Leader Blues

Wednesday, March 16, 2005

TOP STORY>> PCSSD’s surplus of $17M is gone

IN SHORT>> The Pulaski County Special School District is among 11 in Arkansas designated as in fiscal distress, a designation that could result in the state imposing its own superintendent or replacing the school board.

The steady erosion of the Pulaski County Special School District’s bottom line over the last several years has landed it fiscal distress designation, according to the state Department of Education.

Only about three years ago, the district had a fund balance of about $17 million, according to Jeff Shaneyfelt, past board president and a certified public accountant. Shaneyfelt estimated the district would have close to nothing left in its fund balance at the end of this year.

“This has been on the horizon for some time,” said Shaneyfelt Tuesday afternoon. He said the designation meant the district had been identified as in financial trouble for two years in a row.

“In three years, we’ve gone from $17 million down to zero. Only way to explain it is our labor costs.”

Salaries and fringe benefits account for about 85 percent of the school’s budget, according to John Artchetko, acting chief
financial officer for the district. Artchetko’s figures show an ending balance this year of $5 million, he said Monday.

“Next year, I don’t know,” said Shaneyfelt. “We have enough money to get through this year. He said the fund balance was even more troubling because the district had received $10 million more this school year, courtesy of the state legislature and the Lake View School case.

“We have nothing new to show for it,” he said.

Shaneyfelt said the state Education Department has the authority to appoint its own superintendent, to reconstitute the new school board or, without going to those extremes, they can have strong input—oversight.”

“Superintendent Don Henderson and I haven’t sat down to discuss grounds for appeal,” said Artchetko. “We will later this week.
“Basically our being placed on list is because of our declining fund balance. We have to cut expenditures.”

The budget process for the 2005-2006 school year has begun, he said. “We’re starting to get requests and budget proposals from the departments.

Part of what we need to do is wait for the bills in front of the legislature that will impact the budget on funding and expenditures. We’re waiting to see how they progress before we begin heavy number crunching. “

He said staffing allocation and enrollment were important factors as well. “So much of the budget is salary and fringe benefits.”

He said the district had thought it had a larger fund balance until the auditor’s adjustment.

“We thought we had more money until they found an error in a prior year that reduced the fund balance.

He said the bottom line had been affected by two years of declining state revenues, commitments to staff contracts, the need to pay competitive salaries and various mandates.

Superintendents and school board presidents were notified of the fiscal distress status March 3.

The districts will have until April 6 to appeal the designation. The state Board of Education will make the final determinations at the April 11 meeting.

The district was one of only 11 statewide identified as in financial distress. The other districts were Altheimer Unified School District, Dierks, Dollarway, Eudora, Flippin, Helena – West Helena, Lead Hill, Midland, Waldo and Western Yell County School District.