Fiscal year change could net $10 million

07/07/2014 12:21 PM

07/07/2014 12:22 PM

A special accounting option available to Texas school districts could earn the Mansfield district a one-time windfall of roughly $10 million, officials estimate.

The school board voted June 24 to follow the lead of at least 185 school districts that have adopted an earlier fiscal year – moving the start from Sept. 1 to July 1.

The change would create a 10-month fiscal year in which the district would incur 10 months’ worth of operating expense while collecting 12 months of state and local tax revenues to pay for it. In effect, it creates two months’ worth of savings that the district plans to sock away in the budget reserve fund.

But they said extra money isn’t the only benefit of adopting the July 1 cycle. The early fiscal year aligns better with federal grant programs and with the school year, allowing districts to get their budgets done before the start of school in mid-August. That would let senior administrators focus more on getting schools open, and teachers would know their contract details before showing up to class.

“It helps to get folks their money in advance so they can go ahead and get their programs funded,” said school board president Michael Evans. “Whatever we can do to help the administrators get the services to the kids is a thumbs up.”

But there are drawbacks. Earlier budget making would have to rely more on preliminary property tax values and could be even more vulnerable to drawn-out legislative deliberation over school funding issues in Austin. Districts might have to compensate by making budget adjustments along the way.

Mansfield taxpayers would not be affected by the calendar change, said Assistant Superintendent Terry Morawski. “It’s essentially a change on paper.”

He cautioned that the $10 million savings figure is a “soft estimate,” noting that the budget impact won’t occur for two years.

The district’s current general budget is $236.1 million, with a reserve, or fund balance, of $95.8 million.

The Texas Education Agency created the early-start option in 2001. The Tarrant County school districts of Fort Worth, Birdville, Burleson, Crowley, Northwest and, mostly recently, Arlington have adopted the July 1-June 30 fiscal calendars.

The Arlington district made the switch starting with a fiscal year of July 1, 2012 to June 30, 2013 and projecting a roughly $20 million addition to budget revenues. Board president Bowie Hogg said it’s been a blessing for budget planning.

“It is a great plan to not do the final touches on the budget in August, but June,” he said.

In Mansfield’s timeline, the 2014-15 fiscal year would remain the same, Sept. 1 through Aug. 31. Then 2015-16 would be the conversion year, running 10 months from Sept. 1 to June 30 and creating the one-time, two-month savings.

All subsequent fiscal years would be 12 months, from July 1 to June 30, with no additional savings.

Evans said the district was in no hurry to make the calendar change, which it could have done a dozen years ago.

“When something is new, you want to see how it works in other places first,” he said. “No, we weren’t jumping on that.”

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