Chester School Board Investigating Retention of Surplus Funds

CHESTER – Pending a decision by the school board the Chester school district can retain up to $194,883 of its 2012-2013 surplus to address any unanticipated expenses in the current year.
It’s a new way to handle the school district’s finances made possible by a recent decision of the NH state legislature and approved of by Chester voters at last district meeting. The basic idea is that, if the funds are available in surplus, school districts can hold up to 2.5 percent of their net assessment to handle any emergencies in the current year.

As reported by financial manager Annmarie Scribner, Chester ended the school year with a surplus of $201,459.53.
Last year’s budget totaled $11,866,824.
In the past the school board has used extra funds at the end of the year for projects they deem worthy, but weren’t necessarily included in the year’s budget, and returned any remaining surplus to offset the tax rate in the coming year.
While that funding has been lauded for its ability to mitigate tax increases for one year, ultimately it needs to be raised again the following year. This artificially inflates the amount of money that needs to be raised to run the school. School board members have often referred to this scenario as one where, “no good deed goes unpunished.”
The current tax estimate for the coming year is $.769 per $1,000 of property assessment, said Scribner. That number is an estimate, as all of the figures upon which it is based, especially revenues, will not be finalized for another month. If the board decides to retain the full 2.5 percent, $6,577 would go to offset the tax rate.
At their Sept. 4 meeting the school board sought to better understand the 2.5 percent rule and what their options were within it.
Particularly they wanted to know whether the fund accumulates each year.
Interim superintendent Jim Gaylord explained that each year the 2.5 percent amount would be recalculated. Next year the monies retained now would be returned and a new sum calculated to reach 2.5 percent. The maximum a district can hold is 2.5 percent of each current year’s assessment, as it does not accrue each year.
The other issue the board was concerned with was how they should handle the district’s capital reserve funds previously created to help the district handle unanticipated costs. These included a building maintenance fund, a special education fund and a high school tuition fund.
When discussing the 2.5 percent rule the budget committee made it clear to the school board that they would not support keeping the 2.5 percent assessment in addition to the other funds the district held.
This was agreed to by the school board and on Wednesday members looked for ways to spend down those other accounts, minus the buildings account.
By the end of the meeting they suspected that the tuition account could be spent down this year and the $75,000 in the special education account utilized to offset next year’s special education budget.
The board asked Gaylord to make sure they could handle those funds in that way.
The board’s consensus was that it would be unwise to empty the buildings fund as it is a useful planning tool for large building expenses; one which allows the board to bypass large tax increases to pay for substantial repairs.
Specifically the board is looking to use much of the fund for a roof replacement in coming years.
Gaylord remarked that he would come back to the board at their next meeting with the information sought and a recommendation for how much of the 2.5 percent it would be wise to retain.
Gaylord noted that he welcomed the new allowance after years of scrimping in budgets to be prepared in the case of an emergency.

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