The Warren County R-III School District is intensifying its focus on ways to limit expenses and manage finances.

Board members gathered for their annual budget meeting on June 25 to close out the fiscal year.

While it can be difficult to determine until final numbers are in for state funding, R-III anticipates facing a shortfall of around $342,000 in operating funds. Superintendent Dr. Gregg Klinginsmith said the unexpected economic disruption of COVID-19 will likely have an impact on the district’s returns from the state.

“The district is not anticipating full funding from the state,” said Klinginsmith. “If the district was fully funded, the budgeting would be approximately $400,000 more. That would mean we would have a balanced budget. The shortfalls have brought our fund balance down and now we have to start working toward building budgets that are surplus.”

The district’s total deficit across all funds is smaller, about $62,000.

“If you look at our overall budget, we’re bringing in the right amount of money,” said Klinginsmith. “It’s just that it’s not being allocated to the right places, and we can’t just change where that money is going.”

The operating budget, which includes staff salaries, has a revenue of $33 million, with $17 million coming from local funding. Expenses are estimated at $36 million.

“We have committed as a board to no longer deficit spend,” said Board President Laurie Wenzel. “This helps us moving forward so we no longer have to spend our savings.”

In contrast, this year’s budget has a $601,000 surplus in the school district’s debt service funds.

The district cut its expenses by almost $2 million from the previous fiscal year, and saw a 2-percent increase in assessed property valuation in the district.

“This really means we’re looking at areas where we can make more budget cuts,” said Klinginsmith. “This year we haven’t made any final decisions on contracts for personnel. We are in conversations about what we could potentially do. I would imagine we’ll see some cuts for the 2021-22 school year.”

It was not a predicament the district wanted to find itself in, but with the occurrence of COVID-19 and the subsequent voter rejection of the Prop W property tax increase, it’s a reality R-II is facing.

“We have been deficit spending our last couple years to try having competitive salaries,” said Klinginsmith. “We can’t do that anymore. We have to find ways to balance the budget.”

The district has been diligent to eliminate positions through attrition, not filling a vacancy once someone has departed. This practice was used following the retirement of Director of Finance Shelley Kinder in March. Instead of hiring to fill her position, the district opted to hire a director of accounting to save funding. The move saved the district around $25,000.

“About 80 percent of most district budgets are people,” said Board President Laurie Wenzel. “As each person leaves the district, we are re-evaluating the need for the position without spending as much money.”