Laurel Highlands District faces $2.9 million deficit
UNIONTOWN - The deficit in the Laurel Highlands School District's fund balance rose to $2.9 million as of June 30, 2002, according to the district's annual financial report.
Representatives of McClure and Wolf, certified public accountants and consultants of Uniontown, reported at Tuesday's finance committee meeting, held prior to a special meeting of the school board, that the district suffered a $2.1 million loss for the 2001-2002 fiscal year, increasing the $800,000 deficit from 2000-2001 to $2.9 million.
The report shows last year the district spent $30.7 million and received $28.6 in revenues.
"That's the bottom line we all have to look at to see what went wrong," said Mike Revak, of McClure and Wolf.
The problem was not only with decreased revenues, which only accounted for $400,000 of the deficit. The budget anticipated $29 million in revenues, and the district actually received $28.6 million. Other problems came from budget line items that underestimated costs.
The line item for instruction, for example, which includes all teachers' salaries, was budgeted at $17.6 million, but actually totaled $19.3 million. The expense for the instructional line item for the previous year was more than $18 million.
Greg Hensh, of McClure and Wolf, said budgeted amounts should begin with the actual expenditures for the previous year. No explanation could be given why former business manager Ronald Aikins reduced the figure for the 2001-02 school year, especially in light of the fact that the instructional line item generally increases from $0.5 million to $1 million dollars each year.
Administration was budgeted at $1.5 million and actual costs totaled $1.9 million. Actual costs for the previous year were $1.7 million.
Other costs that were underestimated include support services at $8.2 million with actual costs at $8.9 million, and transportation at $1 million with actual costs at $1.2 million.
Another source of loss is the cafeteria, which had a $20,833 deficit for the last fiscal year, even with a $51,000 subsidy from the general fund.
The board agreed that expenses and wages and benefits for cafeteria workers are simply not offset by income from lunches.
Once the audit report was given, board president Edward George turned the discussion toward the future. "We have to go on from here," he said.
Revak explained that income from a bond issue and plans to cut spending could reduce the deficit this year.
He also advised keeping a close watch on the budget, reviewing it month to month to closely monitor spending. He commended current business manager Joyce Estocak for improving the quality of the district's recordkeeping.
District solicitor Gary Frankhouser addressed the issue of taxes. He said because the county's new property tax assessments will be implemented this year, millage would have to be adjusted downward to compensate for the new assessment system, but the board could still consider raising taxes. He also said, because it is the first year for the new assessments, the district is only permitted to increase its revenues from property taxes by up to 10 percent.
McClure and Wolf recommended increasing revenues by collecting more per capita taxes in the district, pointing out a significant percentage of per capita taxes are not paid.
Hensh explained a new reporting requirement for school districts that involves "full accrual," requiring an appraisal of the district's assets and a totaling of its debts.
American Appraisal Co. is currently working on the report for Laurel Highlands.
If the district's liabilities are found to exceed its assets, this report could have an additional negative impact on the fund balance.
Following the finance committee meeting and work session, the board held a special meeting to accept the audit report and annual financial statement.
The board also voted to post a part-time Access billing position, requiring three years' experience, with hours and wage to be determined, and voted to participate as a part of a Consortium of Fayette County School Districts to make application for a 21st Century Learning Communities grant, and to hire David Jones and Associates to negotiate the grant, for a middle school after-school program and to provide Compass Math/Reading software to the middle school.