State lawmakers pushing school budget reforms
Lawmakers have introduced a package of school budget reforms to prevent financial crises like the ones gripping the St. Vrain and Elizabeth school districts.
The primary bill, Senate Bill 149, would require standardized accounting procedures and quarterly financial reports to the state Board of Education.
“This kind of review is already proscribed by our policies and we provide
not only quarterly reports, but regular on-going financial reports to the
board,” said Karen Strakbein, director of finance with the Eagle County School District. “There are large financial responsibilities that come with serving on the Board of Education. We provide our members with extensive information about the district’s financial condition.”
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Eagle County Assistant Superintendent John Brendza said he isn’t surprised with the proposed bills in light of what happened at the Front Range school districts of St. Vrain and Elizabeth.
“If this legislation passes, school districts will have to make sure they communicate to the board on the status of the district’s finances,” Brendza said. “It’s going to change the way the community monitors the spending of their money.”
The bills would set strict accounting principles, tighten restrictions on interest-free loans from the state, require districts to turn over assets if they cannot repay loans on time and prevent bond money from being used to pay teachers.
“”The St. Vrain situation has obviously been a wake-up call for all of us. We must clearly do all we can to see that this situation never happens again,” State Treasurer Mike Coffman said last week.
Officials in the 22,000-student St. Vrain school district revealed a $13.8 million shortfall and blamed it on accounting errors.
With a budget of $30 million budget, the Elizabeth school district has a deficit of about $2.25 million, officials there said. Its superintendent, Bruce Bartlett, resigned Dec. 12 amid allegations he squandered thousands of dollars of district money and falsified contracts. The Arapahoe County district attorney is investigating.
“With the very public financial problems of the St. Vrain and Elizabeth
school districts, some local residents have questioned the financial
situation with Eagle County schools,” said Pam Holmes Boyd, spokeswoman for the Eagle County School District. “The school district is in strong financial condition. The school district’s 2002-03 budget is in balance with projected revenues exceeding operational expenses.”
Other bills aiming to set tighter financial standards include a measure sponsored by Sen. Ron Tupa, D-Boulder. The bill would allow school districts to sell assets to the state and lease them back if they are unable to repay loans by the annual June 25 deadline.
Coffman said another bill that has been introduced that would tighten rules on interest-free loans school districts use to tide them over until they can collect property taxes. The bill would require school boards to pass resolutions before districts can borrow money from the state.
“”The St. Vrain school board claimed it had no knowledge of the district’s deteriorating financial situation,” Coffman said. “”Our proposal provides a more effective budgeting and oversight process, which should bring problems to the attention of a district’s board before it’s too late.”
Coffman said the state does not want to trample local control, but the state is held financially responsible for district financial problems.
“Because school boards are ultimately responsible for making districts’ financial decisions, it is very important that members understand both how schools are funded in Colorado and how their individual school districts’ budgets work,” Boyd said. “Senate Bill 149 attempts to make sure this happens.”
State of the district
Eagle County School District auditors report that the district conducted all of its financial operations last year within the parameters of state law.
The school district received in November its official comprehensive annual financial report, or audit, compiled by the independent Certified Public Accounting firm McMahan and Associates.
The auditors accepted the budget figures, noting “the general purpose financial statements … present fairly, in all material respects, the financial position of Eagle County School District Re-50J.”
The official audit confirmed the school district used current revenue to fund all operating expenses.
“This means we are living within our available dollars,” said Pam Holmes Boyd, spokeswoman with the district.
The district’s operating expenditures last year were more than $33 million. Additionally, the district’s fund balance, cash that the district has available but has not allocated, is about $12 million, as of June 30, 2002.
“That figure represents a very healthy fund balance,” Boyd said, “and
like a personal savings account, it is money the district keeps on hand in
the event of emergency.”
This current fund balance also includes the $3.1 million in Question 3D funding pending the outcome of the lawsuit Cacioppo litigation.
The Associated Press contributed to this story.
Veronica Whitney can be reached at 949-0555, ext. 454, or at firstname.lastname@example.org.