BROOKSVILLE — With the economy beginning to bounce back, the Hernando County School District is looking to build a bigger financial cushion into its budget — a move that would bring the district in line with many others across the state.
At Tuesday's workshop, School Board members will consider a policy requiring the board to work to maintain a balance of 5 percent of the general fund budget. The state currently requires a fund balance of no less than 3 percent. The district doesn't have its own policy.
Superintendent Lori Romano said there are a couple of reasons to move in this direction.
She said the reserve money would protect salaries — especially for teachers, who make up a large chunk of the budget. It also would help the district's credit rating and allow the district to obtain better rates on loans or refinancing.
"We're trying to be fiscally responsible and protect our people and positions as best as we can," Romano said.
The Hillsborough and Pasco county school districts both have policies that set 5 percent as the minimum fund balance. The Pinellas County School District has a policy requiring less than the state requires, but is in the process of amending the policy to align it with state statutes, said district spokeswoman Melanie Marquez Parra.
Hernando school officials say the new policy would enhance the long-term financial integrity of the district and create better cash flow, as well as ensure more stability in an economic downturn. It would provide more funds should an emergency occur and help maintain strong bond ratings.
The specific policy says the School Board "shall endeavor to maintain its target operating fund balance at five percent." If the budgeted ending fund balance falls below that target, the superintendent would be required to develop a plan to reach that level.
While the 5 percent level is not mandated, the intent is to reach that level, Romano said.
"I think the language is that way because we're not there yet," she said.
The district currently has a projected operating fund balance of 3.21 percent, which equates to roughly $4.85 million.
To reach a fund balance of 5 percent, the district would need roughly $7.5 million. That means the district would need to add about $2.65 million, according to the district's chief financial officer, George Gall.
So where would that money come from?
While she didn't point to specific sources, Romano said the target amount would be given high priority.
The district is implementing a priority-based budget process, which hasn't been done in the past. Basically, it's what it sounds like: The most important items will be given the highest priorities.
Through that process, Romano believes the district will be able to find the extra money.
"I do," she said. "I'm not saying to you it's going to happen overnight."
Jo Ann Hartge, president of the Hernando Classroom Teachers Association, said she thinks the higher fund balance is a good idea, but has some reservations.
"We all know that we're not getting the funding that we should be," Hartge said.
She said she is concerned about how extra money can be found without something being harmed.
"Something's got to give," she said.
Romano said she has discussed the fund balance proposal with union officials and believes she has their support.
"This is really to help protect teaching positions," she said. "They don't want something to happen to their people."
Regardless of whether the measure is approved, it's telling that it is now coming before board members — after several years of budget reductions caused by the recession and lower tax revenues.
"We're probably in a better position today to consider a proposal like this than at the time I joined the board," said board Chairman Matt Foreman.
Danny Valentine can be reached at [email protected] or (352) 848-1432. On Twitter: @HernandoTimes.