Revenue increased slightly, while spending declined in fiscal year 2011-12 for the East Baton Rouge Parish school system, according to its latest audit.
The trends were reversed from the year before, a good development for a school system that has faced persistent financial problems in years. Still, the bump in revenue didn’t help the school system’s bottom line much.
That’s because its general operating fund, which is about 60 percent of all school system spending, is still spending more money than it’s taking in, about $12 million more in spending than the $394 million in revenue.
That’s down from $29 million in excess spending in 2010-11, when revenue was about $379 million in the general operating fund.
In the process, the school system has steadily drawn down its reserves. So, in 2007-08, it had a $135.7 million fund balance, the equivalent of 38 percent of its spending that year. In 2011-12, that had dwindled to $60.1 million, or 15 percent.
The audit for the 2011-12 fiscal year, which ended June 30, was presented to the School Board on Thursday and will be considered for approval at its Nov. 15 regular meeting.
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 awards for the quality of its accounting work.
Mike Schexnayder handled Thursday’s presentation. He is a CPA and a partner with the firm, which audits more than a dozen school districts in Louisiana, including East Baton Rouge and Ascension parishes.
Schexnayder said the school system, like his other clients, have been facing similar problems.
“Pretty much every school district we’ve dealt with has had to make some reductions,” he said.
East Baton Rouge Parish school system’s financial position has been helped by improved sales tax revenue. Still, it needs to reverse the decline in its reserves, even as it faces new challenges during the 2012-13 fiscal year, specifically millions of dollars being diverted to private schools through a new voucher program and an expected increase in the cost of teacher’s retirement, Schexnayder said.
A 15 percent fund balance, as the school system has now, is understandable but needs to be bigger so that the school system has money for unforeseen events, he said.
“The state considers a 7 percent fund balance to expenditures as good,” he said. “I personally think that’s way too low.”
The school’s system “unassigned” reserve, money it has not designated for other purposes and can spend immediately, is only $16.5 million, or 4 percent of its general fund. Last year, the school system had $25.4 million in that category or more than 6 percent of its general fund.
The school system took in $568.3 million during the 2011-12 fiscal year, but spent $685.2 million.
More than $70 million of the $685 million spending total is an estimate of the school system’s liability for the future cost of medical insurance for retired employees and for employees who will eventually retire.
Per-pupil spending was slightly higher in 2011-12, $14,496 per student, up from $14,877 per student the year before.