Audit shows declining surplus

By Joseph Cyr
Staff Writer
    HOULTON, Maine — What was once a hefty surplus account for RSU 29 has considerably dwindled, according to a recent audit for the school district. David Alward, a certified public accountant, presented his audit of the school district for the year ending June 2013 at Monday night’s regular school board meeting. Alward told the board there was no glaring issues found in the district’s finances.
According to Alward’s audit, the district has $780,778 in its undesignated fund balance, referred to in the audit as “unassigned funds.” In last year’s audit, that figure was $1,263,533. Any money that is left unspent at the end of the school year is put into the undesignated fund balance. Several years ago, that carry forward was much higher, but in recent years, the amount left over has been smaller.
Board member Jeremiah Crockett asked if there was a recommended percentage or figure that the district should keep in its undesignated fund balance.
“It’s subjective,” Alward said. “We look at the number and trends. If it’s a low balance, but it’s been going up, that is OK. If it’s going down, that is not necessarily a bad thing as long as there is enough of a cushion there. There is no exact number you have to have.”
Superintendent Mike Hammer said he believed the district needed to keep six months of operating costs in its undesignated fund to cover any unforeseen interruptions in revenue. Occasionally, the state is slow in submitting payments to school districts, which can impact payroll. RSU 29’s payroll runs between $350,000-$400,000 on a bi-weekly basis.
“Some districts are so close that they have to borrow funds until they get reimbursed by the state,” he said.
A school budget differs from a municipal budget in that each district is given money from the state for general education aid. In order to receive those funds, a district must come up with a “required local” share, as mandated by the state.
Those two figures represent what the state refers to as the amount of money needed to provide “Essential Programs and Services,” or more commonly called EPS. That figure is how much the state feels each district should spend to educate its students.
Most school districts in the area, spend more than the EPS figure and therefore must come up with an “additional local” share to balance the budget. In RSU 29, there has been no additional local requirement for the past four years as the district has used money from its undesignated fund balance to cover the additional local amount.
In the 2013-14 fiscal budget, the district took $182,288 from the fund so that no additional local revenue was needed to balance the budget. The previous year, the district took $426,567 from the fund for the same purpose.
Alward said if the district continued dipping into this account as it has in the past, that account would be completely depleted within a year-and-a half.
Board member John Tribou said the group may need to make some tough financial decisions when putting together its next budget.
“I think we have to dig pretty deep this year,” he said. “We need to evaluate this year’s budget line by line, top to bottom. I encourage every board member here to get involved whether you are on the finance committee or not. I think we can thwart off a tax increase if we work a little more diligently. We have to do something differently. I don’t want to be a part of causing a mill increase to the municipalities.”
Board chairman Fred Grant asked Tribou if he was willing to give up funds from the state in order to reduce the budget.
“We need to look at all options,” Tribou said. “If giving up funds from the state is the right thing to do to get us where we want to be, then we may have to. But we need to take a really hard look at it.”
Grant said it (budgeting) was a very difficult position to be in for one major reason.
“Our first and foremost charge as a board is the education of our students,” Grant said. “If the state mandates an increase, for every dollar we reduce that (required local) amount, they give us that much less. Any increase to our municipalities the last few years came directly from Augusta.”
Grant suggested the district should look to sit down with town leaders from Houlton, Hammond, Littleton and Monticello to see if there were creative ways the district could increase its revenues in ways other than increasing taxes.
The district has yet to delve into the 2014-15 school budget. Typically, RSU 29 sends a budget to voters in June.
In other agenda items, the school board:
• Renewed the superintendent’s contract for Hammer for two more years. Hammer will receive a 1.5 percent salary increase in each of those two years as part of the agreement.
• Accepted the retirement of Diane Conlogue, who spent 27 years in the food services department, and the resignation of Paula Gendron, an education techician in the district.
The next regular meeting of the RSU 29 school board will be 6 p.m. Monday, Feb. 3 at Houlton Southside School.