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Its
president, Nancy Doorey, assured a special meeting of the school
board on Mar. 18 that those steps "will not harm our
instructional program" nor result in any layoffs of district
employees.
The board
took no specific action at what was described as an
informational meeting. The relatively few attendees -- mostly
district administrators and people who have been involved as
volunteers with committees dealing with district finances and
activities -- seemed agreed that Harter can be relied upon to
handle the situation. Both he and Doorey were applauded after
speakers hailed their leadership.
Harter
outlined some accounting steps -- mostly reallocation of
expenditures to accounts other than local operations -- that are
being taken. Other internal measures he proposed include
deferring non-essential purchases, conserving supplies and
materials in schools and administrative offices, delaying travel
and conference participation, conserving electricity and
delaying the use of air conditioning, eliminating overtime to
the extent possible and asking employees to defer taking
personal leave to reduce spending for substitutes. The district
will defer hiring an authorized assistant superintendent and
will 'turn back' for state credits four unfilled central-office
administrative positions, he said. Longer range, he said, such
things as having parents carpool athletes to sports events,
seeking donations for some activities and reducing the amount of
contractual services will be evaluated.
Board
member David Adkins questioned whether the general public might
perceive the situation as part of the strategy to obtain a
favorable result when the district goes to referendum on Apr. 23
to obtain an increase in the ceiling on its local operating tax
rate.
"I know
that in the past some districts have created crises [for that
purpose]. That is not the case here. This has nothing to do with
the referendum," Harter replied. "We are coming down to the last
of the dollars from the 1994 referendum and they are not going
to stretch far enough." Brandywine has not gone to voters for an
operating-tax increase since then.
For more
than a year, district officials have referred to a dwindling
reserve from which part of the local budget has been financed.
When the present budget was adopted it was projected to be down
to about $1.3 million at the end of this fiscal year. Harter
referred to that -- about 1% of a $114 million total budget --
as being a "razor-thin margin." By the end of December, he
said, the projection was down to $840,000. A significant
proposed component of first-year spending if voters approve
higher taxes is to rebuild the reserve to about $3 million,
which is described as a more prudent level.
Harter
told the board that he became aware that the district's
financial situation was even more perilous than thought after
Mar. 5 when chief financial officer Michael Shockley, who has
diabetes, left the staff on long-term medical disability.
Since coming to the district two years ago, he has been credited
with tightly managing finances and making more efficient use of
fiscal resources.
With
Shockley's departure, Harter said he asked the business office
to review Brandywine's financial situation, with a view to
determining its position to weather the remainder of the
academic and fiscal year. He described that as a precautionary
step.
"By
Friday, Mar. 8, the budget staff generated a report that
indicated that the negative trend for the ending balance had
accelerated and that, without some spending reductions, the
district would end the year with a negative balance in the local
expense account," Harter said in a summary report presented at
the board meeting.
He also
told the board that a straight-line projection of spending in
the last four months of the fiscal year indicated that the
district would overspend its local-funds budget by nearly 7%.
School
districts are financed from several sources. In Delaware, the
largest portion comes from the state. Local revenue accounts for
about 35% of Brandywine's income. State law does not permit
deficit spending by school districts.
Harter
said Mark Dufendach, director of financial management for the
state Department of Education, Jerry Gallagher, head of DelDOE's
general funds division, and David Blowman, executive assistant
to the secretary of education, came to Brandywine to review the
situation. They provided detailed reports and offered
suggestions and advice, Harter said. He also received advice
from the chief financial officer of another school district, at
whose request he declined to identify.
Based on
that, Harter requested the special board meeting to provide a
public airing of the situation. "I felt it important that we be
out front and inform the public," he said.
He said
that he did not want the situation to be construed as a crisis
but added, "I am certainly going to err on the side of caution"
in dealing with it.
During
discussion at the meeting, there were suggestions that, in
retrospect, it might have been better to have sought the
operating tax increase last year. The district did receive voter
authorization then to sell bonds to finance a major building
renovation program. Doorey explained, however, that "it would
not have been a good-faith effort to go forward [with a tax
referendum] without a credible plan [for the future of the
district]." The coming referendum is based, in large part, on a
strategic plan adopted late in 2001.
Starting
with an anticipated limited amount of fiscal breathing room, the
district has been confronted with additional unexpected
expenses. An overestimation of enrollment has required it to pay
teachers in excess of the state allotment from local funds;
there was a sharp increase in insurance costs following the
September attacks on the World Trade Center and Pentagon; and
the state implemented a new pay arrangement which impacted cash
flow.
Kent Rigel, a retired business
executive who co-chaired Brandywine's financial review taskforce
last year, said Brandywine and other districts also are
constrained by having to operate within what he described as
"the arcane state system [for] managing public funds."
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