March 28, 2024

NCSD Board to consider inter-fund loans

With a gap in state funding and summer finally on the horizon, members of the Newton Community School District Board of Education will consider authorizing the use of Inter-Fund Loans at the its upcoming board meeting on Monday night. The move would allow the district to use the money from their fund balance to cover expenses during the summer, but the district will have to wait until September to receive funding from the state of Iowa.

NCSD Superintendent Bob Callaghan said he’s not sure if the district will need to borrow from itself, the board made a similar move last year to allow administrators to tap into the fund balance to cover summer expenses, but there wasn’t a need for the money.

The district has a balance of $1.2 million in their fund balance account, on Friday the superintendent estimated that it would cost roughly $1.5 million to keep the district operating during the summer. The loan would only be temporary, as soon as the state’s funding arrives in the fall the district would be able to replenish the fund balance.

“We may not have to borrow any money this summer, we may be able to arrange our payments,” Callaghan said. “We did the same thing last year and we were able to make it (without borrowing money).”

The district’s fund balance is replenished by the cash reserve levy, money the district collects through property tax to cover costs beyond funding provided by the state of Iowa. Both Callaghan and Gayle Isaac, the district’s director of financial services, have made replenishing the fund balance a top priority. On Thursday, Callaghan said the district is hoping to put the $1.1 million they levied in April into the fund balance, a move that would almost double the existing balance. Budget expenses may require the district to deter some of those funds, however.

“We think we’ll have to use some of that cash to finalize the budget for next year,” Callaghan said. “We’ve been using that fund balance to balance our budget over the past few years.”

The fund balance is the district’s only source of ready cash, building that account up has been a priority for Callaghan and Isaac. It’s where administrators turn to cover unexpected expenses, including last fall when the board voted to approve hiring additional special education teaching associates. Those moves have left district administrators in a financial pinch as they work to balance their budget in the face of lower than expected Supplemental State Aid, or SSA. Legislators at the statehouse approved a 1 percent increase in SSA this year, lower than administrators had hoped for.

“With a concerted effort to not reduce staff except through attrition and retirement our expenses have exceeded our revenue for quite some time,” Callaghan said. “The board has made a conscious decision to utilize the fund balance to continue to support employment at the school district.”

On Monday, the board will also approve contracts for certified staff members across the district for the 2018-19 school year. Next year NCSD teachers will begin the second year of a two year contract, negotiated last year by the board. The contract includes a 2 percent cost of living raise. In a cost-cutting move, Callaghan said the district will also reduce seven positions. The superintendent said it’s too early to tell if any teachers will be laid off due to the reductions.

“These have already been defined by building principals,” Callaghan said. “The vast majority are either retirements, attrition, or a situation where a person changes campuses or resigns.

Contact David Dolmage at 641-792-3121 ext. 6532 or ddolmage@newtondailynews.com