BURNSIDE - The Southeast Webster Grand and Prairie Valley community school district boards held a joint meeting Wednesday to explain the benefits of their proposed whole-grade sharing contract.
Gary Sinclair, a consultant from PMA Financial Network, Naperville, Ill., explained to members of both communities how the districts use budgeting tools and build their projection models.
"Like any projection model, the value of the tool is directly related to the quality of the projection," Sinclair said. "The good thing about this tool is, once you get started, you can go online and make a thousand scenarios."
Projections were shown for both districts, and both showed declining enrollment figures and varied tax revenue, with allowable growth uncertain. Prairie Valley's revenues exceed its expenditures, Sinclair explained, and SWG has been more aggressive with its cash position because it has not been as good as their unspent balance position.
Both districts, Sinclair said, would remain fiscally solvent if they continued with their plans, which are different from each other.
"If the districts do not whole-grade share what they have to look at is, how do we meet the needs of our K-12 kids that we currently have with the budget we currently have?" he said. "If they do whole-grade share, then we have to look at, how do we meet the needs of our kids with the elementary going in one direction and the secondary going the other?"
Sinclair described whole-grade sharing as the most reasonable financial option for both districts.
"There are two sets of districts I think get into real financial trouble. One are those that say yes to everything. The other are those that say no to everything," he said. "That's not our job. We generate authority to educate kids. Getting higher fund balances, although you've got to have a reasonable fund balance, is not our goal. Our goal is educating children."
For each district, financial projections are based on the past five years of revenue history and take into consideration enrollment figures on each of its expenditures.
"The value of that is, as you do projections, you are able to consider where you've been in the past and where you're going to go in the future," Sinclair said. "Then what we do, as we work with the district, we start to make assumptions about each of those."
This set of assumptions, which most drive the school's budget, include allowable growth, dropout prevention, taxable evaluation, income tax and uniform property. Sinclair showed on his spreadsheet the effect changing the projected allowable growth, as an example, has on the district's unspent budget.
"There is a tendency to underestimate revenue and overestimate expenditures so you cover yourself," he said. "In this model, we try to avoid that because you don't need to build in artificial mistakes. This is based on our best professional judgment."
He added, "The good thing about this tool is, it's a five-year projection with a one-year action."
The members of each board must agree to these assumptions, Sinclair said, to make decisions.
"These are the key drivers," he said. "And if you can't agree on the key drivers, the results aren't going to mean anything."
The PVCSD board will vote on its whole-grade sharing contract on Tuesday, and SWGCSD board will vote on its contract Wednesday.