A Summit School District committee tasked with making financial recommendations is proposing a raise to the minimum threshold for fund reserves in a bid to bolster the district’s savings over the coming years. 

During a Nov. 16 board of education meeting, Finance Committee Chair Stan Katz spoke about a recommendation that, if ultimately approved by board members, would increase annual revenue savings from 10% to 13% over the next three to five years. 

Currently, the district has a policy of reserving, at minimum, 7% of its annual revenue for its fund balance, which essentially serves as its savings account. That’s in addition to a 3% minimum required by state law, meaning the district is saving 10% each year. 

While the fund still sits above its required minimums, the total amount has been continuously depleted in recent years by budgets seeking to keep up with rising costs. It prompted concern last school year from both the Finance and District Accountability committees, which penned their frustration to board members in written letters over the summer.

This year’s spending plan continues to keep the district on a potential path to hitting a deficit, which is possible by as early as the 2025-26 school year. Officials said they had to make significant investments to hire and retain staff, including pay increases for teachers, principals and bus drivers. But they also voiced commitment to avoiding a deficit. 

Katz said the Finance Committee would like to see more involvement from the board during the budgeting process, adding that a board member was not part of the committee during the 2022-23 school year. 

“Last year, we were working in a real vacuum,” Katz said. “We didn’t have the ability to ask the board, ‘What’s important to you? Where are your priorities?’ And that is the reason we wound up with what I consider to be not the world’s best budget.”

By increasing its fund balance, the district can ensure it has a robust “safety net” that it can rely on for unforeseen events, such as what happened during the COVID-19 pandemic, Katz said. Eventually, the district could try and raise its savings threshold even further, possibly to 17%, which Katz said would represent around two months’ worth of operational expenses. 

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But he also acknowledged that would mean making cuts or, at the very least, freezing certain spending levels. 

“This is a balancing act, and there is no one right answer,” he said. 

Board member Johanna Kugler said the district finds itself in a much different financial situation from the past decade with a rising cost of living and the impacts of inflation.

“There has been more emphasis on teacher pay and benefits … the cost of facilities,” Kugler said. 

While district leaders did not make a decision around the committee’s request, several signaled they would support discussing it further in subsequent meetings and before the budgeting process for next year is underway. 

“I would highly recommend that we consider that recommendation,” said board member Lisa Webster.