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School review turns up $3-million
By ROBERT KING, Times Staff Writer BROOKSVILLE -- Since she arrived a year and a half ago, Carol MacLeod has been trying to straighten out the school district's messy financial picture. Now it appears she has struck gold. After an extensive review of the books, MacLeod says she has discovered a $3.3-million surplus in a school district account that appears to have gone unnoticed since 1995. MacLeod said she found the money in a "sinking" fund used to repay school construction loans that date back to 1984, when the district was trying to cope with explosive growth. Apparently, school officials struggled to repay the loans from the tax money being set aside for debts. To compensate, they began diverting money from a stream of cash that typically covers school repairs and maintenance projects. MacLeod said those payments, made from 1985 to 1995, more than covered the debt payments. In fact, by June 1995, there was a $3.3-million surplus in the debt payment account. When she became the school district's finance director in December 2000, MacLeod entered a school district in financial turmoil. No one knew how much money the district had for day-to-day operations, much less longer term accounts. Once the immediate crisis subsided, MacLeod began reviewing everything. This past March, she noticed something amiss about the sinking fund. "When I looked at it and saw this rather large dollar amount I thought, "I wonder what that is?' " MacLeod said. "I realized that there was money in there that did not need to be there." For a school district that state auditors have criticized two years running for being in financial decline, the discovery of $3.3-million is akin to manna from heaven. Though the money came from taxes typically aimed at maintenance and repair projects, MacLeod said the cash could be pumped into the district's much-depleted operating budget. On that point, she sought a legal opinion from state Attorney General Bob Butterworth, who responded Tuesday that it must be used as the law demanded when the money was first generated. MacLeod says the $3.3-million was generated before 1995, when education spending rules were looser. In other words, the money could be used now for operating expenses. MacLeod said the money will wipe out $2-million in debts that remain from the district's disastrous self-funded health insurance plan. And the remaining $1.3-million could enlarge a rainy day fund that has grown dangerously thin in recent years. "Personally, I think it couldn't have come at a better time," said School Board member Robert Wiggins, who is up for re-election this fall. MacLeod's "discovery" raises some obvious questions. As to whether there are other such windfalls to come, MacLeod says emphatically "no." She says she has reviewed everything now, and this is the only surprise she found. As to whether county residents had to support a heavier tax burden than they otherwise might have, MacLeod says "no." In fact, she said the School Board didn't levy as much property taxes for school construction as it could have between 1985 and 1995 because construction was being subsidized by the maintenance budget. As to whether the money generated any interest during its dormancy, MacLeod said it brought in the same revenue as the district's other accounts. And why didn't MacLeod notice the surplus when she reviewed the school district's books while working for the state auditor general? MacLeod said her job was to make sure the numbers were in the right place. To an extent, she says, she assumed the district had a purpose for putting the money where it was. She wouldn't venture a guess about why the money was never spent before. Neither would she offer theories on how it went unnoticed for so long. School Board members contacted Wednesday said they were unaware of the money's availability until they were briefed about MacLeod's finding last month. Jim Malcolm, who has been on the board since 1992, said he recalls putting money into the sinking fund shortly after he was first elected. But he says he never knew of a surplus. He said high turnover in the finance office, where there have been six directors in a decade, could account for the oversight. Though it is cause for concern, Malcolm said, he much prefers to look at the brighter side of an unanticipated "windfall." "Hey, I'll take the embarrassment of her going back and finding a surplus. I'd much rather you be calling me about that, than you calling and telling me we owe $3-million. That would give me apoplexy," Malcolm said. "I will take buried cash in the football field to the tune of $3-million any day." Board member John Druzbick said he is concerned the money sat idle so long. But he said it wasn't spent foolishly. And there are two ways to look at the discovery. "You can say they don't know what they are doing or you can say they've got a finance director who knows what she's doing," Druzbick said. He prefers to praise the finance director. To be certain, the money that has accumulated could have been put to other uses. To begin with, the cash originally came from the maintenance and repair budget. It's possible certain projects were delayed or deleted. Beyond that, the money was dormant for seven years that saw budget cuts, the health insurance crisis and yearly contract negotiations where teachers and other workers were inevitably told "that's all the money there is." "It could have been used many times over," said teachers union president Cynthia Moore, who expressed shock at news of the surplus. "What else is hidden?" Superintendent Wendy Tellone, who took office in September, said she believes everything under the district's tent is now accounted for, thanks to MacLeod. "She's done an excellent job of scrutinizing the budget and researching it," Tellone said. "I think we are finally finished with it."
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From today's Hernando Times Editorial Letters |
