Michelle Reid has a simple mantra when it comes to finances.

Revenues should exceed expenditures.

And for a second consecutive year, it appears that will be the case under South Kitsap School District’s superintendent.

Annette Baker, the district’s business office director, presented the 2015-16 budget during an Aug. 5 public hearing. The school board is scheduled to approve the budget during its Aug. 19 meeting.

Baker said SKSD’s revenues are expected to increase from $97.6 million in 2014-15 to $110.7 million during the upcoming school year. Expenditures, which include transfers to pay debt service and capital projects, are expected to total $109.9 million. Much of that revenue comes from the state.

Baker said while the state is expected to provide more funding in 2015-16, much of it will be dedicated to funding all-day kindergarten and increases in salaries and pensions. For example, the 3 percent cost-of-living adjustment for certificated employees means the district will pay $45.9 million during the upcoming school year. In 2014-15, SKSD paid those employees 40.8 million.

Despite that, Baker expects the district’s fund balance to increase from $8.9 million when its financial year concludes Aug. 31 to $9.72 million during the upcoming school year. Reid said in March that is important for SKSD’s financial health.

“We want to maintain a 5 percent board committed fund balance,” she said. “We want to make sure we don’t fall below that 5 percent again because that makes us bondable and it gives us a little bit of a cushion should something happen.”

The district’s fund balance decreased to about $4.9 million in 2012-13, which led Reid to consult with Debra Aungst, a former Puyallup School District administrator, to perform a review of SKSD’s finances in August 2013. Aungst’s report stated that the district’s “current financial condition clearly calls for immediate attention.” She was referring to a specific category state education officials  use to measure each district’s financial health. Using the state’s matrix, SKSD was three steps away from a financial warning. Among the state’s 295 school districts, 270 were in better financial shape than SKSD.

Several board members, including Greg Wall, expressed satisfaction about the district’s improved financial position.

“It’s nice to see that graph going up every year instead of down,” he said. “That was kind of traumatic.”