Eagle County School District’s 2021-23 fiscal analysis shows stability, but what does it mean for this year?

The Eagle County School District’s financial information looks stable, even as the district invests in capital projects, staff and students.

Sandy Farrell, the district’s chief operating officer, presented an update on the district’s 2021-23 fiscal health analysis and the first quarter budget report to the school board on Wednesday, Nov. 13. “We are financially stable and there’s not a need to be concerned,” Farrell said.

The district has been spending into its general fund for several years, with purpose. “We are still continuing to focus on attracting and retaining staff, and adjusting our fund balance based on what we need to do to meet those needs annually,” Farrell said.

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Supporting students’ socioemotional and programming needs top the list.

Fiscal analysis shows supported general fund expenditures

Unlike municipalities, the school district approves its budget after school is out in June. Separate from the district’s budget is its fiscal analysis, which is put together by the state auditor’s office and assesses the overall health of the district’s financials.

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The most recent fiscal analysis covers three years of financial information, from 2021 through 2023.

The state auditor’s office uses six financial indicators to assess the health of a school district’s financials and identify if a district is at financial risk.

The fiscal analysis comes with limitations, including not applying to the current fiscal year, or even to last year, the 2023-24 school year. However, risks posed to last year and this year’s financials can be ascertained by paying attention to the trends presented in the fiscal analysis.

The six financial health indicators are tied to six ratio formulas, which are in turn tied to the area of highest budgetary risk: the general fund. The school district has been deliberately spending into its general fund to help attract and retain staff, as well as to financially support students.

“Over time, our fund balance got to be greater than what we needed and spending it in today’s time for today’s kids is important,” Farrell said.

Of the six indicators — asset sufficiency ratio, debt burden ratio, operating reserve ratio, operating margin ratio, deficit fund balance ratio and change in fund balance ratio — those tied to the general fund show a declining balance, but all are relatively healthy. The district’s general fund is consistently larger than its spending, as are its use of bond dollars.

Farrell said she did have to explain to the state about the change in fund balance ratio, which is calculated by subtracting the prior year’s general fund balance from that of the current year and then dividing that number by the prior year’s balance. A consistently declining or negative balance is not a sustainable operating model because eventually, the remaining fund balance will run out and be unable to cover the deficiency. While the numbers were negative in 2022 and 2023, they are not of concern yet because “we’ve been spending into the fund balance to help attract and retain staff,” Farrell said.

First quarter budget report looks strong

Farrell’s budget presentation compared last year’s first quarter numbers to this year, as well as examining percentage of budget each expenditure takes up to see if the budget adopted in June was appropriate and if finances are trending as expected. The school district’s first quarter includes July, August and September.

“Everything’s looking as it should, and the district is maintaining its financial stability and moving in the right direction,” Farrell said.

The district received the federal secure rural schools grant late this year compared to last year, when the funding was received in the first quarter. The district has now received the funding and it will be accounted for in the second quarter report, Farrell said.

One big budgetary change was that the district’s interest income grew a lot this year. This fund fluctuates depending on interest rate and cash balances, Farrell said, and is not something the district relies on for “continuing costs” because it can vary greatly.

While some years, the interest income is as low as $40,000, in the first quarter alone this year the fund exceeded $740,000, with an anticipated budget for the year of $800,000. Some of the additional funds can help pay for new athletic fields.

Salaries and benefits are increasing to accommodate for cost-of-living increases across most budgetary categories, but the percentage change in the budget was minimal year over year except for in the transportation category. Transportation salaries are “a little higher,” Farrell said, to account for a “aggressive salary schedule” in an attempt to attract and maintain drivers. The salaries budget increased from $300,000 to nearly $375,000 from the first quarter of 2023 to 2024.

The grant funding category also grew significantly from last year. While last year, the district received $755,000 in first quarter grant funds, this year, the district received $1.35 million, which Farrell attributed to the hard work of the grant writing team.

In the building fund, the district has $30 million, or one third of the $100 million bond measure approved by voters last November, for construction projects. So far, the district has spent $1 million in first quarter, but use of the fund is about to increase dramatically. “I can tell you the check request payouts are coming in pretty quickly now and that number is going to go up pretty significantly in the second quarter,” Farrell said.

During the same meeting, the school board approved adding another 20 units at the IK Bar property in Gypsum, confirming that there will be two buildings with 40 total units of housing to accompany the under-construction Gypsum Early Learning Center.