The Abbotsford School District’s surplus of funds is draining closer “to the place where the director of finance won’t sleep well at night.”
In a 2018/19 fiscal year budget update, the school district posted a larger deficit than previously expected – $3.9 million instead of $3.1 million. The school district received an extra $1.1 million in operational grants, while losing $1.5 million to “schools/other draw on surplus,” and $600,000 in additional spending on the Eagle Mountain school, among other adjustments to the budget.
A large part of the deficit this year is coming from the school district’s contribution to the proposed Eagle Mountain school, secretary-treasurer Ray Velestuk said, noting that if that weren’t in the budget, the deficit would be closer to $2 million.
Trustee Korky Neufeld asked Velestuk how much the school district should be trying to hold in its war chest to ensure it is capable of handling an emergency while being wary not to grow their surplus so large as to attract the attention of ministry accountants looking for savings at the provincial level.
“I think that accumulated surplus of unrestricted surplus should be somewhere between $4 and 6 million that is there for unexpected things that arise,” Velestuk said, noting an increase to the utility bill this year in the hundreds of thousands of dollars.
“There are a few other factors that go into that. Our enrolment continues to grow, and we will require more portables. That’s going to require additional funds to deal with in pressure points around the district. I’m cautious that we don’t move into a position where we don’t have any breathing room with our accumulated surplus.”
The district started the year with over $8.8 million in accumulated surplus, according to the 2018/19 budget, amended on Tuesday, which is forecast to drop to just shy of $4.9 million by the end of the year, which Trustee Preet Rai suggested is getting into “dangerous” territory.
“We’re getting to the place where the director of finance won’t sleep well at night,” Velestuk said.
Rai noted that after the current $4-million deficit, the school district still needs to send another $2 million or so to the ministry for the Eagle Mountain Elementary School.
“We are looking dangerously close to where we shouldn’t be,” Rai said. “So in the next budget cycle are you going to bring something out?”
Velestuk said the “vast majority” of the deficit is from planned spending for projects coming up.
“But we are getting to a point where that is running a little bit thin, and so we’ll see where we’re at in the coming budget cycle,” Velestuk said.
That cycle is coming up in short time – the school district is set to hold its first public budget information meeting for 2019/20 fiscal year in the evening of March 7.
“At that point, we’ll have sort of a recap on what our forecast is for the current year and starting to look ahead at some of the major factors we’ll have to deal with in the coming budget,” Velestuk told school board.
“Trustee Rai alluded to the weakening surplus is going to be of some issue. So we’ll deal with that in the coming months.”