If no budget changes are made, the Abbotsford School District’s financial reserves could drop to about a third of the low end of its target range by summer 2020, the school board recently heard.
Earlier this year, secretary-treasurer Ray Velestuk raised concerns about the school district’s accumulated surplus, and returned to the matter in recent budget projections for the 2019-20 fiscal year.
While delivering budget estimates, Velestuk told school board that the district does not expect to be quite as deep in the red this year as previously stated. However, he said the school district still needs “to have a look at our big financial picture of where we’re at” in terms of its unrestricted accumulated surplus.
Velestuk said the 2018-19 operating deficit is anticipated to rate at around $1.9 million, rather than its current $3.9-million projection. But that’s still expected to bring the unrestricted surplus down to $3 million by the end of the fiscal year, which is about $800,000 below the target range of $3.8-5.8 million – between two and three per cent of the operating budget.
On top of that, the 2019-20 projected operating deficit now sits at $1.7 million, Velestuk said, which would draw the unrestricted surplus down to $1.3 million by summer 2020, just a third of the low end of that target range.
“That is what is a concern,” Velestuk said.
The unrestricted portion of the surplus reserves is of particular concern, as it is what the school district turns to in the case of emergencies, as it has no restrictions on how it can be spent. Velestuk gave the example of the natural gas shortage that resulted from a pipeline explosion near Prince George late in the fall last year.
“That has resulted in us having our natural gas costs escalate to be about $400,000 over budget, primarily because of the rates of natural gas,” Velestuk said. “That is the purpose of an unrestricted surplus is that we don’t have to race out to other areas of our budget and make changes, maybe, or two to adjust for something that is unforeseen.”
By contrast, the restricted surplus may have to be reinvested into the schools from which the surplus came (per school district policy) or back into Aboriginal education (per ministry policy).
“So the next month-and-a-half, work is around how do we maintain our financial health?” Velestuk said. “How do we protect some of that so we don’t live on that edge, if you will.”