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North Marion board warns May state reconciliation could shrink revenues, discusses fund-balance goals
Summary
District finance staff told the board that May reconciliation of state revenue could produce positive or negative adjustments and presented options for increasing the ending fund balance from the current 4.4% toward a 10% goal; staff projected an estimated June 30, 2026 ending balance around $2,475,000 but warned of a roughly $150,000 reduction tied to revised enrollment counts.
Kim, the district finance/staff presenter, told the board the district is "really deep into budget planning" as the state’s May reconciliation approaches and said the district would learn in the next two-to-three weeks how much revenue it will actually receive for the coming school year.
Kim said the May payment includes prior-year adjustments and that those reconciliations can be positive or negative depending on final audits, transportation costs, property-tax collections and student enrollment. "It comes out of your May state school fund payment," she said, explaining how reconciliation affects the district's cash flow.
Kim gave specific budget figures. She said last month’s projection of roughly $500,000 in excess revenue was trimmed after final enrollment updates reduced the district’s State School Fund by about $150,000. She also said transportation revenue — about $300,000 of the excess figure — "might have to be paying back." On expenditures, Kim reported an improved variance under budget, from a prior $930,000 projection to $990,000 under budget this month. Combining those movements, she said a conservative projection for the district’s June 30, 2026 ending fund balance could be about $2,475,000 (compared with an earlier estimate of about $2.55 million), while noting the board had budgeted an ending reserve of $1,200,000 for the current year.
Board members pressed Kim on how large reconciliation movements can be and the causes. Kim said adjustments "could be 10 or 5" percent in extreme cases but that smaller districts' numbers tend to be less impactful than larger districts; she pointed to the high-cost disability grant as another reconciliation driver to watch.
The board also discussed a target for ending fund balance. Kim outlined options — keep current budgeted reserves (4.4%), aim for a long-term 10% target, or select an intermediate target — and said the board’s direction on that goal will shape next steps in budget development. Under the fund-balance policy adopted later in the meeting, a board resolution would be required if the district falls below an 8% threshold.
Kim cautioned about enrollment volatility: the district is seeing continued declines and even short-term attendance changes (for example around spring break) can trigger a 10-day attendance drop that affects state counts. She said she had projected year-end enrollment of 1,552 but was concerned the district may fall short of that figure.
Next steps: staff will continue to refine revenue and expenditure estimates as state numbers update and will return to the board with fund-balance scenarios during upcoming budget work, including the fund-balance discussion scheduled later in the meeting.
