This is third consecutive year Goffstown School District returned money to the town
School officials say a projected budget is a target, a highly-educated guess that’s nearly impossible to predict exactly.
“There are so many moving parts here that the insinuation that the target can be fixed 16 months out is unfathomable,” said Philip Pancoast, chairman of the Goffstown School Board.
From its 2011-12 budget of $34,606,354, the district announced recently it would return $960,681 to town coffers. Last year, the district returned $2.3 million, the year before that $2.7 million, and the year before that nearly $3.4 million.
Budgeting is affected by a host of variables, including changes in staffing, cuts or boosts in state and federal funding, fluctuations in the price of commodities, and enrollment fluctuations.
Forecasted expenditures are based on current conditions and past trends.
“It’s an educated guess based upon everything you can know at the time,” Pancoast said. “And those guesses throughout the budget process get refined, they get better.”
Board of Selectmen Vice Chairman Scott Gross, who previously sat on the School Board, said it’s hard to come as close as the district did this year.
“You’re talking about budgeting within one percent, about spending 99 percent of your budget,” he said. “I can say that from being an elected official for 12 years, that’s extremely difficult to do.”
The district actually returned 2.7 percent of its 2011-12 budget, compared with 6.7 percent the year before. Still, that’s close forecasting.
“I think that the School District, by and large over the years, has been fairly conservative in budgeting for revenues,” Gross said.
Town Administrator Sue Desruisseaux said the only way the school can do something other than return surpluses to the town is by calling a special town meeting.
She said a surplus is a win-win. “So if you are able to get better rates (for expenses), that will lead to a surplus, and that’s always good for the taxpayer because that money is then used to offset their side of the tax rate.”
In Goffstown, each $100,000 budgeted will cost the taxpayer about 7 cents per $1,000 of assessed property value. Likewise, each $100,000 in unexpected revenue will reduce the tax rate by 7 cents. On average over the last six years, then, the owner of a $300,000 house would pay about $483 that would go unspent and be used to offset the tax rate.
Selectmen Chairman David Pierce said although residents are paying out a little more than needed, the exact amount is reduced from the following year’s tax rate.
He said although it typically doesn’t happen, on occasion residents will ask that if the district overspends by 1 or 2 percent each year, why not reduce the allocation by 1 or 2 percent?
“If people understand the finances of the school system they understand that 1 or 2 percent that’s being returned indicates that they’re managing their finances very well,” Pierce said.
To illustrate the difficulty of budgeting for commodities, Pancoast asked what one might plan in terms of gasoline costs 16 months in advance, which the district does each year.
“We didn’t even say close to ($4), but we found ourselves on that particular item in a variety of different positions over the last five years.”
Between when the best guess is made and the time the district goes to market, things can be wildly different, he said. “And then they change during the time when we were actually buying.”
Another factor is special education. Budgeted expenses were projected to be high this year, with the district returning $339,780.
“I know 16 months ago what my population of students looks like,” Pancoast said. “I have some notion about how many of those kids might graduate. I can make some best guess of how many kids might arrive. And I can make a best guess about what their needs are going to be.”
But the exact number is impossible to nail down – things happen that alter that which was anticipated, Pancoast explained.
Loss of staff through attrition, or the replacement of teachers with higher- or lower-paid teachers, are other determinants that are impossible to predict.
Then there is the uncertainty of legislation on the state level. Pancoast said the district expected to pay a higher percentage of retirement costs last year, though it didn’t come to pass.
Anticipated retirement costs were budgeted at almost $500,000, and constituted the lion’s share of what the district returned to the town.
Pancoast said if the state indicates it will increase the schools’ contributions to the retirement fund by 12.5 percent, the schools will increase projected expenditures by 12.5 percent. But the actual percentage could be far from that.
“What the Legislature said they were going to do … and what ended up happening, were different,” he said. “We had to budget for what they told us because that’s all the information we had when we put our budget together and went to the voters.”
Although the taxpayers might not like putting in more than necessary, there are medium and long-term considerations that make it less discomforting.
First, leftover funds can be put toward either the town’s fund balance or easing the following year’s tax burden.
School surpluses can also effect a district’s bond rating. Though Moody’s rating agency did not respond to a request for an interview concerning its ratings in Goffstown, fund balance reserves and a district’s ability to levy taxes are key considerations in the rating process.
Ray Labore, business administrator for Goffstown schools, said he wasn’t sure what effect year-end surpluses could have on bond ratings.
But Bedford’s superintendent, Tim Mayes, said the comfortable amount left at the close of the fiscal year is viewed as fiscally responsible by Moody’s, which recently upheld SAU 25’s AA2 rating.
“Having a $2 million fund balance on an annual basis is, in their eyes, a healthy position to be in for the school district,” Mayes said.