District too big even after school closures
BY MARK J. CRAWFORD
Telegraph Editor
STARKE — Superintendent of Schools Will Hartley is meeting with schools to explain the context of the Fiscal Year 2020-21 audit, which once again found issues of material weakness in processes and procedures, and noncompliance in handling federal funding.
Issues included a more than $767,000 drop in the district’s fund balance, from more than $1.3 million to $542,000. That reduced the fund balance to just over 2% of total general fund revenues — less than the 4% required by school board policy. Also, the district must report to the state when the figure falls to 3% or below, but the state was not notified until after the audit was released.
The fiscal year audited began July 1, 2020. Hartley did not become superintendent until Nov. 17 of that year. John Valinski was serving as finance director but has since been replaced.
Hartley said in Brandon Esposito the district has a finance director who understands the complexity of school funding. The experience of Assistant Superintendent Karen Clarke has also proved helpful, as has consultant Scott Ward, who was hired to help go through years of “bad accounting.”
“Luckily, we got Mr. Esposito because he’s maybe the first person in a while that really truly understands education finance in that position,” Hartley said. “It’s just completely different from any other accounting, and it’s hard for people to understand that. But there are so many categorical areas and all the places where you have to spend money, or you can only spend money.”
Hartley said one of the drains on the fund balance has been the practice of paying for certain positions out of general revenue instead of categorical revenue, including positions like curriculum resource teachers and interventionists.
The size of the district is another strain. This time last year the discussion of budget constraints led to the closure of the elementary schools in Hampton and Brooker. Now Hartley is discussing a report prepared for the prior administration dating back to 2017 which revealed — through a comparison with similarly sized Gilchrist County — that the Bradford School District was overstaffed by 180 positions.
Allowing that Bradford has a higher enrollment of ESE students than Gilchrist, Hartley said 150 positions might be more correct. It is a problem they have been dealing with through attrition, trying not to hire replacements as employees leave the district of their own accord.
So, while there won’t be many layoffs, they do plan on addressing the overstaffing problem over time.
“The objective is to save as many jobs as we can, and then through time and attrition be able to cut back like we need to. And then by the end of 2024 when those extra grants run out, we should be where we need to be,” he said.
Explaining to teachers that the district is overstaffed has been one of the harder discussions.
“It’s very hard for them to hear because they work in the school every day. And I get it, I used to work in the school, and it seems like you could never have enough people. But in a district like Gilchrist, where they have 180 less people than we do, if you go back and look, traditionally, they are one of the highest performing districts in the state. And so, it can be done and be very successful with the number of staff that they have. Eventually, as we year by year cut back, cut back and cut back, we’re just going to have to learn to do things a different way.”
The cost for those positions is enormous for the district budget. Hartley said assuming just 50 of them are teaching positions at an average salary and benefit package of $55,000, that adds up to $2.75 million.
Looking at allocations for next year, 18 teaching positions are being cut, he said. They are still looking at noninstructional positions and making sure each position is paid for out of the proper pot of money.
Hartley said not doing so actually hurts teachers, pointing to Fiscal Year 2019-20 when the district was overspent by $1.2 million by relying on general versus categorical revenue.
“I mean, to put that into perspective, just that money alone would give our teachers a $6,000 raise,” he said.
Instead, they are going into another budget year with a diminished fund balance and the state requesting districts to increase teacher pay.
Beyond available operating funds, the audit dinged the district on a few other areas, including the failure to correct misspending of federal dollars on health insurance premiums for employees who were not participants in the program. This money, more than $167,000, must be repaid out of general revenue.
Auditors also found a significant deficiency because the district did not comply with the requirement to minimize the time between receiving and disbursing federal Education Stabilization Fund Program revenue. This led to questioned costs of nearly $995,000.
Also, while there was turnover in the finance office, the district missed even an extended deadline to file an annual financial report with the state, and information was misreported. For example, the district reported emergency relief funding not earned by the end of the 2021 fiscal year and therefore not available to cover expenses during that year. In addition, more than $982,000 in coronavirus relief funding expenditures was omitted from the schedule of federal awards. The same was true of Education Stabilization Fund revenue totaling more than $196,000.
Finally, a previous comment on timely bank account reconciliations was only partially corrected.
“At the end of our audit conference this year, the auditors said, sorry, this isn’t anything that that you’ve done, or your new finance director has done. This has just been years of very bad accounting,” Hartley said.
Now that the state has been notified of the district’s financial condition, the superintendent is not sure what the response will be. He did say he is confident that funding positions out of the correct category would quickly get the unassigned fund balance back up to 3% of general revenue.
“I mean, the main thing that I’ve been trying to make sure our staff knows is, yes, we are here, and this is why we’re having to make some of the decisions we’re making in the district. I mean, obviously, we know in a small town there’s going to be a narrative that’s created, and it’s either going to be the truth, or it’s going to be what everybody assumes,” he said.
“My thing to them is, this is where we’re at. This is how we’re going to begin to move in the right direction, which we can do pretty quickly. That things are going to be OK. It’s not time to jump ship or go run off somewhere else. And truthfully, there will be a very small amount of cuts that have to be made once we move people to correct funding sources.”
