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Are School District reserves running dangerously low?


School Superintendent Mark Rendell was unable to give clear answers on how much cash is in the general fund at the Jan. 15 School Board meeting, but he denied recently-resigned Finance Director Julianne Pelletier’s warning that the district’s reserves will soon fall to 2.5 percent, or $3.8 million.

That would be a problem because state statute requires a 3 percent cash remain in school district general funds for emergencies and unexpected expenditures.

School Board Chair Laura Zorc placed discussion of Pelletier’s report at the top of the meeting agenda to warn fellow board members against any unnecessary spending until the state of the fund balance is made clear. Zorc said the report “is very troubling,” and needed to be brought “out into the sunshine.”

Zorc only cited part of Pelletier’s report, a list of pending expenditures that will leave the general fund short. The list included $600,000 in fines levied on the school district by the state for miscounting bus riders, $2.6 million due employees, $90,000 for “additional legal fees” and $70,000 for “generator fuel leak clean up/tank replacement.”

Pelletier’s projected general fund balance deficit  didn’t reflect an additional $1.1 in transportation funding that School Board Member Jacqueline Rosario says will be withheld by the state due to additional rider counting errors.

State documents confirm state transportation funding for the Indian River School District will drop from nearly $4 million to $2.8 million this school year, which includes the $1.1 million take-back. 

With that money figured in, based on Pelletier’s report, the school district’s fund balance would drop below $3 million and amount to less than 2 percent, far below what the state mandates.

Zorc said transparency on general fund reserves is essential. She cited state statutes that require the district to notify the state if the “projected” general fund cash balance will fall below 3 percent.

If the fund is projected to fall below 2 percent, the district must submit a financial plan to the state. If the plan is deemed weak, the state can take over district finances, she said.

Rosario asked Rendell how often he looked at the general fund balance. Rendell said “twice a year.” Former Assistant Superintendent of Finances Carter Morrison, who was suspended in July, would only show him the balance at the end of the fiscal year and during budget talks, he said.

Rendell said Pelletier’s calculations were incorrect and assured the board, “I don’t believe we’ll be anywhere near 2.5 percent.” He said he had hired Margaret McGarrity of CFO Strategic Partners to go over Pelletier’s figures, and that McGarrity found some salaries could be charged to other funds, easing the burden on the general fund. McGarrity’s latest calculation put the fund at 4 percent, he said, and shifting salaries to other funds is not complete.

Rendell asked the board not to take action to cut spending until McGarrity gives a final report at the Jan. 29 meeting. 

Zorc warned she would make a motion for a spending moratorium then “if all my questions aren’t answered,” and asked fellow board members to think about possible cuts to bolster the general fund balance in case it is necessary.

When expenditures came up later in the meeting, the board voted to delay spending nearly $600,000 for a grounds maintenance contract and $156,000 for digital reading textbooks that would have come out of the general fund.