Included in the current year expenditures is approximately $12 million in State mandated increases in employee benefits. The approved original budget includes a projected deficit of $24.9 million for FY14.
General Fund Reserve Background – It is also important to understand the amount of General Fund reserves that were available during the periods under review.
The General Fund reserve started at $81.3 million at the end of FY11 and is projected to be at approximately $70.5 million at the end of FY13. If the projected budget deficit for FY14 is incurred, the reserve will be approximately $45.6 million at the end of the upcoming fiscal year.
CFO Burbridge has consistently stated that the reserve should be maintained at approximately 7.5% of expenditures, or $44 million. This level will allow the District to have sufficient cash to operate without having to rely on Tax Anticipation Notes to fund current operations.
During the current year budget discussions, the BOE set a $41 million threshold for the reserve and established a budget that leaves a projected $45.6 million in the General Fund reserve at the end of FY14.
Questions for the Candidates
- What is your view on the four years of approved budget deficits?
- If you disapprove of the budget deficits, what parts of the budget would you have looked to for additional savings?
- Do you believe the BOE should have increased taxes to cover the budget deficits?
- If revenues remain constant with FY14, should APS run a budget deficit in FY15?
- Would you take any steps to reduce the FY14 budget deficit of $24.9 million when your term begins in January 2014?