Hopkins School District #270

01/10/2010

Hopkins Public Schools' Citizens Financial Advisory Committee (CFAC) has reviewed the district's financial position and made recommendations for the Hopkins School Board to consider as it develops the district's 2010-11 budget.

CFAC is one of the district's long-standing advisory committees. It is comprised of residents with financial experience and expertise.

CFAC's recommendations are based on current economic factors that have an impact on the financial situation being faced by the Hopkins School District and the state of Minnesota. While Hopkins Public Schools is financially stable with a healthy, but not excessive, fund balance, CFAC members are urging caution in light of the prospect of no new funding for the state, and possible cuts in revenue from the state.

CFAC's recommendations include the following:

• accepting the district's assumption that the district will lose approximately 100 students per year for the next five years. Current demographic analysis by the state supports the assumption of declining enrollment. Enrollment should be monitored and reforecast annually.
• accepting the district's assumption that per student funding from the state will stay the same for the next two years, then will be reduced during the next two years by 1 percent each year.
• accepting the district's assumption that salary costs will increase by 2 percent next year and by 2 percent in the following four years, and fringe benefit costs will increase by 8 percent in each of the next five years. The district appears to have a strong working relationship with the unions and both parties seem to understand the current and future financial challenges that will hopefully lead to a fiscally responsible agreement. CFAC also recommends that the district continue its open and active dialogue with its unions, ensuring that all staff members understand that it is unwise to assume that current cost increases will be made up or funded by the state in the future.
• continuing to use the financial planning model to monitor the district's three- to five-year projected fund balance and ensuring that it does fall below $8 million or 10 percent of annual operating costs.
• strictly adhering to a practice of producing a balanced budget each year, and monitoring actual expenses on a monthly basis and adjusting spending so expenses do not exceed revenue in any given year.
• continuing to look for operational efficiencies
• carefully managing the district's fund balance