The Red Clay Consolidated School District will not need to borrow money from the state this year thanks to a higher than anticipated cash balance left at the end of the 2008 fiscal year.
Red Clay needed a bridge loan from the state the last two years in order to make payroll. A bridge loan, also called a float, is repaid as soon as the district receives the bulk of its local tax revenue in October.
“By the skin of our chinny-chin-chin we will make it to October,” said Chief Financial Officer Jill Floore at the Red Clay Board of Education meeting held Sept. 17 at Warner Elementary School.
Floore was presenting the district’s financial position report that shows $26 million in projected salaries and other expenses from Jul. 1 to Oct.15 and $27.6 million in projected income. That will leave the district with $1.5 million around the time most school taxes come in.
“That is one tremendous piece of news,” Board President Irwin J. Becnel Jr. said. The board unanimously approved the report, required by state law.
The board also unanimously approved a 2009 preliminary operating budget of $167 million in revenues, a 7.9 percent increase over last year, and $160.6 million in expenditures, a 3.9 percent increase, Floore said. She anticipates a $6.5 million carryover at the end of the 2009 fiscal year, meaning the district will be in even better shape.
“The carry forward balance is what we have to have on hand in order to make payroll July, August, September and October,” Floore said.
Now that the district has demonstrated it will not need to rely on extra state assistance, it could be close to seeing the official departure of the state Financial Recovery Team assigned to Red Clay in May, 2007 when it became clear the district would need to borrow money to meet payroll for the second straight year. By August of that year, the state team had assumed control over expenditures and hiring decisions.
The team has been relatively inactive. Red Clay Superintendent Robert J. Andrzejewski said the district made hiring and expenditure decisions on its own this school year. The last Financial Recovery Team member to attend one of the Red Clay Community Financial Review Committee’s monthly meetings was Emily Falcon, of the Delaware Office of Management and Budget, on March 3, according to committee minutes.
Red Clay is meeting benchmarks as identified in its recovery plan, said Ron Gough, spokesman for the Delaware Department of Education. But it still meets criteria for review in accordance with state law.
“While the FRT is currently not active within the district, we are pleased with their financial progress and continue to monitor the district’s monthly financial reporting,” Gough said. “This is a critical time of year for a district until such time they receive the bulk of their local fund receipts the end of October. It is at that time the FRT will be able to better evaluate the financial expectations as projected in the district’s August 31, 2008 financial position report,” he said.
Floore had originally anticipated a $260,483 carryover of local funds when the 2008 fiscal year ended Jun. 30, but it ended up with a $2.5 million local carryover because of a conservative budget, she said. The local funds coupled with $2.2 million in leftover state revenue left Red Clay with a $4.8 million balance to start the 2009 fiscal year.
“We’re in great shape this year. We’ve gotten further faster because of the collective management of our resources,” Floore said. “But what’s around the corner is frightening. What we went through last year is going to happen again. The state is in no better shape with the real estate transfer tax.”
The board anticipates approving a final budget in December, well after the Sept. 30 enrollment count.
