Audit shows district $2.1M in hole

 With a $2.1 million budget deficit in fiscal 2007, Lenoir County Schools was forced to use its fund balance to narrow the gap between budgeted and actual funds available to meet the district's needs.

The school district's financial situation was complicated by several factors which included overspending, faulty budget forecasting, and not receiving expected state and federal funds, according to an audit report.

Sitterson and Barker, P. A.'s fiscal year 2007 audit for Lenoir County Schools highlights the district's financial shortcomings and offers several key recommendations which may help solve its problems. Several of the recommendations have already been adopted by Ken Shaw, Lenoir County Schools Finance Director.

"We are getting better at forecasting," Shaw said. "From now on we are only going to budget what revenues are actually coming in."

Shaw acknowledged developing annual school budgets is difficult because the district is not always guaranteed that projected state and federal funds will be available for programs. This was true in 2006-07 when Lenoir County Schools spent $13.7 million on general fund expenditures while receiving just $11.6 million in general fund revenues.

When fiscal year 2007 ended, the school district had a $1.7 million deficit in its general fund balance and a $206,539 deficit in its state public school fund balance, according to the audit report.

Lenoir County Schools' fiscal 2007 overspending problem and budget mismanagement happened on "John Frossard's watch and not mine," Superintendent Terry Cline said.

Former Lenoir County School Superintendent John Frossard resigned as superintendent in December 2006. Cline became interim school superintendent in January 2007 and was later named the district's full-time superintendent.

Cline said fiscal 2007 financial statements showed expenditures exceeded revenue because of increased child nutrition program costs, additional funds were needed to help pay for employee overstaffing, and budgets were not appropriately reconciled, which could have saved money.

Lenoir County Schools began to use its fund balance more aggressively in 2005 to balance out federal, state, and local funding deficits and rising costs. The school district's fund balance was $4.1 million in 2005 but dropped to $500,000 this year, Cline said.

"That's a problem," Cline said. Cline said the district plans to implement financial measures next year to help bring down costs and actual revenue will only be used when developing future school budgets.

In 2006, the school district changed its budget procedures to provide the school board with a better financial picture. "The trend was to over-estimate the budget so we would never go over the budget, but the board felt it was misleading," Cline said.

Cline said the school district plans to cut several non-instructional positions during the next fiscal year which include cuts for secretaries, custodians, and assistant principals at the middle and high-school levels. The cuts should improve the district's financial position, he said.

School board members Connie Mintz, Garland Nobles Jr., and Darrell Parrish declined to comment on the audit report.

Chris Lavender can be reached at (252) 559-1078 or clavender@freedomenc.com.