Despite weeks of wrestling with numbers, members of the Gainesville school board determined Saturday that they will not be able to finalize a fiscal year 2009 budget by the time the new budget year begins Tuesday.

School system accountants and board members have been scrambling to meet the state Department of Education's June 30 deadline for adopting a final budget.

The board likely will finalize its budget for the upcoming fiscal year by July 31, said Janet Allison, director of finance for the district. The school district operates on a fiscal year that runs from July 1 to June 30.

Willie Mitchell, chairman of the school board, said the board will review Superintendent Steven Ballowe's job performance at either its Monday meeting or at a meeting on July 7.

In May, Allison told the board that the district will face a deficit of about $6.5 million at the end of the current fiscal year, which ends Monday.

Since May, the board has been working to finalize a tentative $61.6 million budget for next year that would cut about $1.4 million off the deficit. School board members said they want to cut more money from the budget to help pay off the deficit sooner.

Allison said she and her staff need time to evaluate potential budget cuts, and the board needs time to evaluate the effects of proposed cuts on teachers and students before they can be finalized.

"I need to meet with the board because it's they who make the decisions," Allison said. "It's just a situation where they don't have everything they need right now to cut. ... It's just not easy to do at all."
Allison said the board will operate using a monthly budgeting process until a final budget is adopted.

Sammy Smith, a Gainesville city school board member, said instead of a final budget, the board will adopt a "continuing resolution" Monday that allows the board to operate on a month-to-month financial basis.

"We were required to pass the budget by June 30 by law, but we've never had data to get us there," he said.

Allison said Saturday that given her staff of four full-time accountants and one part-time accountant, she feels the July deadline is a reasonable one.

School board member David Syfan said the board will not pass a budget for the upcoming year until they all feel comfortable with the numbers.

"Our goal is July 31, but it's going to be conditioned on our budget feeling correct," Syfan said. "If we're not comfortable with our budget, then we may go another month."

As far as the board determined Saturday, there are no state-imposed penalties to a late budget adoption other than the requirement to submit monthly budgets to the state by the end of each month identifying revenues and expenditures.

Allison said grievous accounting errors made in the 2008 fiscal year budget have resulted in major hiccups in devising a 2009 fiscal year budget. She said $4 million of school nutrition and federal program funds were not written into the 2008 budget.

"If it had been included, you would have noticed right off the revenue was $55 million and expenditures were $59 million," Allison told the school board. "It was a budgeting problem and not an expenditure or money missing. ... It would have led folks to believe that they had money to spend. Basically, the general fund was overbudgeted."

She said as far as she can tell at this point in her painstaking task of correcting the flaws, the school system didn't spend all of that $4 million.

Allison said the peculiar bottom line in the system's bank account wasn't immediately obvious because the general account was tied to other school accounts, and money was automatically swept in from other accounts, such as the SPLOST account, to cover the shortfall. Allison said she untied accounts from one another to prevent similar mishaps from occurring again. She said funds removed from the SPLOST account since have been replaced.

In addition, Allison said there were some accounting mistakes made when the board attempted to cut $2.8 million from the fiscal year 2008 budget last fall when the board realized the school system was not likely to meet its revenue projections for the year.

"The board thought they had $2.8 million to cut in the fall, but about $800,000 of that was not actually in the general fund," Allison said. "That $800,000 wasn't in the general fund to cut. I think some of it was spent on the field house at Gainesville High School."

Allison said she doesn't know exactly how the accounting mistakes were made. She noticed them after she was hired as a part-time accountant in August last year.

"It came before I came along," she said. "We've done an awful lot of work to fix it. We've got to move forward here. I've tried to make sure that doesn't happen again by budgeting by fund."

She said there are now more than 16,000 different funds for the school system. Ballowe pointed out to the school board Saturday that if the board had not rolled back the millage rate last October from 7.83 mills to 6.96 mills, the current deficit would be $2.9 million rather than $6.5 million. Earlier this month, Ballowe proposed a new millage rate of 7.96 mills.

If a 7.96 millage rate is adopted, the owner of a $183,800 home, the median home price in Gainesville, would pay $183 in additional school tax this year.