School Board transfers $2.25 million

WINNSBORO – Fairfield School District Superintendent J.R. Green asked the School Board during their Oct. 20 meeting to approve a transfer of $2.25 million from the general fund to the capital projects fund for the 2014 -2015 fiscal year, which ended on June 30.

“The funds will be used to pay for various technology, equipment and facility needs in the District,” Kevin Robinson, the District’s Director of Finance, told the Board.

Later in the meeting, Board member William Frick (District 6) asked the superintendent to give the Board some idea, beyond new technology and other improvements, of what the $2.25 million transfer would be used for.

Green replied, “This is something I’m going to bring back to the Board eventually, but there are a few things we’re looking at. We’d like to get a couple of new activity buses…we need to refresh some Chromebooks…and we have an issue with the cooling tower at the high school and we think we’ll eventually have to replace it.” Green said he would also like to embark on renovations that will allow the removal of portables behind the middle school and at Kelly Miller.

“For me, the elimination of the portables would be the priority,” Green said, “but I say that in context of not knowing what that would cost, so I can’t say this is something we can move forward on.”

Robinson explained that after the transfer of the $2.25 million from the general fund balance (now estimated to be $11 million), the general fund balance would be approximately $9 million at the end of the 2014-2015 school year.

This generated a discussion about the district’s fund balance and an expected surplus from the 2014 – 2015 fiscal year.

According to Robinson, the general fund surplus, estimated at $4.5 million, is the result of an anticipated $2.8 million increase in revenue due to an increase in property tax, with the remaining $1.7 million resulting from savings in expenditures. These expenditure savings include a $1.4 million decrease in expenditures on salaries and benefits and a $300,000 savings from not having to transfer money into the food services program last year as had been anticipated.

Board member Annie McDaniel (District 4) cautioned that the Board should wait before approving any fund transfers until the annual audit of the District, due in November, is published. She questioned how Green could be confident of such a large surplus, since the District had a much smaller fund balance the previous year. The District’s annual financial statement for the previous fiscal year (FY 2013-2014) showed a general or unassigned fund balance of $6,565,658.

Concerned about the savings of $1.4 million in salaries and benefits, Frick said he saw that as a significant expenditure savings.

“Am I reading that correctly?” Frick asked. “Do we have any kind of explanation about that? That seems rather significant.”

Robinson said this savings came about because several positions that were in the budget were not filled or filled for only part of the year. He said the District also hired teachers with less experience to replace some retiring teachers who were paid at a higher rate, and that the District was also able to transfer a little more of salary costs into the special revenue fund than had been anticipated.

McDaniel asked if the Board could see the projected schedule from the auditors that shows the $4.5 million increase in the fund balance.

“It’s strange that we are asked to vote in October before we have (seen) the audit in November. The audit will reflect exactly what’s happening,” McDaniel said.

Frick asked, “With an anticipated $9 million in the fund balance (after transferring out $2.25 million), and considering that each year we’re looking at about a $6 million TAN (Tax Anticipation Note), are we potentially anticipating next year not having to do a TAN?”

Robinson replied that the District would probably still issue a TAN but not in the amount of $6 million; “In theory, we’d have to do less of a TAN,” he said.

“We have money in the capital project fund, I would say about $1 million, that is obligated,” Robinson added. “But some of that is accounted for by the on-going project with the old Career Center. We do have projects that come up during the year that have to be done. The purpose of transferring the money now is to give us the flexibility if we have any unforeseen facility needs, and also to give us the ability for other things that need to be done, which we don’t anticipate having enough money for once we get done with the old Career Center.”

“One of the things that get people in the most trouble with money is not being up front and transparent,” McDaniel again cautioned. “So with capital projects, you should take time to discuss, plan and know what you want to spend. There is no reason by the time you transfer the money that you aren’t specific about what you want to spend the money on.”

“Normally,” McDaniel continued, “with capital projects, there is specific planning for these projects, with an estimated cost beforehand. You don’t say ‘you propose, you might, you’d like…’ You come back later when you know what you want to spend it on. When you know what the total is, you request that we move it. We should not be voting arbitrarily.”

Hartman asked if the money could be pulled out at a later time.  Green answered that it  could.

The Board passed the transfer on a 4-2 vote, with McDaniel and Hartman voting against.

“Madam Chair,” McDaniel said, “I would like the record to reflect that I am voting against this because, in my opinion, it is reckless to vote now knowing that the audit is coming up next month.”

Hartman said she voted against the transfer since the funds can be transferred at any time.

“The Board should not pull the funds out until we know what it will be used for,” Hartman said.