Two Payson school board members bravely charged the windmill of the district’s financial reports, but ended mostly sprawled in the mud, studying the clouds.
Board president Joanne Conlin and member Jolynn Schinstock had asked the administration to set aside an untouchable reserve and convert the monthly financial reports into something they could follow.
But after a lengthy discussion, Conlin failed to convince the rest of the board to set up a $300,000 board-controlled contingency fund.
And after another long back and forth, Conlin won approval of a new reporting format to track the contingency fund and spending by department — but the new forms remain dense enough to give an accountant a headache.
The concern about the district’s currently healthy contingency fund has been a running theme in board meetings, as Conlin has doggedly sharpened her pencil and gone squinty eyed every time the administration takes money out of the contingency fund. The current rules allow administrators to spend up to $25,000 for a single item or contract out of the contingency fund without prior board approval.
Conlin for months has been pushing to protect the contingency fund for genuine emergencies, especially now that the district has finally used up the million dollars it got from selling Frontier Elementary School. Ever since, the district has struggled with overcrowding at Payson Elementary School as it gradually spent down the slush fund from the sale for small capital projects on the remaining school sites.
The district has nearly $500,000 in a reserve fund for capital projects plus just over $900,000 in an operations reserve fund — although the amount in the fund varies every time you run the spread sheet.
So the discussion started with a proposal to move about $300,000 into a “super reserve fund” only the board could spend. The district would earmark another $325,000 from the existing contingency to cover an expected drop in state support due to pandemic enrollment declines. The other third would remain in the existing fund, which administrators could use to cover unanticipated, day-to-day expenses.
But the discussion started with confusion about how much was in the fund at the moment — $910,000 in one report, $936,000 in another.
“By the time the budget was loaded in the system for positions and everything,” said Chief Financial Officer Kathie Manning, “we had hired people at different levels and different salaries than what was projected. Almost all of these transitions are in and out of debit and credit. There’s going to be lots of movement, especially at the beginning of the year, in contingency.”
“So the $26,000 is adjusting salaries?” said Conlin.
“I would have to look,” said Manning. “A lot of adjustments happened before we got to this point.”
So Conlin suggested creating a separate board reserve, with money transferred out of the existing contingency fund. The district has a capital and operating contingency fund of about $1.5 million. That’s better than the district has managed in years, but it’s still only about 8% of the overall $17 million budget.
Board member Shelia DeSchaaf was skeptical. “What are we trying to accomplish by dividing it up? We get a report at every meeting. I feel like that’s an easier way to get from Point A to Point B.”
Schinstock supported Conlin. “I think it’s like a joint checking account with your husband. He’s spending it and you’re spending it and then you look and say, ‘oh my God — we’re down to $100.’”
Superintendent Linda Gibson jumped in. “But there aren’t two people spending it. I spend it. It’s more like I spend it all, but he gets to see what I spend it on. The board isn’t spending it — we’re bringing it to you and what we need to do with it.”
“I know we don’t physically spend the money,” said Schinstock, “but we give approval to spend the money. I like to make sure there’s a really good savings account to fall back on if something catastrophic was to happen.”
“But we’ve never even had this healthy a contingency before,” pointed out Manning. “We can do it. We can handle it any way you want to handle it. I just want to make sure this is what you want.”
“What items were inappropriate?” asked DeSchaaf.
“Nothing,” said Schinstock. “But it’s a balancing act. We want to make sure we never go below a certain level. I’m not saying anything was ever done inappropriately.”
“This is all the money we have left,” said Conlin. “We don’t want to just go along and then whoosh, there’s no more money. The money from the sale of the school is gone — there isn’t anything left. We need to hold things at bay so there’s a true reserve when there really is a crisis.”
Conlin’s motion to split up the contingency fund died for lack of a second.
She proved only a little more successful in winning approval of a new format for the monthly financial report, which includes tracking the contingency fund.
Conlin and Schinstock wanted a format that would make it easier to figure out where the district’s money was actually going, whether the spending was over or under budget and where the contingency stands. Gibson presented three proposed formats, all of them head-scratchers and each offering different levels of detail. Conlin and Schinstock liked different things in each of the three formats – but Gibson was hoping they’d pick one or the other.
Manning pointed out that the budget includes state-controlled accounts, cash accounts, encumbrances, contingencies in most budget categories, site funds, federal funds and a welter of other categories. She shifts money from one fund to another throughout the years, like a juggler keeping chain saws in the air.
“I have questions. I want to see the budget that we approved in the beginning. I don’t know if your intention is to show the budget or the budget as it changes.”
“But it always equals the total you approved in the beginning,” replied Manning. “The only difference is the transfer out for energy savings. If you’re talking about the state budget, it does not include the transfer out – but it’s on a separate line. Is that what you’re talking about?”
The discussion provoked a series of “who’s on first” moments as Conlin and Schinstock took another run at penetrating the mysteries of the financial reporting forms.
Underwood finally brought the semi-circular discussion to a close, suggesting “I think that you guys should meet with Kathie and let her show you one-on-one what you want us to see and then come back to us.”
“We did that,” noted Manning. “And that’s how we got to this.”
Ultimately, as the four-hour meeting continued, the board voted to get the simplified report each month — including the percentage of the total budget spent in each category. The board will also get the more complicated report in the existing format every quarter.As it happens, the convoluted discussion was followed by a proposal to add a $60,000 student achievement teacher to Payson Elementary School.
“Where’s that money going to come from?” asked Conlin.
Gibson and Manning exchanged looks.
“We were going to move it from contingency,” said Manning, but instead she said they would figure out how to shift the money from other operations funds.