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City school's finance woes go back to 2007

System's former finance director says she never saw letter

POSTED: June 10, 2008 5:00 a.m.

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Gainesville school superintendent Steven Ballowe said Thursday that the system’s financial woes can be traced to March 2007, when the city government notified the system that property tax collections were $3 million less than projected for the 2006-07 budget year.

But word didn’t travel beyond the former finance officer, who was Angela Adams, he said.

"The city had informed (Adams) in a letter ... but that information never got to the board or the senior staff," said Ballowe, whose district now faces a deficit of $7 million as it prepares to approve the 2008-09 budget.

After Adams left in August for a similar position with the Buford school system, the board hired Janet Allison as the district’s finance director.

Ballowe said Allison found the letter while going through papers and in talking with city finance director Melody Marlowe, who couldn’t be reached for comment.

Adams denied receiving the letter from the city.

"If it came to my desk, I did not read that letter. I never saw such a letter," Adams said Thursday, while declining to comment on other aspects of the city’s financial status.

She added that she recalled no conversations, written or otherwise, with city finance officials about lower-than-projected revenues.

Ballowe said the school board approved the 2007-08 budget, which began July 1, without knowing about the lower tax projection from the city. So, the board projected it would collect at least as much in the new budget year.

And until the lower tax revenue discovery was made in August, the board was operating as if finances were fine. As board member David Syfan said in a public hearing Wednesday, the board thought it had a $900,000 surplus.

And the board had spent about $2.5 million on projects it thought it could afford, including a new band room at Gainesville High School and renovations to the football stadium at City Park, Ballowe said.

Also, the board would have low-balled its revenue projections for this school year. As it is, the district expects another $2 million revenue shortfall this year.

And Ballowe said he wouldn’t have recommended missing an opportunity to capitalize on higher property reassessments. Instead, the board voted to roll back the tax rate last year so that it would collect no windfall from the higher property values.

Ballowe said looking back now, that was a mistake. But school officials believed at the time that, even with the $3 million shortfall, a combination of budget cuts and a midyear budget infusion from the state would "put us in the black."

Then, school officials found accounting errors had occurred, particularly in that money intended for the building fund, and federal programs were wrongfully in the general fund and had to be moved — another $1 million hit to the city finances.

Ballowe went on to say, "The saddest part with the board and administration is not knowing (accurate data), and there was no way to correct (the issue). Also, the board received an audit in June 2007 with no major findings (dealing with) revenue, etc."

The state audits the school system each year, but audits usually focus on one year behind the current fiscal year. An audit of fiscal 2006-07 is under way.

City residents have called for an audit of current expenses, and school officials, including Ballowe, agree that’s the way to go.

"The question is also bound to be there — was there anything illegal done?" Ballowe said. "No. ... We had a bad combination of the economy and projections and accounting errors. It’s more (a case of) shoddy bookkeeping."

School officials froze spending, including further hires. In addition, the board is looking at $4.5 million in cuts, along with the proposed increase in the tax rate to 8.34 mills from 6.96, to start pulling the system into the black.

The board voted on May 19 to approve a few expenses that school officials said were much needed, including new air-conditioning air compressors and costs not covered by insurance in replacing the roof at the Gainesville Learning Academy.

Also, the board voted to spend $4,750 on resodding and irrigating the practice field at Gainesville High School, with May board chairman Sammy Smith asking Keith Vincent, the district’s maintenance and transportation director, to seek out "every potential source and fund" for financial help.

Ballowe said that working against the school system since his arrival in 2001 are tax exemptions and money the state withheld from allocations to school systems, popularly known as austerity cuts.

In this year alone, those amounts cut from overall revenues total about $12 million.



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