The Troy City Schools are forecasting nearly $1 million in revenue increases for fiscal year 2016, growth that could position the district to increase its cash reserves.

Mickey Daughtry, CFO for the district, presented a draft of the FY2016 budget to school board members on Tuesday. The budget forecasts revenues of $20.66 million and expenses of $19.6 million, and the excess revenues could allow the district to set aside up to 1.9 months of operating expenses in the reserve funds.

The board expects to end the current fiscal year with only about one month in reserves.

“We’re forecasting a 3 percent increase in sales tax revenues,” Daughtry told the board members. “I’m forecasting a flat $3 million for the year.”

The Troy BOE receives 39 percent of its funding from two primary local sources: sales tax revenues and ad valorem taxes, which generate about $1.9 million annually.

The state provides 51 percent of the funding for the district, primarily through the Educational Trust Fund. Additional funding sources include federal funding, 10 percent; and other sources, such as CNP rebates, at 1 percent.

The board forecasted revenues of $19.7 million for the FY16 budget.

One potential variance in the revenues is the effect tornado damage had on the local Walmart Supercenter and surrounding stores, which in turn could significantly lower sales tax revenues. “Right now we get about $47,000 a month in sales taxes from Walmart,” said Dr. Lee Hicks, superintendent. “The situation will depend on how long Walmart is under reconstruction.”

The Troy Walmart store and several nearby outparcels were significantly damaged by a tornado in early August, forcing Walmart to close for nearly two weeks before reopening only a portion of its location. Hibbetts Sporting Goods was gutted and remains closed.

Expenditures for the year are expected to be nearly flat to FY2015.

Personnel expenses remain the largest portion of the district’s expense budget, at $14.5 million or 76 percent. The district employs 237 full-time staff, including 143 teachers; three librarians; five counselors; 11 principals and vice principals; and 79 support staff.

Debt service for the district remains flat at $1.3 million or 7 percent of the budget. The debt service primarily pays the interest portion of the nearly $15 million capital improvement bonds which the district issues to fund renovations at Charles Henderson High School and Charles Henderson Middle School, as well as the construction of a new preschool wing at Troy Elementary and a new softball field at the high school.

“We’ve got a year before we begin repaying the principal on those bonds,” Daughtry said, adding that the annual principal payment will be $350,000 to $400,000.

Other operation and maintenance expenses are budged at $1.4 million, a slight increase from the $1.3 million in the FY15 budget.

“Our per pupil expenditures will increase to $8,484.30 per pupil this year. That’s a slight increase over the prior year ($8,450.58) and that’s probably because of the drop in ADM.”

ADM refers to the average daily attendance count take by the state Board of Education each year. Each fall, districts count attendance for 20 days and the average of daily attendance for that period is used to drive funding calculations for the next year budget cycle.

The FY2016 budget is driven off the Fall 2015 ADM of 2,018 students. The ADM for Fall 2014 was 2,040.

“There were about 31 or 32 Troy City School students in the trailer park (Hillside) that was closed” due to the Publix retail development, Hicks said. “We’re not sure how many of those students we will end up losing because they had to move.”

Hicks said the ADM calculations for Fall 2016 began on Tuesday and expects enrollment to land “somewhere in between the 2014 and 2015 numbers.”

Another wildcard that could impact the FY16 budget is the Alabama Legislature. With lawmakers back in a special session this week and the state’s FY16 budget yet to be set, any decisions to tap or utilize the Educational Trust Fund or the “rainy day funds” could bring about proration, Hicks said. “We don’t know what will happen right now,” he said. “We’ve made this budget, but depending on what happens with the Legislature, we could be looking at proration this year.”

Proration results in an across-the-board reduction in state funding to local districts. Each percentage point of proration means about $90,000 to the Troy City Schools, Hicks said. “We can’t put a period on the end of this sentence because we’re still waiting on the state,” Hicks said. “We hope and pray they will work with us.”

The board will hold it second and final public budget hearing at 5:15 p.m. Monday, Sept. 14.