An unexpected shortfall in state funds is forcing North Wasco County School District 21 to use up its rainy day option.
At a special school board work session March 26, chief financial officer Randy Anderson said he had been notified mid-March that state revenue was less than projected and the district would be given $550,000 less in May than he had previously been told.
“The frustrating thing is, normally they make this known in January so we have six months to deal with it,” Anderson said, noting that now there is only about two months’ worth of payroll left in the school year. Currently the state pays the school district about $1.3 million a month.
He told the board there was an option, essentially an accounting trick, which would allow the district to get by without resorting to draconian cuts. The state makes two payments in July (the first month of the fiscal year) and none in June, and state law would allow the district to count one of the July
payments like it came in during the previous fiscal year instead.
The move would mean the 2012-2013 fiscal year would contain 13 payments, and the thirteenth payment would cover the $550,000 shortfall. The catch is that the next year’s budget would be one month short—forcing the district to borrow again from the following July and continue the practice in perpetuity.
Anderson said basically all of the remaining spending for the year was tied up in contracts so the other option would be to declare an emergency and end the school year early — not something the district wants to do when it has already cut six days. Past budget shortfalls have already depleted the district’s reserves.
“I’m not prepared to run the general fund in deficit and I don’t think anyone else is either, and this is an allowable way to avoid that,” he said.
None of the school board members told Anderson they thought he should not pursue the accounting option he put forth, but several said they weren’t very happy it had come to this, because once the emergency option was used up it wouldn’t be available again should there come a worse shortfall in the future.
“This would be a lot easier discussion for me if we hadn’t burned through our reserves,” Brian Stahl said.
Ernie Blatz agreed, saying the same thing could happen again and the next time the district wouldn’t have any choice but to make cuts more drastic than any it has made thus far.
“At what point do you say to the state, ‘We’re done; we can’t do what you’ve asked us to do’?” he asked.
“We’re going to do whatever we can do for as long as we can do it,” Anderson replied. “We are still going to have 3,000 kids show up and we’re going to figure it out somehow.”
District Superintendent Candy Armstrong said she supported the “rainy day” plan because it was a way to fill the gap in funding without disrupting students’ education.