Isaac Elementary School District is among the highest-risk districts for the third year in a row due to its change in weighted student count (WSC), operating budget limit reserve, General Fund operating reserve ratio, General Fund change in fund balance, and frozen tax rate, as shown on the measure cards below.

The District’s WSC has declined 23.3 percent since fiscal year (FY) 2019 with a 4.9 percent decrease in FY 2023, to date, impacting its student-count-generated revenues and budget limits. The District’s primary property tax rate has been frozen every year since FY 2017 except for FY 2020 due in part to levying for desegregation spending, limiting its available property tax revenue. The District continued to keep its General Fund spending within available revenues (i.e., positive operating margin) in FY 2022, as it has since at least FY 2019. However, its spending reductions were still not enough to fully compensate for prior years’ negative operating margins, as the District reported a FY 2022 $3.8 million deficit General Fund balance, an improvement from its FY 2019 $8.3 million deficit balance. By using lines of credit and other borrowing methods to accommodate spending with its cash deficit, the District incurred nearly $143,000 in FY 2021 borrowing costs. While the District describes in its response that it continues to issue debt to provide cash flow for continuing operations, we were not able to identify its FY 2022 borrowing costs as the District did not record or incorrectly classified those borrowing costs in its FY 2022 annual financial report. Although the District’s FY 2022 operating budget limit reserve grew to over $1 million, it remains entirely unfunded. The District reported using more than $10.5 million from COVID-19 federal relief monies to maintain its operations in FYs 2020, 2021, and 2022. The District further reported it plans to spend 35 percent, or $11.8 million, of its remaining relief monies to maintain operations. As these are one-time monies, to avoid future financial risk and to ensure it will be able to spend within its available cash resources and budget capacity when these relief monies are no longer available to spend after September 30, 2024, the District should plan how it will adjust its spending in areas where its remaining monies are used, including the before and after school program and small class sizes described in the District’s response below. While the District has made progress in addressing its identified risk areas, it is still among the highest-risk districts for the reasons we identified above. We can’t confirm that its improvements represent an overall positive trend as described in its response based on too few data points and external factors that will affect the District’s future outcomes.

The data shown on the financial risk analysis shows an overall positive trend in the District’s financial data, with the exception of the change in weighted student count. The general fund balance has increased by more than $4 million dollars. The operating and capital budget limit reserves have increased by $800 and $900 thousand dollars.

To address the change in student count, the district is using ESSER grants to provide the funding for a Community Engagement and Marketing Director. By promoting the small class sizes and 6am to 6pm, Before and After School Program (free for all students), offered at all sites, the district hopes to attract additional students.

The annual expenditures will continue to be adjusted to operate within the student-count-generated budget limit and maintain a budget reserve. The district will continue to work with the county schools office and maintain the frozen tax rate to generate additional revenue and reduce the cash deficit. Additional funding will be secured through Tax Anticipation Notes to ensure adequate cash flow throughout the year.