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Janesville School Board to consider size of fund balance

JANESVILLE — Money the Janesville School District doesn’t spend has sparked controversy in recent years.

The school board Tuesday night will consider new policies to guide their use of what is sometimes called the reserve fund, Fund 10, or fund balance.

The multimillion-dollar fund balance has grown remarkably in recent years, and some have questioned why the district has cut positions and programs while its reserve fund was snowballing.

District officials say there’s no strict guideline for how big a fund balance should be, but auditors have told them it’s a good idea to set aside the equivalent of two to three months of operating expenses.

A recent district analysis said two to three months equals $16 million to $23.9 million. The fund balance as of June 30, 2007, was well over $26 million.

And the fund balance is expected to grow when it’s next measured this summer, in part because of lower-than-expected costs in the district’s self-funded health insurance plan.

The fund balance has its uses, however. They include:

-- Paying bills when revenue doesn’t arrive in time. This avoids the interest cost of short-term borrowing.

-- Lower interest rates when the district issues construction bonds. A healthy fund balance is one sign of the district’s ability to pay its debts, which leads to higher bond ratings, which means lower interest rates.

-- Covering unexpected expenses.

In an unusual move, the school board last fall decided the fund balance was big enough to be tapped for $1 million to reduce the property tax levy.

Officials say a fund balance should never be used for ongoing expenses such as salaries and benefits. The reason is that the money can be used only once, and then it's gone, while salaries and benefits continue annually.

Dave Parr, co-lead negotiator for the teachers union in the recent negotiations, agrees the fund balance should not be used for ongoing expenses.

But Parr points out that the fund balance is growing by leaps and bounds compared to the district’s main sources of income—state equalization aid and the local tax levy.

The state caps the aid and levy growth each year. The revenue cap has allowed revenue increases between 2.4 percent and 5 percent in the past six years. But the fund balance grew much faster than revenue in those years.

Parr pointed out that at the same time, the district has cut positions and programs because officials said they faced budget shortfalls.

Sam Loizzo, president of the teachers union, hopes the board will look at that history and make changes.

“I would love to see the district bring back librarians at the elementary level to fully staff every library so that no student goes without library media person in each of the buildings,” Loizzo said.

Eight of the elementary schools that used to have one librarian each now share four librarians because of budget cuts.

Loizzo said he’d also like to see programs such as the All City Sing restored.

At the same time it was cutting, the district started several charter schools. Those are good programs, Loizzo said, “but I think there are other things out there that could affect more people across the board rather than some of the more specialized programs.

“I realize that the board does not want to spend money on things recurring year after year, but I just think there are certain things we need to examine,” Loizzo said.

IF YOU GO

The Janesville School Board study session on a proposed new fund balance policy is set for 6 p.m. Tuesday at the Educational Services Center, 527 S. Franklin St. The board usually does not allow public comments at study sessions.

TAGOS ON THE AGENDA

The Janesville School Board has added another meeting to its business on Tuesday night.

The board’s buildings and grounds/finance committee is now scheduled to meet at 5:40 p.m. to consider adding $72,300 to the 2008-09 budget. The money would be used for rent and supplies to expand the TAGOS Leadership Academy.

The new charter school for at-risk students in grades 7-12 is located at Arrow Park. It would expand from about 30 students to 70 students.

As announced previously, the full board also has a study session scheduled for 6 p.m. Tuesday to discuss a proposed policy governing the use of the operational budget’s fund balance. Approval of the TAGOS expansion is now added to the agenda of the 6 p.m. meeting.

Both meetings are in the board room at the Educational Services Center, 527 S. Franklin St.