11/03/2014 – Monthly Financial Report

September 2014 Financial Report

11/03/2014 Work Session

Dr. Michael Bell (CFO – Chief Financial Officer)
This is the monthly financial report for September 2014, which is within the 2015 fiscal year (FY2015).

Page 1
Budget is about $800 million. Expenses YTD are $115 million (14.4% of budget). That’s good because in the first quarter you would expect 25%.

Page 4.
Last year we had collected $182 million by this time and we have collected $207 million YTD. We are ahead about $64 million. There are some timing reasons for that, but it appears to be good news.

In September FY14 we received 4 wire transfers from the tax commissioners office. This past September we received 5 wire transfers. The digest growth and values holding and the additional wire transfer accounts for about $35M to $40M of the $64M increase … that’s good news.

We are up in state and local revenue sources. Overall the revenue is looking good.

Page 14
The statement of fund balance and operating surplus page. The fund balance at the end of FY14 was $41M. That’s above the $20M we imputed when we structured the budget. As we move into the mid year adjustment period, you’ll see the estimated fund balance stated at $40M. We’ll also have some additional expenses, some adjustments that were made since we started this. We’ll be requesting some money to clear up some accounting issues that the district has carried for a number of years.

The amount of revenue we have collected above the expenditures along with the incremental fund balance gives us an operating surplus, as of the end of September, $133M. As we go through the year, we will spend part of that surplus down.

Page 33
I would like to point your attention to the Emergency Expenditure report on page 33. These are the ongoing expenditures of facilities relative to the copper vandalism situation. This is another statement of where we are in that regard.

Page 34
The variance report said we projected to be at $144M in revenue and we are actually at $207M. We projected to be at $110M in expenses and we are actually at $115M. Slightly higher in expenses, but not 25%.

[00:06:33]

Mr. Thad Mayfield
Page 4 – Is the beverage tax a timing issue?

Dr. Bell
It could be a timing issue.  We are ahead of where we were last year.

Mayfield
Page 6 – Legal expenses.  Looks like we are on track to go over budget by 25%

Bell
There are some expenditures in that number which relates to a clean up of prior issues.  Settlement of prior legal expense issues.

Mr. David Campbell
Page 33 – Emergency Purchases of $191K.  We talked about this before.  Are we still estimating $1M?

Bell
We are still anticipating about $1M

Mr. Jim McMahan
Does this affect our heating?

Bell
A majority of the affected units were cooling units.

McMahan
Regarding bank owned houses that have been foreclosed on, can you ask the tax commissioner for a bank owned report of property in DeKalb.  How many are bank owned, how many have paid their taxes, percentage of taxes paid, what is still outstanding.  The final payment for taxes is due at the end of October, right … beginning of November.  They should have some totals.

Bell
They have detailed files.  I’ll ask them.

McMahan
When will the FY2014 DE046 be finalized and sent to the board.

Bell
The DE046 was finalized and sent to the state October 30.

McMahan
Can the board get a copy of that?  That ties back into the variance report.  On page 34 of the electronic variance report.  On the excel, the little red dot that gives an explanation of the excel formula.  It says the YTD projected is based on 2014 estimates and FY2013 actuals.  I’m asking for some clarity on that.

Bell
I’ll see what I can find out about that.  We do a combination of forecast and trend analysis.  We take a new budget number, then we take a proportionality of the prior year or two and apply the prior proportionality to the new number and come up with a projected number.

McMahan
Right, and our variance is based on … now that we have our FY2014 DE046 that we are basing our FY2015 on.  Is that how our variance report is?

Bell
The DE046 is about 60 – 80 pages of state required accounts that doesn’t comport to our budget documents.

McMahan
The DE046 are final end of year numbers, right, with no more adjustments.  Is that correct?

Bell
The state regards it as such.  It’s possible for something to happen after October 30th that might modify the DE046. The DE046 starts with the general fund which is not just the general operating budget … which is about 90% of it.  Then you have a some grant funds.  Often times you have deficits in those grant funds.

McMahan
Please address the variance and see if where those numbers are aligned.

Dr. Joyce Morley
I would like to know the relevancy of finding out all the foreclosed properties in DeKalb.  Some of this stuff doesn’t to have an impact on what we are doing.  We are constantly taxing the administration with these tasks, and unless it’s going to yield us more money, then why are we going through this?

We have to look at what we’re asking for and how it’s going to impact education … [yada yada yada].  I wasn’t at the last board meeting, but was able to watch it on video.  I was disgusted and shocked and sad about what we are here to do and some of the things we just keep beating horses over the head and keep bringing up as a board.  We have a task to do.

We don’t want to go back where we were with the last board.  I wasn’t a part of that last board.  I’m concerned with some of the things we ask this administration to do.  Then some of the things we ask the administration to do circumvent the Superintendent in this whole process.  What’s the need?  What’s the basis?  What’s the impact?  What’s the benefit? … [yada yada yada]

We’re not supposed to be entrenched in the day to day operations of the district.  I saw that by watching the videos and not participating.  [repeats again what she just said … yada yada yada … ]

Mayfield
Regarding the state report and possible post submission adjustments.  How accurate is the state’s website?

Bell
The state’s site is 98% accurate.  The state regards it as submitted and accurate.  I can’t find a place where the state says the report has been accepted.

When the state regulators come back and talk to us about various issues like maintenance of effort, etc … They are regarding as authoritative the DE046.

McMahan
I appreciate your questions regarding the affects of my questions.  The big 4 banks have been fined over $100 billion over the past 24 months regarding their illegal activity … making the right reports.  With that being said, there is a national epidemic where the banks have not been paying their taxes.  Even though we are above schedule on our tax revenue digest, I’m proactively addressing this concern.   I’m only asking the administration to ask one question.  The onus would be on the tax commissioner’s office to get the info.

Superintendent Michael Thurmond
I would be remiss if we didn’t recognize Dr. Bell’s outstanding leadership.  It would also be appropriate to recognize every call center in the district.  This $40.9 million dollar surplus would not be possible if not for the outstanding stewardship of the men and women who manage the budget.

One of the challenges we face is the justified criticism that has been heaped upon this school district for years and years.  The people said the employees in this office did not manage the resources in a professional way, that we squandered millions of dollars and negatively impacted academic achievement and growth in this county.  I think if we close the books on FY2014 with a $40.9 million surplus, you have to recognize that major progress has been made in maintaining fiscal integrity.

It is not a minor accomplishment.  It should be noted.