Franklin schools’ 2015-16 expenses may have exceeded revenue by $1.6 million [Updated]

Published 3:22 pm Tuesday, November 1, 2016

The Virginia Department of Education’s 2015-16 Superintendent’s Verification Report for Franklin City Public Schools appears to show that the school division’s expenditures for Fiscal Year 2015-16 exceeded their total revenue by approximately $1.6 million.

According to VDOE Deputy Superintendent Kent Dickey, who prepared the verification report based on the division’s submitted data, and mailed it back to Franklin City Public Schools for review and signatures, the division reported $16,309,556.76 in total revenues and $17,909,550 in expenditures.

However, according to City Councilman Benny Burgess, the numbers reported may not tell the whole story, especially if the roughly $11.6 million beginning balance includes carryover funds from the previous year. Burgess explained that if the school division spent funds this fiscal year that it had acquired via a grant or other source during the previous fiscal year, and if those funds were not taken into consideration when computing the current year’s revenue versus expenses, the result may be the appearance of a larger deficit than what actually exists.

“That’s why we’re waiting for the results of our expanded audit,” Burgess said. “My understanding in talking to the city manager and the mayor that the number [for the current deficit] is still $481,000. They did not have carryover funds to cover that.”

City Manager Randy Martin agreed with Burgess that the reported opening balance likely includes funding separate from the school’s operating budget such as cafeteria funds, pointing out that the school division’s current budget deficit and this new report are two separate issues.

“That beginning balance does not correlate directly with their operating budget; they’re apples and oranges,” Martin said.

“The one thing that was alarming to me was that report is based on the school’s report to the state, which was dated Oct. 17, and that report, as I understand it, should have been sent to the Department of Education no later than Sept. 30,” Franklin Mayor Frank Rabil said. “The fact that we sent it on Oct. 17 says that we were late.”

The report also included a breakdown of expenditures, about 20 of which included warnings from the Department of Education flagging the items as being outside the expected range of values and asking the division superintendent to verify his numbers. Most of the warnings focused on salaries being out of range, another highlighted the fact that the division’s Federal per-pupil amount varies significantly from the prior year, and another reminded the superintendent’s office that no records for subcontracts or sub-awards had been entered.

According to Charles Pyle, the director of communications for the Virginia Department of Education, these flags are often triggered when a long-time employee retires and is replaced by someone at a lower level of compensation, or, conversely, when there is a retirement and a higher level of compensation is required to fill the vacancy because of market forces.

School board member Bob Holt said he didn’t think the $1.6 million figure was correct.

When asked for comments on the report, Division Superintendent Dr. Willie J. Bell released the following statement via email:

“The Annual School Report for Franklin City Public Schools Operating Fund started with a Beginning of Year Balance of $11,651,203.49 for FY 2016. This amount ($11,651,203.49) is the carryover amount from the FY 2015 school year,” Bell said. “The total revenues of ($16,309,556.76) received FY 2016 is added to the beginning of year balance ($11,651,203.49) equaling the amount of $27,960,760.25. The amount $27,960,760.25 less total expenditures of $17,909,550 gives Franklin City Public Schools an End of Year Carryover Balance of $10,051,210.25 for the FY 2017 School Year. The variance on the Annual School Report of $1,599,993.24 is the difference between the FY 2015 End of Year Carryover Balance ($11,651,203.49) and the FY 2016 End of Year Carryover Balance ($10,051,210.25). In summary, Franklin City Public Schools Beginning of Year School Operating Balance is $10,051,210.25 for FY 2017.”