Hernando School Board hears troubling financial forecast

Published June 24, 2014

BROOKSVILLE — Hernando County School Board members received a bleak picture regarding the district's finances Tuesday during a discussion of the coming year's funding forecast.

When it comes to core operations, the district is spending millions of dollars more than it takes in — and has been for some time, according to the district's chief financial officer, George Gall.

"Economic conditions have been unkind to Hernando County schools," Gall said.

He said the district needs to adjust to the "new normal."

Over the past four years, including the one ending this month, the district's general fund spending has outpaced revenue by roughly $25 million. The trend is forecast to continue for 2014-15, with expenditures eclipsing revenue by about $10 million.

That's not good, Gall said.

It means the district must transfer money into the general fund to make up the difference, which in turn means less money for capital projects.

"We have been taking money out of our savings account and putting it in our checking account to keep things in the proper ratios," he said in an interview with the Tampa Bay Times.

The district has more than $200 million in capital projects, technology requirements and debt service to cover over the next four years with only nominal dollars available, Gall said.

"The negative financial spiral will get worse if we do nothing," he wrote in a presentation to the board, though there was no discussion Tuesday of possible solutions.

Overall, Gall said, the total balance in all district funds has dropped by $84 million since June 2008.

While the district has seen some increases in revenue, including new funds allocated because of its relatively small size, it has not been enough to offset the losses and new expenditures.

The district is expecting to lose about 350 students for 2014-15, bringing enrollment down to about 21,613. The projected loss in revenue is about $2.4 million.

The district is also looking at other losses tied to the implementation of the Affordable Care Act, an increase in enrollment at charter schools and higher costs for school resource officers.

Gall said new expenses far eclipse new revenues.

The district expects to enter the fiscal year that begins July 1 with a beginning fund balance of $13 million. Initial forecasts show the district's unassigned fund balance at about $3.5 million, or roughly 2.28 percent of estimated revenue.

Last year, board members approved a policy requiring the district to work to maintain an unassigned balance of 5 percent of the general fund.