EBR superintendent eyes more spending as district's finances improve

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After four straight years of bad news, red ink has turned to black, leaving the East Baton Rouge Parish school system at least temporarily out of the financial hole.

The better economic picture is leading Superintendent Bernard Taylor to suggest spending a bit to catch up the salaries of some employees who fell behind during the down years, expand magnet programs and expand early childhood education.

Taylor, however, cautions that he won’t go overboard.

“We’re not going on a spending binge,” he said. “That’s not going to happen.”

The caution is warranted. Despite being a bit more flush, the school system faces continued and growing competition for students from independent charter and private schools that accept publicly funded vouchers.

Taylor argues the school system has held its own, not losing “significant numbers of students.”

The school system had 42,375 students on Oct. 1, when the state officially counts school enrollment. That’s down almost 400 students from the year before and about 1,000 from 2011.

The school system’s most recent annual audit, for fiscal year 2012-13, approved in November, represented the reverse of the past. Revenue outpaced spending, and spending declined both overall as well as in the general operating fund, which represents two-thirds of all spending.

As of June 30, the school system had $32.2 million in its unassigned reserves, roughly double what it had left over the same time a year before.

The decrease in spending on general operating costs, about 4 percent decline, is a contrast to the past when such spending has been either flat or increased.

Taylor said roughly $1 million a year less is being spent in Central Office compared to when he arrived in June 2012.

“What’s helped lead to this is very disciplined spending,” he said.

The annual audit was conducted by Postlethwaite & Netterville. The auditors gave the school system a clean bill of health, finding “no material weaknesses” in its internal controls.

For more than a quarter-century, the school system’s finance staff has won annual awards for the quality of its accounting work.

The picture for fiscal year 2013-14, which is halfway complete, is unclear.

The last projections were released in August after the School Board delayed for weeks before adopting its 2013-14 general fund budget. At the time, the projection was the school system would spend $18 million more than it took in for general operating expenses, with reserves dipping substantially to just $8.7 million by June 30, 2014.

Without giving many specifics, Taylor said the situation is much improved.

“If anything, we might be slightly ahead. We won’t need to dip into the fund balance,” Taylor said.

The $32.2 million surplus from last year has surely helped. That’s $8 million more than the school system was predicting over the summer.

Sales taxes, through October, are generating more per month than they were the year before.

The school system’s attempts to shift many retirees to a Medicare Advantage plan run by Humana also appear to have saved more money than predicted.

In May, after months of rancorous debate, the School Board agreed to allow about 3,000 retirees who were already eligible the option of continuing to get their supplemental insurance through the school system’s group plan, albeit with much higher premiums, or switch to the Humana Medicare Advantage plan.

At the time, the estimate was about half would stay, half would go. Those annual savings were pegged at less than $6 million for the first year. Taylor says now that about 90 percent ultimately made the switch to Humana.

“As painful as a process it was to go through, I think it has resulted in a win-win for everyone,” Taylor said.

Taylor said the annual savings will be more than $8 million, perhaps as much as $12 million.

Taylor has already proposed using some of the added money to improve salaries for some employees who were hurt by three years of salary freezes, in the process falling behind newly hired employees not affected by the freeze.

“Those who were here had an inequity,” he said. “We can never make those people whole totally.”

Taylor has suggested spending a bit more to expand foreign language immersion programs as well as create a new magnet program at Brookstown Middle, but the board has yet to vote on those proposals.

Taylor also has suggested adding about 1,000 spots to its prekindergarten program, which would cost about $28 million a year. Taylor said some of the added money could be used for that possibility.