DPS fund balance would have halted county increase

Dec. 06, 2013 @ 07:22 PM

County officials would never have agreed to give Durham Public Schools an additional $2.4 million this year had they known the district was flush with a $19.7 million unassigned fund balance.

County Manger Mike Ruffin said Friday that had county commissioners known the school district had amassed such a substantial reserve, they would not have given DPS the additional money school officials said was needed to help avoid spending down its fund balance to a dangerously low level.

“There’s no way they would have funded that request,” said Ruffin, noting that the county dipped into its own savings account for a portion of the $2.4 million approved by commissioners.

Additionally, Ruffin said a county analysis of school district finances early this year projected an unassigned fund balance of $10 million to $12 million.

That analysis led Ruffin to recommend flat funding for the district this fiscal year, which would have meant DPS would have received $117.2 million in county funding, the same amount it got the previous year.

“The reason I made that recommendation is that, based on our analysis, we felt like they were going to have sufficient resources to cover the request,” Ruffin said in an interview Friday.   

But school board members, using district numbers, believed the fund balance would be significantly lower, in the neighborhood of $4 million.

So, they made impassioned pleas to county commissioners for additional funding to cover impending state cuts that would cost the district teaching assistant positions.

Commissioners agreed to give the school district an additional $2.4 million -- half of the $4.8 million DPS requested – bringing county funding up to $119.6 million.

The revelation about the extra $15 million has angered some school board members, and led to a further erosion of trust in embattled Superintendent Eric Becoats, who has been under fire for a series of missteps including questionable use of his district-issued credit card, which the board terminated.

Board members also worry about the loss of credibility with county commissioners.

“This probably can damage our working relationship with commissioners,” said School board Chairwoman Heidi Carter. “We’re going to work to repair that. It’s critical that the county trust that the school board is being a strong financial steward of the resources we get.”

County Commissioner Chairman Michael Page said he hopes the oversight doesn’t occur again.

But he said the unexpected windfall should put the school district and county in a stronger financial position next year.

 “It’s going to relieve some of the burden on taxpayers,” Page said. “We can be a step ahead in the coming year instead of spending a lot of time trying to find extra dollars.”

Commissioner Ellen Reckhow said it’s important the school board and commissioners have a good working relationship, one that’s built on trust.

She the fund balance revelation has damaged that trust.

“I feel it has,” Reckhow said. “Now we may have to do more due diligence in the future and require more verification.”

Carter said the fact that the board didn’t knew about the extra $15 million is evidence of “weak management” on the part of Becoats, who she said is responsible for providing the board with an accurate accounting of district finances.

“One of the most important things we do is adopt a budget plan on how to spend the taxpayers’ money and we are dependant on the superintendent to provide us with an accurate accounting of district’s finances to present to the community and county commissioners,” Carter said.

She has called for an independent review to try to get to the bottom of why there was such a large discrepancy between the amount of money the school district has on hand and the amount the board was told it has.

The district has roughly $32.6 million set aside in various fund balance categories this year, including $7.4 million committed for teacher and staff salaries.

The $19.7 million in the unassigned fund balance is the equivalent of a district “savings or rainy day account” and the board has great discretion in how it is spent.

School administrators told the board that more than half of the $15 million -- about $8.6 million -- was earmarked in the 2012 restricted fund balance category for technology improvements, which the district found a way to pay for out of its regular operating budget.

So, the money was moved from the district’s “restricted” fund balance category, meaning restricted for use for a specific purpose, to its unassigned fund balance in this year’s budget.

The same was said to be true for about $4.4 million set aside for teacher and staff salaries and several million more for other items.  

And Becoats said the district used the information in the 2012 Comprehensive Annual Financial Report (CAFR) when developing the budget and it showed $8.6 million in the district’s restricted fund category.

He said the CAFR isn’t updated until after the next year’s budget has already been written.