School Beat: Monday night: District establishes fund balance objective; Switches bonds, saves money--on why fund balance objective matters

Last October in the finance committee meeting, members discussed the state of the fund balance and what the objective of the school district was. Click on the audioblogger and you can hear that the target was set at 7% and Mr. Pierick goes over how that will be calculated.


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Previously in August, Art Phillips had asked about the fund balance in connection with the motion to restore operating cuts and fund the Plunkett Raysich study. he asked for specific targets and was told there was none.

In the April 2006 School Board District Administrators report, Supr. Heidi Carvin had noted the necessity of addressing the fund balance issue and that taking money from the fund balance to make up energy cost spikes could not continue-- she said:

""Planning for 2006-07 School Year: When fund balance is used for unanticipated costs, it is important to make budget adjustments the next year. This prevents the fund balance from eventually going to $0 and the District becoming bankrupt. The struggle to build the fundbalance back up also continues. "


On Monday night, the public saw the very first result of the long process of discussion in meetings as the policy of the fund balance was given FIRST READING. Yes. Things happen slowly in large organizations. As the representatives from Paine Webber were making their presentation on the routine switch of bonds that could save the school district money since interest rates had declined 2%, they mentioned that a key part of ensuring the school district could get a replacement bond at A3 rating by Moody's was the establishment in board minutes of a target for the fund balance.

The public can search on the blog and see the disasterous results for Monroe and other school districts that have not maintained their balance in difficult times. The cost of financing goes up dramatically--and money that could be spent on teachers is spent for higher debt service payments due to higher interest rates.

So---on Monday night, Paine Webber representatives praised the school board for their policy---at first I thought this might be sly humor since it was after all only the very first reading of such a policy---but after further reflection, I would agree that it has been a process of dialoge over the past months about this matter and a understanding has been reached ---thus----

When the construction project was bought up right after the GO refinancing, and the proposal was to consider the offer of a contractor to sell the district a lot at 6th Street and Badger Drive with deferred payment option and to construct a house with students of the construction class---they were told that the funds necessary for this project will be BORROWED commerically and NOT from the fund balance. In the Observer's view this was very correct and consistent with the fund policy targets talked about only minutes, or SECONDS ago in the school board meeting. Right in my immediate memory span.

Readers can search the blog for other articles on the fund balance issue. The Observer salutes Art Phillips and other board members that have raised questions on this issue. They are performing their duties as board members. This is not "micromanagement" but rather the essential management of policy that board members must perform. Thanks.