Wednesday, Nov. 16, 2011 | 10:02 p.m.
The Clark County School District’s annual audit for fiscal year 2011 found no major accounting problems, but showed continued financial stresses stemming from the severe economic downturn.
Total revenues fell by 4 percent, or $113 million, during the fiscal year ending June 30, 2011, according to the independent audit report accepted by the School Board on Wednesday. The auditor Kafoury, Armstrong and Co. attributed the decrease to continuing double-digit declines in property tax revenue and local taxes, which make up the majority of the district’s total revenue.
Even as revenues declined, total expenses rose by almost half a percent, or $13 million, despite pay cuts, utility savings and discontinuing year-round elementary schools. Auditors attributed the higher expenditures to five new school openings, increased food and transportation costs and education-related salary increases for teachers.
All in all, the School District spent $88 million more than it received in state and federal funding, resulting in its general fund balance declining by 33 percent, from $145 million to $97 million. The School District pays for its day-to-day operations through its general fund.
Last school year, the School District finished one of the largest school construction programs in the nation through issuing municipal bonds. This week, the district’s bond oversight committee will consider issuing more bonds to maintain and construct more schools, alleviating overcrowding at schools. However, due to the economic downturn, the District now has negative ratings with the three major credit rating groups — Moody’s, Fitch and Standard and Poor — which may complicate issuing more bonds.
As of June, the School District had about $4 billion in debts, which is below its debt limit of about $10 million. Debts and liabilities were exceeded however by the district’s assets by $2 billion, even though net assets declined by 4 percent.
Looking forward, the School District is scheduled to file a revised budget for fiscal year 2011 to the state by January 1, 2012. The district’s finances department will present the final budget update to the School Board for approval early next month.
The revised budget has not changed much since an amended version was adopted over the summer. Although student enrollment declined slightly this school year, the district’s per pupil funding remained at last year’s student enrollment figures under a one-year “hold harmless” provision.
To maintain current school-funding levels, next year’s student enrollment would have to increase by more than 1,600 students, according to the district’s preliminary budget projections. That might be unlikely, as student enrollment has stabilized since 2009 after more than a decade of rapid population growth in Clark County.
The budget situation for the upcoming year is uncertain. However, if recent years’ trends hold true, revenues may decline again as property values head south, student enrollment plateaus and low interest rates hampers investments.
Expenses may rise as well. Following a consultant’s recommendations, the district is contemplating upgrading its decade-old student information and human resources systems, which is expected to cost tens of millions of dollars.
However, since a budget is a snapshot of an organization’s fiscal health at a point in time, the district is not making any future assumptions yet, according to Jeff Weiler, the district’s chief financial officer.
“There are so many variables still outstanding next year,” he said.