School board approves preliminary budget

The Hot Springs County School District Board of Trustees approved a preliminary budget for fiscal year 2021 to 2022, after the district’s business manager, Chauncy Johnson, introduced it on April 20.

After Board Treasurer Joe Martinez moved to approve the budget, and Board Vice-Chair Sherman Skelton seconded the motion, the board approved the budget unanimously.

Johnson opened by noting the district’s local revenues continue to be low, as projected for most of the year, and while he assured the board that the district would be “okay” as it closed out the current fiscal year, he nonetheless predicted the district would only be able to reserve roughly 5% of its reserves, above and beyond its pre-1997 reserves, which he estimated to be in the $500,000 range.

Johnson acknowledged the district has had higher reserves in previous years, thanks to a more steady economy contributing to its local revenues.

Johnson went on to explain the district’s revenue projections for fiscal year 2021 to 2022 are about $11.1 million, with the district’s most recent ADM (Average Daily Membership) report — which refers to the average number of students enrolled in a school or district each day, over a specific time period — indicates 638 students in the district.

Given the ongoing (albeit receding) pandemic, Johnson deemed this “a positive figure,” and even anticipated that number would increase over the years, based on the number of students who have chosen not to be in school this past school year due to what their families see as the risks of COVID-19.

Johnson noted the legislature did not change education funding “drastically” for the upcoming fiscal year, even though the “big bill” legislators had considered would have made “some pretty severe cuts,” so the district’s funding should remain relatively consistent with its existing model.

Johnson added that the district’s special education funding cap is still in place, but also reported that the legislature did pass Medicaid funding for special education, which he expects to present the district with challenges that are “not quite clear” currently.“We do know that we’re going to need resources in order to seek Medicaid reimbursements for special education students,” Johnson said.

Johnson forecast that federal funding for COVID-19, also known as SR2 funds, would be “just barely” more than $1.4 million for the Hot Springs County School District, which would be required to use those funds to address COVID-relevant issues such as learning loss and any equipment that would be needed for either social distancing or air filtration and cleaning.

“Local revenues will most likely stabilize due to increasing energy prices,” Johnson said.

“With COVID-19 and the reduction in energy needs, because of less travel (and associated expenses), we believe that’s why our revenues for mineral extraction are down. I see those coming up. We’re already going to the pump and seeing that fuel prices are up.”

According to Johnson, “The majority of our focus in utilizing COVID-19 funding is going to be to get our kids up to speed as quickly as possible.”

Johnson admitted he’d “estimated a little high here” compared to previous years’ budgets, speculating that the actual expenditures for 2021 to 2022 could be closer to $10.6 million, “but I’m always a little bit conservative.”

Johnson does expect health insurance premiums to increase by about 3.5% or less, “which is pretty good compared to past years,” during which the district has seen yearly increases of as much and even more than 10% in their health benefits.

“(Special education) funding will continue to need close monitoring, especially as we move to Medicaid billing,” Johnson said, “but I feel confident about how we’ve moved through the spending cap.”

Johnson pointed out that, even with decreased local revenues for the coming fiscal year, the district will receive hold-harmless money for what it lost during the current fiscal year.