To balance its budget for the 2017-2018 fiscal year, the Rapid City school district will dip into millions of dollars of reserve funds and other monetary streams typically earmarked for building projects.

The decision that caused at least one school board member some consternation during Monday night’s meeting.

Though the final $189.8 million budget for the fiscal year beginning July ended up being approved, Sheryl Kirkeby was the lone school board member who voted against it.

“I am very concerned about the use of the capital outlay reserves, and I do feel as though that is my major hesitation towards this,” Kirkeby told the board.

Kirkeby’s concern stems from the proposed use of what amounts to years of savings in the general and capital outlay funds to balance the district’s overall budget.

The district will use $887,866 in general fund reserves to make sure that revenues are up to the task of meeting projected expenses in the general fund alone. Balancing the capital outlay fund will also require the district to tap into $7.14 million in reserve dollars.

Once the reserve funds are spent down, it will take years to bring them back up to current levels, according to Assistant Superintendent Dave Janak.

The general fund will also be propped up with $8 million in what’s called capital outlay flexibility. A rule created by state lawmakers, capital outlay flexibility allows school districts to use a significant percentage of their capital outlay funds — intended originally for building projects — to finance expenses that normally have to be paid for from the general fund.

The school district has relied more and more on capital outlay flexibility in recent years to meet its financial goals, taking millions of dollars from the building fund to pay for expenses like increases in teacher pay.

Relying on these funds, Kirkeby argues — as she has in the past — for anything other than their original purpose is a precarious approach to budgeting, but Janak said the school board doesn’t have much of a choice if it wants to pay the district’s bills.

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“I would not in any way, shape or form describe this as a crisis,” Janak said. “But it is something the district will have to look at over the next couple years.”

To free up dollars in the capital outlay fund, district officials have decided to forego any big building projects for the 2017-2018 year, but that’s not for a lack of candidates. MGT of America, a private consultant, has identified a list of more than $300 million worth of facility improvements that the district could tackle over a 10-year period.

If it wants to begin chipping away at that list in the foreseeable future, the school board will likely have to entertain borrowing money to get the job done, Janak said.

Overall, the 2017-2018 budget as approved by the school board on Monday evening is $2.4 million less than the current year's budget for the school district.

In other business, the school board underwent a changing of the guard as newly elected board members stepped in to replace old ones. School Board President Jim Hansen stepped down from the dais after six years of service, as did board member Ed McLaughlin after four years on the board.

The two men were replaced by Mike Roesler and Christine Stephenson, who were both sworn in during Monday night’s meeting. The board then voted unanimously to appoint board member Matt Stephens as the new school board president.

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Education/County Reporter

Education/county reporter for the Rapid City Journal.