Sumter School District could be lifted from fiscal emergency this year

BY BRUCE MILLS
bruce@theitem.com
Posted 8/11/19

After a monthly report at last week's school board Finance Committee meeting projects Sumter School District to end its most recent fiscal year with $11.5 million in its general fund, it appears the district will soon be lifted from its fiscal …

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Sumter School District could be lifted from fiscal emergency this year

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After a monthly report at last week's school board Finance Committee meeting projects Sumter School District to end its most recent fiscal year with $11.5 million in its general fund, it appears the district will soon be lifted from its fiscal emergency declaration. The only question is exactly when that may occur.

District Chief Financial Officer Jennifer Miller and officials with the state Department of Education spoke Friday on the matter with The Sumter Item.

The district has basically been on some level of a state department financial watch list since 2017, with the passage of a state fiscal practices law requiring all school districts to have a minimum of one month's operating expenditures in their general fund balance. For a district, that translates to having at least 8.33% of its annual budget on hand in the general fund at any given time.

One month's operating expenditures for Sumter School District is currently about $10.5 million, and the projected $11.5 million in the fund balance as of June 30, 2019, would allow the district to be removed from any fiscal declaration list.

Miller and state department officials said the district's official audit report in December by Mauldin and Jenkins LLC will present the final fiscal 2019 totals and provide the verification.

School district budgets are so large that all invoices through June 30 of a fiscal year aren't necessarily reconciled and accounted for until August and even September at times, Miller said. In October, she said she will have a firmer reading on where the general fund stands as of June 30, 2019, she said. Most districts have their official audit reports presented by outside auditors in December.

At the Aug. 1 committee meeting, Miller's reports showed the district ending fiscal 2019 with an estimated change in fund balance - or net income - of $2.9 million. After having $8.6 million in its general fund at the end of fiscal 2018, that surplus would lift the general fund to the $11.5 million figure.

If the district is above its one-month threshold requirement with the audit and doesn't have any findings of significance and showing a lack of internal financial controls, then the state Department would lift the declaration, according to Laura Showe of the state Department of Education's finance office.

Official correspondence from the department to the district would likely happen in about February, Miller said.

The district would be removed from the declaration either at that time or with the beginning of next fiscal year on July 1, 2020, said state Department of Education spokesman Ryan Brown on Friday. He said he wasn't exactly sure because the legislation is relatively new, and the Sumter district is one of the few that the state agency has placed on fiscal emergency.

Miller said it was her goal to get above the one-month threshold in fiscal '19. According to the new state law, the district had until the end of the current fiscal year that just started on July 1 - June 30, 2020 - to reach the general fund balance requirement.

Miller emphasized on Friday that the one-month threshold, or 8.33% of total budgeted expenditures, is the "bare minimum," and she plans to advise the school board to keep pushing upward.

"The one-month operating expenditures is the bare minimum fund balance that we have to have," Miller said, "and I will highly encourage the board to keep striving to have more. A more realistic figure would be 15%, and that would actually help our bond ratings at that point."

The first revelation of financial difficulties in the district occurred in the official fiscal 2016 audit report, presented in December of that year. That report revealed the district had overspent its budget by $6.2 million that year, draining its fund balance to $106,449. The district had operated for the better part of two years without a CFO.