The district is seeking additional revenue to:
Increase safety and security at our schools
Retain and recruit quality staff
Access $5.1 mIllion dollars in funding ($3.1 million from the state, $2 million from local taxes)
Reduce a budget deficit
Help cover increased costs due to inflation
Bond elections are for new school buildings, affect the district’s interest and sinking rate, can’t be used to pay for staff or other day-to-day operations, and add to a school district’s debt.
A voter-approval tax rate election is required to adopt a tax rate greater than a school district’s Voter Approval Tax Rate and if approved, only affects the school district’s Maintenance and Operations rate. The additional fund can be used to pay for staff and day-to-day operating expenses, and does not add to a school district’s debt.
Despite the lower total tax rate, due to tax compression, the VATRE is needed for Canyon ISD to claim three additional “pennies” in the M&O tax rate. If approved, the three additional pennies would result in an estimated $5.1 million in additional revenue, made up of $3.1 million in additional state funding and $2 million in local revenue.
Approved VATRE funds will primarily be used for:
Increasing safety and security measures at our schools
Retaining and recruiting staff
Reducing the budget deficit
Covering increased costs due to inflation
Most common answer would be Assets – Liabilities = Fund Balance, which fluctuate daily. However, there are Fund Balances that cannot be spent such as non-spendable and restricted fund balances, and those that can be spent such as committed, assigned and unassigned fund balances. The District’s Board of Trustees set a committed fund balance each year for upcoming projects and one-time expenditures. Commitments may be amended by the Board of Trustees at any time. The remaining spendable fund balance is in Unassigned, which is utilized for:
· Cash Management
· Eliminate or lessen the need for short-term borrowing costs
· Unforeseen expenditures and disasters
· Ongoing support for educational programs
· Lower interest rates on district bonds
· Best Practices
The District’s current total Fund Balance as of August 31, 2022 is $59,646,971. Of the total Fund Balance, unassigned Fund Balance is $35,069,587, which provides 4 months of general fund expenditures. However, the District is currently in the process of closing out the 22/23 fiscal year and anticipates decreasing total fund balance, as well as unassigned balance by over $4,500,000. This will drop the unassigned fund balance to under 31,000,000. The Board of Trustees passed a $10 million dollar deficit (if the VATRE does not pass). When a deficit budget is approved, the Board is opting to utilize unassigned fund balance. Therefore, the unassigned fund balance at the end of 23/24, will be less than 3 months of expenditures.
A commonly referenced guidelines is that District’s should keep at least three months of expenditures
within unassigned fund balance:
· FIRST Indicator, school districts need 90 days cash on hand or current investments in the General Fund
· The Government Finance Officials Association (GFOA) recommends an unassigned fund balance of “no less than three months of regular general revenue operating expenditures.”
· FIRST Indicator, Average of assigned and unassigned can not be decrease more than 25% in 3 years, or you must have 75 days of operational expenditure
However, a District’s need for fund balance can vary depending on cash flow needs and anticipated future cost. Two factors that impact this need are fiscal year start dates and relative reliance on local property taxes.
Canyon ISD’s Long-Range Citizen Committee developed a plan, which was adopted by the Board of Trustees, to open an additional Junior High and High School. The District anticipated the additional salary cost, as well as utilities and maintenance, associated with opening two additional campuses. Once the 2018 Bond Program was passed by the community, the District began planning for these additional costs. In order to continue with high levels of learning, extra-curricular offerings and competitive salaries, the District set aside Fund Balance to be utilized until the new campuses get closer to capacity. However, the Canyon ISD did not foresee a 17.2% inflationary cost increase over the last five years, nor did they anticipate the Legislatures not increasing the basic allotment. The Basic Allotment is the per student daily attendance allotment utilized for funding. The last increase was in 2019.
Fund Balance should be utilized for 1 time expenditures. For example: you utilize your savings to purchase large ticket items, cars, homes, etc. However, you should not utilize the Fund Balance to pay day-to-day operations.
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