District Response: State Auditor – Fiscal Health Analysis

District Response to the Office of the State Auditor regarding Fiscal Health Analysis Aug 2009

Lewis-Palmer #38 Response: The district indicated that the underlying cause of the negative indicators was a desire by the local board prior to the 2006-2007 school year to spend down fund balances that were growing at a rapid pace due to growth in student population. Unfortunately, expenditures of fund balance were made for staff increases, resulting in an ongoing expense. The district had a $1.7 million dollar deficit for Fiscal Year 2007. After years of fund balance growth, the board had a difficult time with the fact that slowing enrollment and too many staff members were causing increased deficit spending. The current board and district administration have now taken steps to correct the negative indicators. For example, midway through Fiscal Year 2008, cuts were implemented, positions were frozen, and the board adopted a five-year plan. In Fiscal Year 2009 the district opened a new high school and placed a mill levy override on the ballot to absorb additional fixed costs associated with it. When the mill levy override failed, the district acted on its alternative plan by cutting approximately $3 million dollars for the Fiscal Year 2010 budget to absorb projected declining enrollment and rescissions and the new school. The board has an official reserve plan to hold 3 percent TABOR reserve, an additional 3 percent reserve, plus a $1 million economic reserve. The district’s Fiscal Year 2010 budget shows a $600,000 increase in fund balance. To view original document with table showing ratios with warning indicators: www.cde.state.co.us/cdefinance/download/pdf/LocGovSchoolFiscalHealthAug2009.pdf