The Rapid City Area Schools Board of Education preliminarily approved the District’s proposed budget for the 2021-2022 school year, which totals $194,277,114. Administrators say the next fiscal year will be a difficult one as the last two years of decreasing enrollment and, consequently, revenue have kept the District in financial straits.
“From an expenditure perspective, the District has done an effective job of keeping cost growth to a minimum, as all major funds show either a decrease or a moderate increase. The District faces a difficult revenue situation in the General Fund, as State Aid revenue decreased significantly due to a major enrollment decline. In turn, this increases the need for support from the Capital Outlay fund to the General Fund, which also presents challenges,” Director of Business and Support Services for RCAS Coy Sasse wrote in a summary of the budget. “Ultimately, FY 22 will be a pivotal year in determining how the district moves into the future and its ability to address its long-term financial issues.”
Most of the District’s revenue comes from property taxes, which have been steadily rising in the Rapid City area. Property valuations in the District have been rising consistently in the 5-6% range over the last seven years, which in turn increases property taxes. Property taxes will contribute around $40.1 million to the RCAS budget this year — an increase of $141,000 or 2%.
State sales tax returns have also exceeded expectations, leading the target teacher salary portion of the state aid formula to increase by 2.4%.
However, the other major component in calculating school district revenue is enrollment. The State Aid formula relies on enrollment numbers to determine how much money a district receives from the state. State aid comprises around 40% of the District’s General Fund. The enrollment count for fall 2021, which is calculated as of Sept. 1, will be crucial in determining how much money the District will receive from the state. In 2019-2020, enrollment fell by 812 students, or 6%, which administrators believe is COVID related.
For Fall 2021, the District projects it will have 13,100 students. The District is projecting it will receive $39.8 million in state aid — a $1.4 million, or 3.4%, decrease from last year.
The General Fund will see regular revenue around $95.4 million, but the regular expenditure will be around $102.3 million, leaving the District with a $6.9 million deficit — a 55% increase from the FY 21 deficit. To offset the deficit, the District will take $6.25 million from the Capital Outlay flexibility transfer — a 40% increase in the transfer amount — and $650,000 from the General Fund cash reserve.
Since 2017, the General Fund has been running a deficit as expenditures per student have outpaced the fund’s revenue. To supplement the General Fund, the District has been taking larger slices — ranging from $2 to $5 million — of its Capital Outlay fund, which will continue in FY 22 to support the smaller state aid package.
“Though the General Fund deficit is projected to increase in FY 22, administration chose not to take major budget reduction measures due to the uncertainty still being created by COVID-19 issues, most notably, the variance in enrollment and its corresponding impact on instructional needs and expenses. Administration will monitor enrollment throughout the Fall of 2021 and determine if and how adjustments need to be made depending on the outcome of the Fall student counts,” Sasse wrote.
The Capital Outlay fund is overall in a strong position and has an adequate balance, but Sasse told the Board the significant increases to the support transfers ultimately will mean less money for facility and equipment needs. As a result, administration reduced Capital Outlay requests by $3.3 million to rein in the budget and accommodate the extra flexibility transfer.
The Capital Outlay fund’s total revenue and expenditures are projected to be $39,137,002, a $3.69 million or 8.6% decrease. The regular ongoing revenue has increased by $898K or 3.6%, and regular expenditures increased by $95K or .38%.
The General and Capital Outlay funds comprise the bulk of the District's budget. The remainder of the budget is dispersed among the Special Education fund ($25,420,331), the Debt Service fund ($404,110), the Food Service fund ($6,232,250), the Preschool Enterprise fund ($415,000), and the Health Insurance fund ($20,300,000).
While some expenditures decreased, Sasse told the Board that is misleading due to changes in allocations from federal programs. The main expenditure increase has been in salaries and benefits, to which 84% of the budget is dedicated. Total expenditures are expected to increase by 1.7% this year, which Sasse said was fair and incremental.
All but one board member, Jim Hansen, voted to approve the budget.
The full proposed budget can be found on the RCAS website. A public hearing on the budget will be held at the June 14 school board meeting.