Cash Flow

Too much month left at the end of the money? Find yourself borrowing from one account to make a payment in another? You’re not alone. It happens in many places. Business, households and schools.
Only five years ago finances were so tight that shuffling the money among accounts began in February to cover the payroll. If the shuffling had not taken place there would not have been enough in the payroll account to honor the paychecks. Not a good position.
At the end of the 2003 year there was a carryover of $350,011. Which sounds like a lot of money until you consider that it was only 1.54% of the following year’s expenses. More shuffling needed to pay the bills until fresh money began coming in.
To put that in perspective, if your annual salary before taxes was $40,000 in 2003, at the end of the year you would have had only $608 in the bank to pay the bills until next month’s check arrived. The major difference being that you would know what next month’s check was to be. And when it would arrive. In school finances, those are both uncertain and varying items. Amount and time.
Going back a few years it was even more challenging. At the end of school year 1998, a mere 10 years ago, the carry over balance was $164,528. A mere .84% of the following year’s expenses. And yes, money had to be borrowed to meet payroll.
Previous boards challenged the administration to achieve a more comfortable and financially sound year-end balance. From the .84% carryover of 1998 to today’s projected carry over of 10.96% much progress has been made. But not without changes.
Local readers need not be reminded of the hard decisions that were made and unpopular actions taken to more closely match expenses to income while taking into account falling enrollment. Neighboring districts are making similar difficult choices currently.
We are not alone. Nor is our area unique in its problems. I met and visited with Dr. Joel Herbst last weekend. He is an area manager with the Broward School District in Florida. He is responsible for 69 buildings and 72,000 students. Total budget for the district, $5.2 billion. The size of a Fortune 500 company.
As we discussed our challenges we found they are very similar. Of course his have more digits but the concepts are the same. Rising costs. Steady to falling income. The need to be fiscally responsible while at the same time achieving academic progress.
One thing we can be thankful for; we do not have a drug infested gang riddled culture like the high school where Dr. Herbst was Principal before advancing to his current position. We have our problems but they pale by comparison.
Florida attempted to address their education challenges by constitutional amendment. Class size was the issue and voters approved a reduction. After spending $10 billion gearing up to make the change they face the reality that schools cannot afford the stipulated numbers or timeline. They are on hold.
The decisions and actions that brought us from 1998, having to borrow money in February to meet the payroll; to having enough money at the end of June 2008 to meet the payroll in July were good ones. We must stay the course and continue to operate with sound fiscal policy.
Readers might find Florida’s class size issue interesting. Search the phrase: Florida education class size. Dr. Herbst’s bio can also be found on the web.
This and other articles in the series are available at: http://mariettacityschoolboard.blogspot.com