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Janesville School District budget gap being kept under wraps

JANESVILLE — The Janesville School Board faces a multimillion-dollar budget gap that it must fill with revenue or cuts. But one month into its fiscal year, the board still doesn't have a good estimate of how big the gap is.

The gap won't be revealed until late this month, district CFO Keith Pennington indicated at a school board committee meeting Monday.

The information would be the first budget projection since last fall.

Superintendent Karen Schulte said her administration has followed orders from the board in keeping budget projections secret.

The reason appears to be public relations.

Schulte said keeping budget projections under wraps helps avoid explaining why projections change over time, something she said is difficult to explain to the community.

The board and administration came under fire from the public during budget discussions last year.

The year was full of surprises as the district dealt with the first reduction in state aid in many years and uncertainties about state law governing school district finances. Some criticized school officials for how they handled the changes.

Not helping last year was the fact that so many district employees' jobs were on the line. In the end, the district eliminated 110 positions.

No major layoffs are planned this year.

Board member Karl Dommershausen noted that some other districts settle their budgets in June and make adjustments after final state aid numbers are released Oct. 15.

Dommershausen said it bothers him that the board has made spending decisions this year without hearing any budget update.

Dommershausen asked whether the budget process would work better if projections were made earlier.

Schulte said she would consider that if the board told her to do so.

For the moment, it appears Dommershausen is in the minority.

Pennington said Monday he'll review projections for revenue when the board meets Aug. 14. He'll review expenses Aug. 28.

The budget gap estimate will be come clear Aug. 28, Pennington said, so that's when the board can begin discussing how to fill it.

The board likely won't put the final touches on the budget and decide about taxes until the end of October. It's required by law to set the tax levy by Nov. 1.

Dommershausen suggested it's difficult to run a district without knowing what the budget is until after the school year starts. Schulte pointed out that school districts have been doing so for decades.

In other budget news, Schulte said Monday she won't recommend raising fees for the coming school year.

Raising fees might bring in more money, or it might not, she said.

With poverty among district families rising, more families are expected to find it difficult to pay the fees. When that happens, the district waives the fee, Schulte pointed out.

Also, it's getting late in the year to raise fees, because it would give families little time to plan for the expense, Schulte said.

The board could overrule Schulte, however.

Even if income from fees increased by thousands of dollars, it would likely do little in the face of a budget gap that is said to be in the neighborhood of $9 million.

Options include taxing to the maximum allowed under the state revenue cap, cutting expenses, finding new revenue and dipping into the fund balance.

Part of the fund balance is not designated for specific purposes but is budgeted for emergencies, among other reasons.

One major use of fund balance is to avoid short-term borrowing. Many other local governments borrow money to bridge gaps between revenues and expenses during the year. The district has for years avoided the costs of such borrowing.

A healthy fund balance also helps the district's bond rating, which means lower interest rates if the district does borrow.

Board President Bill Sodemann said at Monday's meeting that the board will have to "bite the bullet" and draw down the fund balance.

Taxing is a more complicated topic than it might appear. Boards that do not tax to the max end up losing state funding they otherwise would have received in the following year, which has happened in recent years to Janesville, Dommershausen noted.