A proposed budget approved by the Rapid City school board Monday night is $5.23 million lower than this year’s, primarily due to the lack of any big-ticket building projects, according to Assistant Superintendent Dave Janak.
The budget may change before its final approval in July, however, as uncertainty still looms over how much funding — if any at all — the federal Department of Education will pass down to South Dakota.
“We have not received allocations on any federal dollars at this point,” Janak told the school board. “The state hasn’t even opened up the program for us to be able to put in our application for those funds and will not do that until they have dollars to distribute.”
Anticipating a loss in Title I funding as a result of President Donald Trump’s budget plan, the South Dakota Department of Education has previously instructed the Rapid City school district to plan for a 15 percent budget cut at all of its Title I schools.
Janak said the district is still bracing for this potential cut and has drawn up an alternative budget proposal to accommodate it if it comes to pass.
“We have prepared an 85 percent budget and a 100 percent budget,” Janak said.
Another problem on the financial horizon is that the district will soon scrape the bottom of the barrel when it comes to capital outlay reserves.
The capital outlay fund is traditionally used to pay for building projects. The district usually starts the budgeting process with millions of dollars left over in the capital outlay fund, a surplus referred to as the capital outlay reserve.
There was as much as $80 million in the capital outlay reserve fund in recent years. But according to Janak, that number is on course to dip below $10 million within the next fiscal year, during which $5.4 million in reserves will be used to pay for a slate of maintenance projects.
“When we have been lean in the past, capital outlay has acted as the bank. We’ve borrowed from capital outlay so we wouldn’t have to go to Wells Fargo to borrow the funds,” Janak said. “And you can see that reserve is projected to decline fairly consistently over the next several years.”
Depending on how much the fund grows over the next year, the district probably has one more year in which it can rely on the capital outlay reserve fund, according to Janak. Any building and maintenance projects beyond that point, he said, will likely require the school board to seek alternative forms of funding.
Overall, the total budget for the fiscal year beginning July 1 is expected to sit at about $189.2 million, or about $5.23 million less than the current fiscal year’s budget.