Blackboard accounting
by Mike Kroll
In last
week's paper I wrote about our difficulties in obtaining useful financial data
from the City of Galesburg's finance department. To be fair we asked two other
local governmental bodies about obtaining their financial data and were
pleasantly surprised by how cooperative both Knox County Treasurer Robin Davis
and School District 205's assistant superintendent for finance and operations
Paul Woehlke were to our requests. In both cases they stated that year-end summary
financial data is available from them within a month of the close of the fiscal
year. Furthermore, both said that mid-year data should not be a major problem
as their computerized accounting systems were capable of generating most
reports extremely quickly.
We inquired
about their concern of significant financial changes occurring after the close
of the fiscal year that would render timely reports inaccurate (the reason most
commonly given by Galesburg finance director Gloria Osborn for delayed availability
of city financial data). Both Davis and Woehlke, responding for their own
respective entities, said simply that such changes are rare and typically
insignificant to the overall financial picture. Neither the school district nor
the county operate with a fiscal year matching the calendar year. In the case
of Knox County their fiscal year runs from December through November while
District 205's fiscal year begins in July and ends in June (corresponding to
the state's fiscal year).
Both the
county and the school district face many unique financial challenges but, like
the city, both are greatly impacted by the persisting poor economic
circumstances in this region. On Monday night following the school board
meeting Woehlke provided us a copy of District 205's auditor's financial
statement for the 2007 fiscal year that ended June 30, 3007. While this is
hardly ÒfreshÓ data Woehlke assured us that most of the financial figures
contained in this report would have been available before the end of July 2007
had we requested them.
Since the
data are available we can examine the financial status of District 205's fiscal
year 2007 in a general manner here with the promise of a more complete report
on the current fiscal year later this summer.
On the
income side FY 2007 saw an extremely small increase in property tax revenues of
barely one percent over FY 2006 but at least it wasn't the decrease many
feared. The increase in federal and state aid to the school district was
somewhat larger at about eight percent. State aid to the school district grew
by $1.1 million due to an increase in the foundation level per student and the
increased federal money represents a half-million dollar increase in the
poverty grant. The school district also rode the wave of higher interest rates
that has now passed to see an increase in revenue from investments.
The postive
news on the revenue side must be offset by increases in district expenditures
between FY 2006 and FY2007 of nearly one million dollars. One area of increased
cost to the school district is the higher than expected participation in the
early retirement program. Part of this program includes salary increases up to
six percent during the last few years of participating teachers career. A
retired teacher's pension is calculated based on their salary for the years
immediately preceding retirement and these salary increased boost participating
teacher's monthly retirement check. As in all early retirement programs the
school district is counting on recouping these costs through the replacement of
retiring experienced teachers with entry-level (or nearly so) teachers. The
accuracy of this assumption remains to be determined.
If you
aren't already aware of the high cost of running a high school consider that
with just the single high school district 205 spent nearly $5.2 million in
instructional costs alone there in 2007 while all of the elementary schools
combined totaled almost $6.5 million. Instructional expenses at each of the two
junior highs averaged around $2 million in FY 2007. A growing expense in
District 205's instructional area is the preschool education program fueled by
the governor's push for universal preschool availability. The demand for
preschool services has been growing at manageable levels so far but this has the
potential to become a significantly greater expenditure in the coming years. It
remains to be seen how well state aid will fund the preschool initiative.
Running a
school district involves much more than just instructional expenses. For
example, the largest non-instructional expenditures of FY 2007 involved major
capital improvement projects included under both the Operations &
Maintenance and Fire prevention & Safety funds. These included the new
parking lots at the high school as well as King and Nielson schools and the new
district security system. FY 2007 also saw the school district make a larger
than usual purchase of computer technology and it is becoming clear that the
demand for instructional technology will continue to grow.
Nearly all
governmental entities are required to do their accounting in what is termed
Fund Accounting. In simple terms this means that revenues and expenses are
segregated into specific funds and money cannot be commingled. These funds
represent use of restricted income sources such as state aid or reflect a
variety of separate property tax levies. For example, money that comes in for
instructional use cannot be used for building maintenance. The school district
operates out of four principal funds, Education, Operations & Maintenance,
Transportation and Fire Prevention & Safety. A fifth, the working cash
fund, is the last of the major funds. There are also a variety of lesser funds
reflecting specific initiatives or programs.
Many area
school districts are fighting a losing battle to maintain their education
funds. The Galesburg schools have faired better than most in this regard. The
education fund actually increased by $833,312 between FY 2006 and FY 2007. The bad news is that both the O & M
and Fire Prevention funds decreased significantly due to the previously
mentioned planned expenditures in FY 2007. Between those two funds District
205's total balance of funds at the conclusion of FY 2007 was down $164,351 but
this was not unexpected.
As school
officials prepare to begin the new fiscal year in July they remain concerned
about whether planned additional increase in state aid will materialize. Even
if the state meets its commitment to higher state aid levels the sorry
condition of the state's own budget almost surely will mean that such extra
money will be late arriving. In fact Woehlke expects delays in the receiving
the remaining state aid payments due for the current fiscal year. While the
financial outlook for School District 205 may not be rosy it remains much
better than many nearby school districts.
05/15/08