For the second time in three years, the New Westminster school district will be reporting a deficit to the Ministry of Education.
Secretary-treasurer Brian Sommerfeldt presented the school district's audited consolidated financial statements for 2010/11 Tuesday night, and the district will be reporting that it will be running a deficit of $521,237. By law, school boards have to submit a balanced budget.
The deficit comes on the heels of the district reporting an $889,000 deficit incurred during the 2008/09 fiscal year. The district started repaying off that deficit, and, by the end of the 2009/10 fiscal year, that deficit was down to $204,600. That figure was supposed to be fully paid off with this year's budget, but not only was that not done, the district incurred an additional deficit of $316,637. When those last two figures are combined, the district's final deficit comes in at $521,237.
Sommerfeldt said the deficit can be attributed to three major factors that occurred in May and June that were unanticipated by the district.
The district had to pay an additional $223,000 to deal with Bill 33 legislation regarding class sizes, $238,000 for unanticipated teacher sick days and teacher-on-call costs and an additional $100,000 for legal fees related to personnel issues.
That $561,000 hit, which all came in the last two months of the school year, put the district into the red.
"I believe these issues are one-time in nature and not structural," said Sommerfeldt. "This represents only 0.5 per cent of our total budget and while it's preferable to have a surplus, plus-minus one per cent is a razor-thin margin."
Sommerfeldt said that the board now has to notify the Ministry of Education in writing of the deficit, but the ministry has already been notified verbally.
"This is disappointing," said school board chair Michael Ewen. "I think what's been instructive for me is that when an issue comes up, we need to ask if there is an impact on the budget."
Trustee Brent Atkinson said that while trustees share the disappointment of not getting the district's books in order, unanticipated expenses in the final two months of the school year are hard to make up.
"If you're going to amend the budget, you have to do it in February for it to have any meaningful effect," he said. "As much as I'm frustrated, . it's difficult to deal with when you get expenses this late in the (fiscal) year. Once you're past February in the budget cycle, you're stuck with the costs."
Atkinson, who also serves as chief executive officer of the School District No. 40 Business Company, pointed out that the district's deficit would have been north of $1 million if the business company had not contributed $538,308 back to the district. The business company is still in the process of repaying back to the district almost $1 million in startup and operating costs.
Trustee Jim Goring said the district may have to look at setting aside contingency funds to deal with such unanticipated costs, but money set aside for a rainy day fund is money that could also be injected back into classrooms.
The district's budget included revenues of $57.3 million and expenses just under $57.8 million.
As late as May 4, the district was anticipating a status quo budget.
"My message is it's a status quo budget," Sommerfeldt told The Record in May. "We're able to manage within our fund-ing envelope to meet our immediate needs. I've made it clear that if we want to look at enhancements, we will need to look at reallocating funds."
According to Sommerfeldt's May report, the district "will enter the 2011/12 fiscal year with a stable base budget situation.
"The school district has developed a status quo budget that will ensure the needs of students are met, but that does not include any enhancements that would need to be funded by reallocation of resources from other parts of the budget."
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