Lynchburg Schools officials make moves to prevent future budget deficits

During a nearly three-hour meeting with City Council, school officials provided a detailed account of what led to an unexpected $440,000 deficit in the last fiscal year and the aggressive steps being taken to prevent any future shortfall.

The discussion, which was heated at times, included the admission by school officials that they did not have the monitoring in place to avoid and correct the issues leading to the deficit.

“I want to say clearly to council that the minute we learned of this issue, the school board, to a person, took this issue very seriously,” said Julie Doyle, school board chairwoman. “We’re very concerned about it and frustrated it happened.”

Doyle said the largest financial blunder occurred when the division built its budget on an inflated enrollment figure. Enrollment was actually hundreds of students lower than what the budget was built on, but officials failed to realize this.

“The very unfortunate answer is we did not have the monitoring and control in place to do that,” she said. “That’s unacceptable.”

Doyle said the board will now receive revenue calculations up to five times a year compared to once a year currently, an ongoing evaluation of expenditures, and reports with year-to-date expenditure comparisons and actual revenue figures. These changes, she said, will help the board to spot any budgetary concerns.

The school board is also expected to approve the creation of its finance committee next month, Doyle said. In addition, Superintendent Paul McKendrick has put some mid-year financial changes in place to be cautious with the current year’s budget.

After the meeting, McKendrick said that sales tax revenue is expected to decline, which will result in less revenue for schools. He has implemented changes to offset the decrease. Some of the changes included: departmental cuts by 5 percent, a hiring freeze, no meal reimbursement for travel and no overtime without his approval.

The division’s enrollment figures used to calculate state funding were also the subject of scrutiny during Tuesday’s meeting. Councilman Jeff Helgeson said there was a discrepancy between what division officials say the budget was based on and what the budget actually was based on.

The school division crafted its budget with a projected enrollment of 8,610.

“I think you built the budget on 8,495,” he said, while holding the division’s FY08 budget. “You’re sure it’s 8,610 students?”

Division officials couldn’t provide a definitive answer. After the meeting, Doyle said she would attempt to resolve the discrepancy. Helgeson eventually said no matter what the enrollment projections, the division did not realize the error.

Doyle said she could not defend the division’s actions, and admitted again to a lack of monitoring before Mayor Joan Foster asked to move on.

“I don’t think we need to continue to rub that in their face,” Foster said. “I want us to go forward in a positive manner.”

Doyle said the board takes the deficit seriously, as evidenced by the presence of so many board members. At least six were in attendance, as well as a handful of central office administrators.

“Clearly we have some credibility to gain back with you and the community,” Doyle said.

Councilman Mike Gillette said the council shares in the deficit responsibility and reversed his characterization of the deficit. He had previously suggested the deficit was closer to $1.8 million because not only did the division have a $440,000 deficit, but it also failed to realize an anticipated surplus of $1.4 million.

Officials said the anticipated surplus is not a line item in the division’s budget, but rather part of the city’s capital expenditures without a funding source.

“I think my assumption has been in error, on the size of the mistake,” Gillette said.

He also said it is not his intent to punish the board, but the fact the error was not realized was a major oversight.

“You are being punished. This is very embarrassing. This is a bad story to tell,” Gillette said, adding Helgeson’s questions about enrollment are legitimate.

Vice Mayor Bert Dodson agreed the board should not be punished.

“What we found is unfortunate. That’s life,” Dodson said, later adding, “We’re going to learn. I’m not going to be part of a witch hunt.”

Still, Helgeson said he had reservations, and accountability is key to a better product. Toward the end of the meeting, he read aloud from Sec. 22.1-91 of the state code that says any school official who spends more money than they have available could be guilty of malfeasance in office.

“It’s not as if you killed anyone, but it’s illegal,” he said.

Foster interceded and said the school division has admitted its error and everyone has said the city must do what’s in the best interest of school children.

Still, it wasn’t enough to quell Councilman Ceasor Johnson who said he thought Helgeson was taking a “jab” at the superintendent.

“It’s like you’re slandering the superintendent, as if he’s inadequate or incompetent,” he said. “I think that’s inappropriate.”

Helgeson countered by saying he was only reading the state code.

“There’s not anyone’s name attached to it. I’m not a judge. I’m not a jury,” he said.

Said Johnson: “It’s not like you read the Clean Water Act, that’s in the state code, too.”

A majority of City Council members appeared satisfied with the school system’s response. Doyle said school officials wanted to make the budget process transparent and would share finance reports with city leaders.

Lynchburg School Board meets again Feb. 3 where members will likely vote to create a new finance committee.

w Staff writer Alicia Petska contributed to this report.