By Nikki Jamieson
The numbers are in for the Horizon School Division’s budget update, and they aren’t quite on budget.
Presenting the fall budget update to the Horizon School Board during their Nov. 29 meeting, Phil Johansen, associate superintendent of finance and operations, informed the board that projected revenues for the 2016/2017 budget had fallen short.
“During the spring, we had budgeted for revenues of ($46,129,811), for this budget update, that revenue has dropped to $45,426,000. That’s about a million dollar decrease,” said Johansen.
According to a statement from the HSB, “Horizon School Division projects revenue of $45,426,650 for 2016-2017, with 95 per cent of that coming from the Government of Alberta. Expenditures of $48,177,451 are expected for the year which will lead to an operating deficit of $2,750,801.”
Although they had still planned on having an operating deficit of $2,131,163, they had a surprise of having lower revenue income. Although the board was originally planning for a $2,131,163 deficit from an operating revenue of $46,129,811 and expenditures of $48,260,974, the fall budget update exceeds that by over $600,000.
“There are main things that caused that decrease,” said Johansen. “The first one is that we’ve had a very significant drop in enrollment, part of that is due to the (Warner) Hockey School not operating this year. And then The other part of it is we did seem to lose some, it seemed like it was spread across a number of schools, but there is quite a few schools where their enrollment did not quite, it didn’t come in where it was projected this year.
“The overall revenue, too, though, that had declined also because of Warner Hockey School. This revenue number, it includes a consolidation of all the school generated funds items, and also staffing payment, which would come from those schools. So, Warner Hockey School, typically, their fees would be worth about $600,000. From that million dollars, you take off $600,000, for the Hockey School. On top of that too, they also would give us $200,000 payment for staffing payments, to cover the cost of the coach or dorm manager. And so, about $800,000 of that deduction in revenue is actually related to the Hockey school, and the fact that it is not operating this year.”
The Hockey School not operating this year would also lead to corresponding reduction in expenses.
While the division is seeing a deficit of $2,750,801, which according to Johansen, “Sounds like a lot, and it is”, they have a few items on the ticket that are contributing to it:
• The board has typically allowed schools to carry over unused funding from year to year, which now amounts to about $2,000,000. The board has asked these schools to make plans to spend the unused funding, and in the schools’ site budgets, they have made plans to spend $700,000 of that, although Johansen remarks that schools have a history of over budgeting for projects, although as they upgrade technology and learning resources, they will dip into that funding a bit more.
• Last February, the board approved $2,000,000 to be spent on various maintenance and technology projects in the different schools. As some of those projects didn’t get finished by the end of the school year, the remaining money, roughly $1,000,000 went into capital items, and won’t effect the bottom line until it is amortized, with the remaining half being expensed as repairs.
• The budget has an item call unsupported amortization of $435,386.
With the deficit, the board will be dipping into it’s reserves to pay for the extra expense. As of Aug. 31, 2016, there was an accumulated surplus from operations of $9,791,745. Johansen predicts that by Aug. 31, 2017, after dipping into reserves there will be an accumulated surplus of $6,274,225.
“On of the things I’d highlight is, with the board use of reserves, really, going into a deficit is a use of reserves,” said Johansen. “The board has generated, saved a fair bit of reserve money over the years, and the fact that we have those reserves, is something that allows us to maintain programming and staffing levels when we do have something like this happen, when we have had a reductions of enrollments.
“We’re well aware that this can’t continue, continually dip into reserves to finance the schools. So management, at this time, has started a process where we’re looking at how money is allocated to schools and we’re trying to find efficiencies within the operations.”
Expenditures in the HSD are grouped into the following categories: Instruction – ECS, $$1,883,275 (3.9 per cent of the budget); Instruction Gr. 1 – 12, $34,114,894 (70.9 per cent); Plant Operations & Maintenance, $7,041,421 (14.6 per cent); Transportation,$2,668,330 (5.5 per cent); Board & System Administration, $2,050,800 (4.3 per cent); and External Services, $418,731 (0.8 per cent).