The number of Colorado school districts showing financial risk factors has dropped, according to an audit presented to the Legislative Audit Committee Monday.
The Fiscal Health Analysis of Colorado School Districts report, produced annually by the state auditor, found that 26 of the state’s 178 districts had at least one warning indicator. The report covered the three-year period ending June 30, 2010.
There were 49 districts with one or more indicators for the three years ending June 30, 2009, and 43 for the previous three-year time frame.
This year’s report found 35 total indicators, compared to 68 in last year’s report and 61 the year before.
The report reviews financial fitness and don’t directly deal with budget and program cuts prompted in recent years by reductions in state and local tax support of schools. But, in some cases, reduced funding has prompted districts to draw down reserves to soften the blow of cuts.
Last year’s report – and then-Assistant Education Commissioner Vody Herrmann – warned that increasing budget pressures might force districts to dig deeper into reserves, possibly triggering one of the warning indicators. That fear didn’t seem to be borne out by the latest report.
Given continuing revenue declines, “I’m surprised that we have not seen more districts with warning indicators,” said committee chair Sen. Lois Tochtrop, D-Thornton.
The six indicators
- General fund liabilities exceed assets
- Debt payments exceed the revenue dedicated to repayment
- General fund ending balance would cover less than a week’s operating expenses
- Declines in reserves
- Previous deficits being paid off by current revenues
- Declines in general fund balance
Read the full report (PDF). See Appendix D for financial statistics on all 178 districts.
Of the 26 districts flagged in this year’s report, 20 had one warning indicator, five had two and only one – Hoehne, a rural district east of Trinidad – had three indicators.
All the indicators were in three areas, debt burden, operating margin and change in fund balance. In several cases, indicators were triggered by districts deliberately spending down reserves to supplement operating revenue.
The five districts with two indicators were Buena Vista, Jefferson County, La Veta, Otis and Ouray. Jeffco officials told auditors they have spent down reserves as part of a plan to soften budget cuts. Other districts did the same thing or spent down reserves for capital projects.
None of the five districts have been put on financial accreditation watch by the Department of Education, and no corrective action plan is being required.
New Hoehne Superintendent Christine Barela attended the meeting and said the district, which expects 355 students this year, has taken budget-cutting steps and is seeking a loan from CDE. The report noted that $211,000 in property taxes due to the district is uncollected because of the property owner’s bankruptcy.
This is the third year that the fiscal health analysis has been done. The auditor’s office uses the three-year rolling data to spotlight trends, and the report doesn’t necessarily catch current problems or reflect recent corrective actions by districts. CDE does review individual district finances annually for accreditation purposes.
• See this EdNews story about 2010 fiscal health analysis of districts and this article about the 2009 report.