School budget basics: The short and sweet version - KWWL - Eastern Iowa Breaking News, Weather, Closings

School budget basics: The short and sweet version

OELWEIN (KWWL) -- Nearly every school in Iowa is facing some sort of money crunch. They're dealing with declining enrollment, and a ten percent state-wide budget cut. In the past week, the Oelwein School Board joined a growing number of districts looking to close a school to ease its financial troubles.

Often when we hear about school budgets, we come across confusing documents and hear terms like "capital expenditure", and "deficit budget". But how much does the average person really understand? School board members sit through hour-long seminars on this subject when they're elected, and district leaders spend entire semesters studying school finance. We're getting the short and sweet version.

"We're working with spending authority, and the cash to back that up," started Oelwein Superintendent Jim Patera.

Enrollment, affects the district's spending authority. The ten percent state-wide cut, comes from the district's cash reserves.

"That across the board cut cost us money. It cost us cash, and we don't want to go to taxpayers and increase their property tax to get that back," explained Patera.

So what exactly is the difference between spending authority, and cash reserves? Look at it this way. Cash reserves are similar to your home checking account. Consider state aid and grants - the school's main source of revenue - your monthly income.

A school's spending authority is more like a credit card. It's the total amount of money a district is allowed to spend within one year. Each district is required to have enough cash to back up their "credit card."

"We cannot allow the district to get to zero. Because anything we spend beyond that, is against the law," Patera said.

Schools can borrow money to make sure they don't get to "zero." With ten percent less in cash reserves and declining enrollment, many districts will have to go that route to stay out of the red.

"We're just trying the best we can to maintain. We'll worry about building those reserves up when the economy's a little bit better. Right now, we're just trying to survive," added Patera.

Usually, districts like Oelwein have about one million dollars left over in their spending authority budget. That money carries over to the next school year. But Patera said that's basically their "in case of emergency" allowance, and they never plan to spend it.

For a full explanation of your school's budget, talk to your district leaders.

Online Reporter Colleen O'Shaughnessy

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