Audit shows Lynchburg schools went over budget

Lynchburg City Schools were $440,000 over budget for the previous fiscal year — a fact division officials weren’t aware of until recently when they received the city’s financial audit report.

“We made a critical miscalculation somewhere, but we’ll get it straight,” Superintendent Paul McKendrick said by phone Tuesday afternoon. “We can account for all the funds. It’s something that shouldn’t happen.”

The circumstances surrounding the budget issue were discussed Tuesday at City Council’s work session, where McKendrick and other school division officials were present. An audit of city finances is conducted each year and City Council received a presentation on the most recent audit at the session.

McKendrick said the division, which has a total operating budget of about $84 million, received $200,000 less than anticipated and also spent $240,000 more than budgeted. The division also anticipated an end-of-the-year surplus of $1.4 million, which didn’t materialize.

Historically, the school system runs a surplus each year.

Some members of city leadership characterized the lack of surplus as part of the discrepancy, suggesting that city schools miscalculated by about $1.8 million, not just the $440,000.

“My biggest concern about this is not necessarily the number, because I think we can do things to address the number,” City Councilman Mike Gillette said. “My biggest concern is the schools were $1.8 million over and didn’t know it until six months later (when the audit was finalized).”

The surplus is typically used for one-time capital projects, such as roof work or sidewalk paving. This year some of the anticipated surplus would have financed improvements to the heating and air conditioning system in central office, which the division will now forgo.

McKendrick emphasized the division did not spend the surplus; instead it never ended up having the money in the first place. Rather, the surplus was projected at the time the budget was put together.

“Projected revenue was less than we thought. It ended up being a $200,000 shortfall in revenue. Then there was a $240,000 over-expenditure in instruction,” he said, adding officials should have a better idea of where that overage came from next week.

The school board, which has not discussed this budget issue, is scheduled to meet Tuesday when McKendrick said members will discuss the situation. McKendrick said the board has not received the information in an official capacity because the audit report came to school administration after the most recent board meeting.

Julie Doyle, school board chairwoman, was also present at the City Council work session and spoke about the actions the division will take.

“This is obviously a large concern. It’s unacceptable, and we don’t want it to happen again,” Doyle said of the deficit.

At next week’s board meeting, Doyle said members will discuss formulating a request to transfer funds to cover the deficit. They will likely take money from the textbook contingency fund, which contains money put aside for future purchase of textbooks. The fund currently has about $1.5 million.Both Doyle and McKendrick said the next step for school administration and the board is to take proactive measures.

“The true burden is how do you make sure this doesn’t happen again,” McKendrick said, adding an issue like this has never come up before. “Our concern is to make sure it doesn’t happen again.”

To do that, officials will discuss creating a school board finance committee and school administration will thoroughly review the first six months of the current fiscal year to make sure the budget is on track. That information will likely be shared with the school board Jan. 20 and then with City Council on Jan. 27.