As of Tuesday, February 5, 2019
DALLAS — The Dallas School District will draft a policy intended to increase its contingency fund, or ending-fund balance, by 1 percent each year over the next several years.
The goal is to achieve an amount that is equal to 5 to 8 percent of the total revenue for the year. DSD’s finance committee made the recommendation for the policy, a draft of which the board will review at an upcoming meeting.
Currently, the district’s policy is to maintain an 8 to 10 percent ending-fund balance — unbudgeted money that carries over from one year to another — something that has not happened for several years. The policy reads that the district has an “ending-fund each balance of at least 8 percent to 10 percent of total adopted revenues.”
Debbie MacLean, the district’s director of fiscal services, said the district’s ending-fund balance reached a low of $921,086 or 2.8 percent, in 2017-18. It’s projected to be $1,388,409 at the end of this year.
She said rating agency Standard & Poor’s Bond Rating Summary from the district’s 2017 voter-approved bond sale warned of lowering DSD’s rating “if the trend of … declining available balance does not abate … particularly without what we consider a credible plan to restore structural balance.”
Board member Mike Bollman said the district finance committee reviewed the policy and trends in the ending-fund balance since the policy was established in 2009. In the years before the recession began in 2008, the district had been able to build its contingency, MacLean said.
“We all know what happened in those years, and we were actually lucky to have the size of an ending-fund balance that we had at that point, because I think we had to reduce $2 million instead of $4 million,” MacLean said.
Board member Michael Blanchard suggested during the committee’s meetings that the policy states that the district must do a budget review if the balance falls below 5 percent.
Blanchard said during the last recession, the federal government stepped in to help.
“I think we were all surprised at the level of federal money that came in, which actually buoyed us for a couple of years. The impacts really weren’t felt until 2011 or 2012. It was the combination of federal money and the ending-fund balance that protected a lot of positions during that time,” Blanchard said. “It’s not likely that in the next recession, we will get the level of federal money. Who knows, but I doubt that that is going to happen.”
MacLean noted that due to enrollment declining, the district had to make cuts as recently as last spring.
“Suddenly we needed to reduce $1.6 million,” she said. “Those kinds of swings give me nightmares.”
Bollman said the district’s average monthly expenses are more than $2.7 million.
“With $921,000, it’s not going to go very far,” he said. “It’s pretty eye-opening.”