USD 466 seeks solutions for budget shortfall

4/29/2014

USD 466 seeks

USD 466 seeks

solutions for

budget shortfall

By ANGIE HAFLICH

ahaflich@gctelegram.com

SCOTT CITY — Scott County USD 466 will need to come up with $700,000 to $750,000 to finish the current year and cover a projected shortfall for the 2014-15 school year, according to a CPA firm that shared audit results at a special meeting of the board of education Tuesday night.

Brian Staats, with Adams, Brown, Beran and Ball CPA firm, of Great Bend, said the district will need to transfer money from its special purpose funds into the general fund to prevent the district from going into a cash basis violation for the 2013-14 school year.

"You actually have enough room in some of these funds to shift some of the expenditures to end the year with a positive cash balance in all your funds," Staats said. "That basically uses up all your excess cash. You'd go into next year with very limited cash in your special funds."

Staats also told the board that the district needs either $673,000 in additional revenue or that much in cuts to make it through the 2014-15 school year.

"You won't make it through the end of next year unless you have cuts to that level," Staats told the board.

Staats recommended adjusting the budget by $700,000 to $750,000 to provide the district with a cushion for next year.

"What's important is to not end this year with violations in your operating funds because it can adversely effect your state funding next year. Then it's a double whammy where, not only did you have a violation this year, you're going to lose some funding next year," Staats said.

Staats identified several factors as playing a role in the school district's current situation. One factor, he said, was that the district had budgeted $6.1 million in expenditures.

"Right now, projected here, we're at $6.4 million, so we've already exceeded that original projection for the general fund. But also, once you've done your budget, the state comes out and does final audited enrollment and then adjusts your budget, so then the state came out and actually reduced the amount in your budget by about $200,000. So not only were you over budget without that, but we're also $200,000 less in the general fund," Staats said.

Because there is $200,000 less in the general fund after audited enrollment figures, Staats said the state will allow the district to look at using special purpose funds.

"Primarily, your general fund and your supplemental general are your operating funds. That's where you get all the money to run the district. You take that and disburse it among the special funds to take care of special activities, but the statutes allow us to take any remaining cash in these special funds, and we can actually transfer those back up to the general fund to make up for shortfalls," Staats told the board.

Staats pointed out that will use up all the district's excess cash.

"So that's not going to be available to you next year, and so, again, we can get you through this year just by making those adjustments. Next year is going to be the big challenge," he said.

Staats told the board the district can increase capital outlay from six to eight mills, but based on last year's property valuations, that would only translate to about $180,000, and that can be used only for facilities and equipment, although USD 466 Superintendent Bill Wilson said that maintenance salaries could be paid out of it. Staats also said the local option budget could be raised from its current level of 30 percent, but that would require a resolution to be passed through a mail-in ballot.

Board member Lynette Robbins asked if there were any red flags that board members should have been notified of earlier in the year. In response, Staats said there were no major issues except cash balances being used up at the time of the audit, which was delivered June 30, 2013.

"With your increase in enrollment, probably not a big flag that maybe the revenues aren't going to catch up this next year. What's tough on these school budgets is the formula. It's not something simple," Staats said. "It's based on at-risk and all different calculations within it, so it's a little tough just to look at the number of students you have without knowing exactly what category they're going to fit in, how your budget's going to come out."

The district's enrollment increased by 28 for the 2012-13 school year, and by 26 for the 2013-14 school year.

"It's just, how the state has manipulated their funding has prohibited your district from gaining a lot based on those additional students," Staats said.

Robinson asked if they should have known when the state gave the district the audited enrollment number in September that there was a potential shortfall.

"At that point, it should have been a flag that there's $200,000 we're not going to have," Staats said.

Robinson also asked why the firm didn't help set up the district's budget this school year, as it has done in the past.

"Partially I think it's from a cost-savings standpoint. We charge to do that, and the superintendent has lots of years of experience, and so opted not to utilize our service on the budget," Staats said.

Last week, Wilson said the shortfall could mean cutting up to eight teacher positions, but as of Tuesday, there was still no indication how many positions might have to be eliminated.

After hearing the results of the audit, board members and administrators met in closed session to discuss non-elected personnel. A decision is expected at a meeting Thursday night.

Matt Fox, a fourth-grade teacher at Scott Elementary School, implored the board to look for alternatives to cutting teaching positions.

"I know you have a lot of hard decisions in front of you, and I know we're all feeling this, and I know we have to reduce expenses, and I hate to see my fellow coworkers, a lot of them I've come to think of as friends and family, being seen as an expense," Fox told the board. "I know it's probably not feasible, but put the teachers beyond cutting and see what else there is."

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