As the Fayette County public school district works to fix financial problems identified in a state audit, variables totalling millions of dollars stand to significantly affect the district's budget in 2015-16.
A major initiative is fixing the chronic financial mismanagement that state Auditor Adam Edelen found. Edelen has said accounting errors contributed to the need for about $17.5 million in budget cuts in 2014-15. The district's fiscal year ends June 30.
District Chief Operating Officer Mary Wright said she does not expect that large-scale cuts will be needed to balance the 2015-16 budget, although it's still early in the drafting of that budget.
Some details about the district's financial situation, along with some proposals for a strategic financial plan, are expected to be discussed at a school board meeting Monday.
At a planning meeting recently, Budget Director Julane Mullins told the school board about some adjustments to the current 2014-15 general fund budget, which in May was $428.4 million.
Because of unanticipated fluctuations in attendance both locally and statewide, the district could get $894,542 less in state SEEK (Support Education Excellence in Kentucky) funding in 2014-15 than had been anticipated. Under SEEK, the state sets an allotment for each student, taking into consideration additional needs for exceptional students, low-income students, transportation, students who do not speak English, and other students in special circumstances.
"Although student enrollment increased in Fayette County in 2014-15, it did not increase at the same rate as it has for the past five or six years," Wright said.
The sheriff's office fee to collect property taxes increased to meet state law and will cost the district an additional $900,000 in the current budget.
Other significant expenditures came up during 2014-15 that had not been budgeted. The district will spend $100,000 on a new associate director of minority recruitment position and $161,000 for eight new bus drivers required mainly because of retirements. Also, $75,000 will be spent on the search for a new superintendent. Tom Shelton resigned in December to become executive director of the Kentucky Association of School Superintendents.
Board members, including Daryl Love, have asked for an update on how the district will spend $150,000 that the board set aside for Fayette County's neediest schools in 2014-15.
"Are we really allocating our resources where there is need?" Love asked at the planning meeting.
Mullins told the school board at the planning meeting that money was tight this year.
"We're living within the budget that the board approved," Wright said in an interview.
In terms of projections for the 2015-16 budget, the district must give employees a 2 percent raise under state law. Salary increases for certified and classified staff, including the state-mandated raise, could cost about $8.5 million. The district could see less state SEEK money again in 2015-16.
A worst-case scenario for a possible 10 percent rate increase for utilities would be $850,000. And the expansion of two of the district's special programs — at Carter G. Woodson Academy and STEAM Academy — could cost $720,000. The Kentucky Teachers' Retirement System employer match is expected to cost $1.2 million.
Additionally, committees now meeting about special education and other issues are likely to make recommendations for improvements that would require expenditures in the 2015-16 budget. Members of the redistricting committee, for example, have discussed whether they should recommend that more money be spent at low-performing schools to raise academic achievement.
On the plus side, the district could get an additional $9.3 million in revenue because of a 4 percent increase on revenue generated from property taxes. The school board will be asked in August to approve tax rates on real and personal property that would generate the additional money.
Wright said the district will report to Edelen each month its progress in fixing problems identified by state auditors. Those included weaknesses in budgeting and financial-management processes, administrative and management salary increases that outpaced those of other district employees, excessive and unnecessary travel, misuse of a trust fund, and conflicts of interest.
Budget managers are receiving training, trust funds will be under new management, and processes for travel and professional development have been strengthened. District officials say they expect to make policy changes to address conflicts of interest in the near future.
Monthly financial reports to the board have previously lacked significant information, according to Edelen. District officials say they are trying to improve that so members can make the best possible financial decisions.