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District finance director reports narrowed projected surplus and encumbrance-driven spending trends
Summary
The district’s second-quarter financial report shows a reduced projected ending fund balance for the current fiscal year versus the budgeted surplus, rising year-to-date expenditures partly driven by encumbrances and special services, and an upcoming state revenue update that could affect projections.
Lake Oswego School District 7J’s finance director presented the second-quarter financial report covering the six months ending Dec. 31 and briefed the board on revenue, expenditure trends and encumbrances that affect the district’s fund balance.
“That 13,100,000.0 is 10.3% of our budgeted, current year expenditures,” the finance director reported, referring to the district’s audited ending balance carried into the current year. He said the district’s preliminary projection for the current fiscal year’s ending fund balance is approximately $3.78 million, down from a budgeted surplus of about $8 million. The lower projection reflects higher spending year-to-date and a slightly lower carryforward than shown in the preliminary unaudited report.
The finance director explained that the expanded year-to-date expenditure figure includes payroll encumbrances and purchase-order encumbrances. “Anytime there's a regular staff member who gets hired...there's an encumbrance that gets created by our payroll software,” he said, and purchase orders for goods and services are similarly recorded as encumbrances and reflected in the expanded year-to-date totals.
He noted that year-to-date expenditures through Dec. 31 totaled about $105.9 million—roughly $9 million more than the comparable period in the prior fiscal year—and that central services disbursements and special services are driving a proportionally larger increase compared with school-program disbursements. The report attributes those increases to cost-of-living adjustments from collective bargaining, inflationary pressures, additional teaching staff and earlier hiring of SCA positions this year.
Board members asked whether more frequent topline reporting (monthly summaries) would help; the finance director said he plans a model update after the state issues revised school fund estimates, typically due late this month or early March. He also called attention to cash disbursement trend graphs in the packet to illustrate that current-year disbursements are above last year’s trend.
The board did not take a formal vote on the financial report; the presentation concluded after questions and clarification.
