Half of the board’s four-hour meeting was spent diving into what next year’s annual budget holds. The board also heard from Adam Fraley with Mauldin & Jenkins of Atlanta on how Cobb Schools managed its finances in FY13.
Early projections, which Chief Financial Officer Brad Johnson said were “guesstimates,” show that for FY14 Cobb could be looking at $807.6 million in revenue, $887.1 million in expenditures and a $79 million deficit.
“We have a lot of assumptions that we used,” Johnson said about putting the report together.
Cobb Superintendent Michael Hinojosa said the district is not ready to release any solutions to eliminating the deficit and said those could be presented to the board sometime in late March following adjournment of Georgia’s 2013 legislative session.
“By then, we should know what the final number will be,” he said Tuesday.
Approximately 70 percent of the total annual budget is spent on instructional employees and 90 percent on all staff members.
Additional expenditures for FY14 include the annual step increase of $9.9 million; increasing the Teacher Retirement System rate from 11.41 percent to 12.28 percent, or $4.4 million; increasing health insurance for classified employees, $5.4 million; utility increases, $1.6 million; and charter school payments, $2.2 million.
Johnson said there are still a lot of “unknowns” regarding the budget. For example, estimating the car tag tax changes, austerity cuts taken by the state and whether an extension for Medicaid funding, or the so-called “bed tax,” will pass.
Hinojosa said that if the bed tax failed, it could result in the district losing another $20 million in funding from the state.
He also reminded the board that the budget overview is the beginning of a potential six-month process and that in February, Johnson’s staff will bring a budget calendar before them to approve.
The FY14 budget must be approved no later than June 30.
During the meeting, Southeast Cobb’s Tim Stultz commented about the trend of a steadily increasing deficit through FY17. Projections indicate that Cobb could be looking at a $105 million deficit by then.
“Year in and year out, we continue to try to come up with a balanced budget, but we end up with furlough days, cutting the school year and looking at these numbers, it appears this is going to be the same model moving forward,” Stultz said. “I don’t think that’s a good way of running the school district.”
He referenced Hinojosa previously, saying that the district will not be able to continue financially surviving on the current “model of education,” and that they have to find a more efficient ways to educate young people.
“You’re exactly dead on Mr. Stultz,” Hinojosa responded. “This year we intend in this budget reduction plan to start laying out some different ideas.”
Hinojosa said the changes would have to be presented at a later time.
In other business, Johnson announced that the district received a “clean opinion” from auditors on the Comprehensive Annual Financial Report.
This means that the financial statements of the district are considered to present “fairly” the financial position and results of operations for the year ending June 30, 2012.
Johnson said only a handful of districts in Cobb prepare CAFRs and that 2012 marked the 31st consecutive year they had been recognized for “excellence” in financial reporting.
“We are proud to continue this tradition,” he said.
Fraley applauded the district for “valuing” its Fund Balance by keeping it as replenished as possible. It currently sits at around $98 million, which would allow the district to run for a little over a month if the General Fund were zeroed out.
“Cobb Schools is in a good financial position,” he said.
The budget forecast will be posted online at www.cobbk12.org.