Lovejoy ISD Budget Outlook
Without a VATRE, current Lovejoy ISD financial projections show:
- $44,527 deficit in FY24 with 100 days of fund balance
- $1,045,556 deficit in FY25 with 86 days of fund balance
- $2,137,508 in FY26 with 65 days of fund balance
Since Lovejoy ISD has a heavy reliance on local tax collections, having sufficient cash on hand is important to cash flow, which includes payroll. A baseline of 90 days and target of 120 days of fund balance are benchmarks for addressing district cash flow needs.
Due to these projections, the district’s focus has been on decreasing expenditures and examining ways to increase revenue. Employee compensation increases, benefit contributions, as well as increasing costs of supplies and utilities impact district expenditures.
PRIORITIZING FINANCIAL SUSTAINABILITY
During the 2021-2022 school year, Lovejoy ISD began an extensive analysis of the current budget state to support a data-driven approach to prioritizing financial sustainability. Assessing Lovejoy's 2021-2022 budget state included:
- Establishing a Stakeholder-Based Financial Sustainability Committee
- Comprehensive Assessment of Current & Future Financial State including:
- Staffing Efficiency Study
- Program Reviews
- Demographic Study
- Capacity Assessment
- Zero Based Budgeting
- Financial Forecasting
Financial Sustainability Committee
Financial Sustainability Budget Priorities
The Financial Sustainability Committee identified four areas of focus to address budget priorities:
- Revenue Generation
- Efficiency Measures
- Program Analysis
- Legacy of Excellence
Financial Sustainability Recommendations
In May 2022, the Financial Sustainability Committee developed recommendations and presented them to the Board of Trustees. Additionally, the recommendations were incorporated into the LOVEJOY 2030 Strategic Plan:
- Strategic Target 7.1
Lovejoy ISD will focus on generating revenue increases in order to achieve financial sustainability.
- Strategy 7.1.1
Consider a VATRE as a means to facilitate financial sustainability.
Link full LOVEJOY 2030 Strategic Plan
Assessment of Current State
- Staffing Efficiency Study
- Program Reviews
- Demographic Study
- Capacity Assessment
Zero-Based Budgeting
Zero-Based budgeting is a method of budgeting in which all functions start at zero and priorities are identified and analyzed.
- Resulted in a net savings of $300,000 for the 2022-2023 budget.
Financial Forecasting
As part of Lovejoy ISD's commitment to transparency and stakeholder engagement, a 40 member stakeholder-based Financial Sustainability Committee (FSC) was formed during the 2021-2022 school year. The FSC included parents, community members, teachers/staff, and district leadership who met over the course of 5 months and took a deep dive into Lovejoy's past, present, and future financial state.
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2022-2023 BUDGET DEVELOPMENT
The focus on financial sustainability activities in 2021-2022 provided a foundation for the development of the 2022-2023 budget which included measures for both enhancing revenue and decreasing expenditures while prioritizing student experience as defined by our graduate profile, mission, and core values.
Priorities for 2022-2023 Budget Development
- Restoring Fund Balance
- Addressing Compensation
- Prioritizing Attendance
- Monitoring and Managing Enrollment
Reducing Expenditures
Lovejoy ISD identified and moved forward with changes that reduced expenditures in preparing the 2022–2023 budget including:
- Staffing Efficiencies and Program Refinements..........................................................................................................$1,300,000
- Zero-Based Budgeting.............................................................................................................................................................$300,000
- District Property Value Study Audit and Appeal...............................................................................................................$86,000
- Graduation Optional for Hourly Staff (Reduction in Overtime Expenses)...............................................................$40,000
- Irrigation Project at Lovejoy High School.............................................................................................................................$38,000
- Power Factor Correction Project.............................................................................................................................................$12,000
- Electricity Contract Extension.....................................................................................................................................................$2,500
Generating Revenue
Additionally, the district identified and is pursuing revenue generating opportunities including but not limited to:
- Increasing Student Attendance
- Tuition Based Enrollment
- Grant Opportunities
- Sale of Unused Assets (including the portables)
- Adjusting the Tax Rate through a VATRE (see below)
One way Lovejoy ISD can bring in additional revenues is by increasing the M&O tax rate through a process called a Voter-Approval Tax Rate Election (VATRE).
By increasing the amount of funds generated by the M&O tax rate, the school district increases the portion of the budget available for paying teacher and staff salaries and benefits; student educational resources; classroom supplies and equipment.
The Lovejoy ISD Board of Trustees adopted a tax rate at the August 8, 2022 Board Workshop that includes 3.17 additional copper pennies to the M&O tax rate and triggers a VATRE.
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POTENTIAL OUTCOMES
If the VATRE passes in the November 2022 election, the district would see an estimated $640,000 increase in revenue annually to support employee compensation and help fund balance recovery.
If the VATRE does not pass, the district will not receive additional available revenue for the identified priorities.
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