There was a great point made by one of our current Board Members at the Candidate Forum on Monday, March 23rd, regarding Fund Balance and how it is a financially smart decision to use those excess funds that may be in that account for things like capital improvements. For instance, If $6 million is the amount of 'extra funds,', spending it to improve a couple of schools or replacing older equipment, etc. is fiscally responsible. It is a one-time payment for the improvements without any future repayments, interest, or other costs in doing the work. What is not a good use of the ‘extra funds’ in Fund Balance is drawing it down to help repay non-referendum debt taken on around the same time as the approved referendum debt. This is my opinion, but it also is the opinion of Moody’s Bond Rating Agency when they provided their rating rationale in downgrading the District’s debt. “Poor budgetary management practices in recent years has resulted in the material use of general fund reserves to pay for non-referendum debt service, instead of levying the full amount, and by doing so has weakened the overall financial profile. Additionally, the new financial management team expects to further draw on reserves in fiscal 2021 which would erode an already weak financial position when compared to peers. In levy year 2022, the new financial management teams intends to levy the full amount needed to cover debt service on the non-referendum debt, which will help stabilize the reserves for the district.” Source: Moody’s (see picture)
Commentaires