I have to get this off my chest.
This is long and not funny, so move on if your eyes start glazing over.
Let's assume that you are interested in School Finance. (OK, that's a big assumption, but it is a good idea to believe in six impossible things before breakfast too.) Let's assume further that you have been told that there is a Fund within the Total Operating Budget for the School District which has a deficit. It's not a big deficit, but every year the School Board has to transfer a leeetle bit of money to THE FUND from the General Fund so that THE FUND's ending balance is zero.
The School District's financial solvency is based on what the ending balance is in the General Fund. (In our case, we also have to keep an additional 3% reserve in the General Fund on top of a positive ending balance, but that's just an additional detail.) The General Fund is where we pay our teachers from--it's the fund the Board has the most control over. Then there are Restricted Funds with income from the State or Feds which can only be spent on Restricted things--like on building maintenance, for example. You can't take money for buildings and spend it on books--those are Restricted Funds. But you could take money from the General Fund and put it in the Books and Supplies Fund if you wanted to boost it a little.
In 2003 I started asking questions about a certain fund, THE FUND with the ongoing deficit, because it bothers me to keep transferring money from the General Fund (which could be used to, say, pay for teachers) to backfill a program which may not be running in the black.
Oh! Not to worry, I'm told sometime in early 2004. It turns out that the program which THE FUND pays for actually runs in the black. The deficit in THE FUND exists because of a contract the District paid up on in 1995. Every year a little bit of profit from the program pays off the deficit.
Okaaaay. Then why are we transferring real educational dollars into a restricted fund for no purpose other than to balance a paper debt? (There's no money owed to an outside source, there's no equipment which can be returned. It's from 1995--can we not simply all agree that in 1995 the idiot who was losing us millions of dollars while running the District screwed up?)
Well, Madame Trustee, if you really feel that it is not a Good Idea to keep transferring money to THE FUND, then no more transfers will be required.
Okaaay. Then why were you doing it in the first place? No. Sorry. Don't answer that. I don't care. Let's just stop doing it.
In February we had two Budget Workshops--at the first one I specifically asked about THE FUND. What is the deficit? What does the profit look like? What sort of transfers will be required?
Oh! No transfers. Nope. The deficit will be eliminated by the end of this fiscal year. "Yippee," says I. (I really did say "Yippee!" in Open Session.)
So two weeks ago we had a Board Meeting wherein we were asked to approve a transfer from the General Fund to THE FUND in the amount of $180,000. Huh? I thought no more transfers. Well, this is for salaries through the end of the year--they've run out of cash.
But haven't they been posting a profit for, like, two years? Uh, OK. Don't answer that right now. Please could you present a report to the Board at the next Board meeting with a narrative explaining all the transfers so far and where THE FUND stands?
I got the report on Friday. It's Monday night. I've read it every which way I can, and, beyond the fact that there are no transfers discussed at all in the report, I'm pretty sure I'm being lied to. Because the transfer from the General Fund to THE FUND just doesn't make any sense, following the logic from the newest report.
I'm so sick of this damn fund. Someone asked me about it over the weekend, and I just kept saying, "Down the rabbit hole. I've fallen down a rabbit hole."
See if this makes any sense:
In 1995 the District decides to enter into a contract to operate a program. This program is supported by State and Federal dollars, so all money going towards that program live in a special Restricted fund (THE FUND). The contract is paid out, but that expenditure puts THE FUND into deficit at the close of the fiscal year. (What should happen right here is that the Board should transfer the money from the General Fund to backfill THE FUND at the close of the budget year, but they didn't.) Instead of a one-time end of year transfer, every following year the Board transfers a leeetle bit of money to THE FUND to decrease the deficit in THE FUND.
Except Friday's report says that in 1995 the General Fund transferred money to THE FUND, and then THE FUND paid the contract. Now THE FUND shows an Accounts Payable balance to the General Fund. Every time there is profit within the program, then that goes into THE FUND's Accounts Payable, reducing the amount owed back to the General Fund.
So wouldn't all the previous years' transfers have made the asset/liability balance worse? And why have we never seen a single transfer from THE FUND back to the General Fund to pay back the balance owed in three years?
I have such a headache.
Turns out the Superintendent, who drafted the report, who's also the director of the program operated by THE FUND, will be out of the office all week. Including the day of the Board Meeting on Thursday when she is scheduled to present this report.
Ummmmmm. Not happy.
And just so you know--I hate school finance. I'd rather talk about curriculum. But I'm stuck doing school finance ad nauseum.