BoE: How did we end up with 15 times more money than expected?

The Fayette County School System began the FY 2012 school year with a projected year-end fund balance of $802,719. But when the year ended June 30 the fund balance was $15.5 million. The multiple reasons accounting for the fund balance being so much higher than projected was the focus of a report Monday by Assistant Superintendent Tom Gray.

Gray told members of the Fayette County Board of Education the biggest savings came from either not filling staff vacancies, where possible, or filling them with temporary employees. The amount totaling $4.3 million included $3.3 million in salary savings and $1 million in benefits, Gray said.

Adding to the fund balance at $3.13 million were budgeted revenue sources from state and local sources. Local revenues were $1.7 million over budget, with auto taxes coming in $1.3 million over projections. Those increased revenues offset the diminished amount of property taxes received. Property taxes by June 30 totaled $1 million less than budget projections.

Various school system departments also saved money in their operating budgets. Those savings totaled approximately $2.7 million, Gray said.

A change in the FY 2012 projected fund balance also added to the FY 2013 year-ned balance. The FY 2012 fund balance was projected at $15 million, but audit results showed the year ending balance at $16.8 million, adding $1.8 million to the FY 2013 fund balance total.

Still another category adding to the $15.5 million ending balance was $1.6 million from a change in the methodology used by the state in determining school system employee health insurance.

A final savings category adding to the bottom line, to the tune of $1.1 million, came from a decrease of 207 employees during health insurance open enrollment.

The move to save money from the various categories started as the 2012-2013 school year began and continued through the school year.BoE: How did we end up with 15 times more money than expected?

NeilSullivan
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Duplicate - Sorry

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NeilSullivan
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H&F Budget variances

Part of the issue is the methodology used by BOE Finance. They consider a "forecast" to be year to date results + expected budget for the remainder of the year. For example, when we had the retirements in November to get in before the plan changed, the salary budget was not changed for the remainder of the year when positions went unfilled or filled with less expensive staff so the expected salary was knowingly overstated.

Second, the run rate for expenditures was never adjusted for actual run rate (lower costs) creating more surplus.

Next, the original revenue projections used tax collection rates that were below the previous year which under estimated revenue.

During all these discussions last Spring, it was appearant the surplus was going to be at least $10MM and the BOE was not owning up to that. The question is whether they did not know or did and presented the public with less than reasonable information. The explanation above is really substandard and does not help us understand the dire warnings from only a few months ago.

A lot of this is somewhat intentional as the staff would rather be "conservative" unfortunately, by misstating the situation, our board has expanded class size past 30, eliminated K-1 parapros whose value in not disputed, and continue to build the surplus pay taking teacher pay.

We need to update our financial practices and think like a business and not a government entity. Many governments have switched form fund accounting to regular accrual accounting or GAAP which is allowed under the GASB pronouncements. This would switch the focus on results from how much left to spend which is where we are now.

Hope this helps. If you go back in the monthly board packs you can see what I am saying.

Take Care,

Neil

fc1989
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del

Del

Husband and Fat...
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Thanks Neil - We are on the same page

Financing was way to conservative. A swing this big, just makes everyone think that they don't know what they are doing or they are hiding something.

Would have much rather had a legit forecast where we could have kept a few more teachers and parapros so our class sizes aren't as large. Then look at the programs we cut.

Monthly finance reports need to come back immediately with real adjustments as they occur. We deserve nothing less.

I still think we did the right thing regarding the school closings, but had this information been provided 2 months ago, we could have had more leverage when we sold (gave) Rivers.

We need complete truth in reporting.

fc1989
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H&F on Rivers ES

I am not convinced that the Rivers decision would have been different. The sale was based on fair market value according to the BOE. The proceeds went to debt service and not the general operating fund so there is no affect on the operating budget except some maintenance and utilities. If they were still holding the building however, a business venture or partnership with a college may have been a more lucrative option long term.

Husband and Fat...
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FC- it's the missed opportunities

If the BOE would have known about the big swing, and now good health, it could have allowed them the opportunity to wait another few months or a year to wait for the bigger payday.

They could have also used the extra year to see if Pinewood would employ enough new family's to reopen the school.

It's more about the missed opportunities that accurate monthly forecasts could have provided.

jlowe51
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$15.5 Million extra!!!!

It has been almost 20 years since our last child has left school but every year the government sticks his hand in my pocket at tax time and pulls out a big sum of money to pay for other people kids to go to school under this socialist program and now you say we have $15.5 million extra this year? Well some of that money is mine and I want it back. It’s my money and you have no right to keep it.

suggarfoot
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thank you all, BOE

You have done a great job and we have some very good people in you. As for the swing...the BOE doesn't do the predictions...that is someone else, and the BOE act accordingly.

If we had the old group, we would still be building schools in every cow pasture a developer wanted to speculate on. Thank God for the BOE we have and never forget how different it could be right now!

Husband and Fat...
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First a thank you

To the staff for tightening the belt. I think all returning teachers deserve a 1 time bonus before the end of the calendar year.

That being said, accounting owes the board a better explanation. Though we are on the good side, some decisions could have changed had we had better forecasts. A 9% swing on a $162m budget is a lot of money. Monthly reports should show incremental increases, not a hefty swing. They fired someone in Dekalb for allowing this to happen.

However, I still believe the closing of schools was the right thing to do based on current populations.

We need to bank some of this money, utilize some (not sure adding teachers is advantages this far into the year), and consider raises for next year, while we continue to tighten our belts where we can.

I have kids in 2 different schools and both seem to be doing just fine adjusting to the changes made.

lawrence
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Husband & Father of 2

It's hard to forecast when the State can cut funding with 30 days notice and incoming revenues from mil tax can fluctuate.

Husband and Fat...
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I understand that

But a swing like this is not in the best interest of the county.

Don't get me wrong, it's good to be conservative in the estimates, but this is too conservative.

Small incremental increases based on actual costs and conservative forecasts are what managers want to see. These should be produced monthly and reviewed by the board.

aliquando
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Overage.

First, glad to see the belt tightening has done some good. Second, create a reserve fund. Third, determine what it would cost to restore employees' pay. Any other ideas?

lawrence
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Hire teachers

At some schools, class sizes are 30, in some cases approaching 40. If they have the classrooms they should consider more teachers especially in elementary and middle schools in the transition grades... 5, 7 and 8th.

aliquando
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Yes

Trust me, I know. Many classes are over 30. The state has granted exemptions since they are sending less money.

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