HUNTSVILLE, Ala. - In a budget presentation at a meeting on Tuesday, Huntsville City Schools leaders learned the proposed budget for the upcoming fiscal year projects a gain, but funds still fall below the month's operating reserve that the district is required to keep in its account.
Huntsville City Schools were recently made aware of a "not good" finance report from Bob Hagood, Deputy Superintendent of Finance. He said at the time that it turns out the district had less money than it thought.
Tuesday, he presented the proposed budget for 2018-2019 that he said shows a $1.8 million dollar increase in fund balance. It's something Hagood says is a positive step because for the first time in several years, the district is not presented with a "deficit" budget where the expenditures outweigh revenue.
"This is a very positive thing for the district. Over the past few years, our financial statements have been in a deficit situation where our expenditures exceed our revenues. This is the first time in several years where our revenues exceed our expenditures so it is very positive for the district," Hagood said.
Hagood called 2019's budget the beginning of the recovery for the general fund.
But there is still a lot to do. Hagood projects the district will start the upcoming fiscal year with $13,375,084.28. That's nearly $5 million below the required reserve. At the end of the year, they'll end at $15,272,292.30 but that remains just below $3 million less than the operating reserve the district needs.
Many cuts have already happened. These are non-payroll cuts, Hagood said, out of multiple departments. Technology and contracts have been cut, along with jobs in the administration building through attrition.
"We've been working tirelessly behind the scenes to cut everything we possibly can. We look at contracts, we look at positions we no longer need," Hagood explained. "What came out of tonight's meeting is it shows we're doing this."
This budget does include the teacher pay raises, local and state, promised earlier this year.
"Nobody goes into teaching to get rich, but a lot of teachers take second jobs. I've done it three times," said Pat Miller, Grissom High School Psychology teacher. "I'm encouraged."
Adam Keller, AEA UniServ District 2 Director, said, "Let me thank you and the board and Mrs. Finley for including those pay raises in this budget. It was a promise made to the teachers and we appreciate that promise being upheld."
What the District Will Do
But the district needs to increase its gains and get above the required reserve amount.
To do that, Superintendent Christie Finley said they'll be doing several things.
"We want to make sure we have the least impact on the classroom. We have to look at those non-payroll expenditures. We've done that. I think Mr. Hagood along with the department chair in the district office made over $6 million cuts in non-payroll expenditures. And I think it is still something we need to continue to look at to kind of shore up where our local units are, and our general fund units."
Hagood said they will start looking at staffing "much earlier" than they usually do to prepare for the 2020 budget.
They need to continue recovering the general fund balance. Part of that is balancing things through attrition. "Any position eliminated during the fiscal year will result in additional gains in the fund balance," Hagood wrote on a slide.
Board member Pam Hill suggested reviewing the stipends and supplements awarded to teachers who help out with extracurricular activities.
"It appears to be an enormous amount," she said.
Hagood agreed that would be good to review.
Huntsville City Schools will also be reviewing programs it currently provides to make sure they are cost-effective.
The district will likely not be conducting its own forensic audit, because Hagood said that would be very expensive and he is not sure the district should spend the amount of money on it.
The district must also continue to talk with the state for a plan since it is dipping below its reserve. The state needs to see there is a plan in place, Hagood said, and they have been in contact on the issue. Hagood added that he has submitted his plan to the superintendent for a review.
What About Job Cuts?
Hagood said one way to recover the general fund balance is to look at cutting locally funded units.
He wrote in a slide of his presentation that, "It is imperative that we eliminate a significant number of locally funded units. During this process, we will look at every option and will have the least impact on the classroom."
Finley said the administration will be communicating with principals, as they tighten their own belts.
She could not calm fears, but some local units must go.
"We haven't gotten here overnight," Finley said. "At this point, we have to take those measures and it doesn't need to be drastic. We don't want anyone to fear that they are going to lose their job. But we also have some people who retire So we can take a locally funded unit, and if the person who retired is a state-funded unit we can place that cost center in that state-funded unit. So through attrition, we can actually balance some of the numbers we have. So that's the intent we want to have happen. We have to be very mindful that these are people's jobs."
Finley added that she is going to do everything to ensure teachers can feel confident about their jobs, but she can't rule anything out.
"My guarantee is to protect the classroom as much as possible," she explained.
Elisa Ferrell, Board President, said the next step is for Hagood to make some more edits to the budget and come back for a second hearing next week.
"He will present an updated version to us. On the 13th, we will review it again and we will have a board meeting on the same day to vote on whether or not to accept the budget," she said.
The state needs to have the district's budget by September 17th.
Ferrell said she regrets that the district is still under reserve, but while the budget discussion continues she wants to see further steps taken.
"We want to take care of our teachers, but at the same time we need to make sure we get back into good financial standing," she said. "I've talked to Mr. Hagood about starting like a CD or a money market and protecting that reserve to move it out of the general fund, so it's not easily accessible. So the board will have better access and more knowledge when it is accessed." She added, "Until then there are things we need to do to make sure this doesn't happen again."
In the meantime, the cuts the district has already done should not cause problems, Superintendent Finley said.
"The cuts that were made in terms of non-payroll expenditures should not, and will not, have an impact on the instructional piece in the classroom," she explained.
Michelle Watkins, board member, said she wants to see parents and teachers engaged in the process and holding the district, and the board, accountable.
"This is where you start calling your board members when you know something is wrong," she suggested.