Audit Shows Talbot Schools Spent $2.3 Million of Savings Last Year, Leaving $3.7 Million Unassigned

EASTON, MARYLAND — Talbot County Public Schools' general fund spent $2,278,252 more than it took in during the fiscal year that ended June 30, according to audited financial statements in the Board of Education's Nov. 11 meeting materials. The fund balance, the district's savings, fell from $10,156,627 to $7,878,375.

Most of what remains is already spoken for. The statements assign $2,741,303 to this year's budget, $983,692 to encumbrances, which are purchases and contracts committed but not yet paid, and $438,168 to school activity accounts. That leaves $3,715,212 unassigned.

The $2.7 million set aside for this year matches the use of fund balance that Chief Financial Officer Sarah Jones described for the current budget at the board's Oct. 12 work session, according to draft minutes. At the same session, Jones said the best practice from the Government Finance Officers Association is a fund balance of 16%, or two months of operating expenses. The Patriot calculated that the total general fund balance equaled 9.7% of the $81.5 million final general fund budget and the unassigned portion 4.6%; those are not district figures.

On the budget basis the district uses to track its spending plan, the year ended close to plan. The budget called for drawing $1,566,150 from fund balance. Revenue came in $1,199,189 below the $79,960,463 budgeted, spending came in $1,200,946 below the $81,526,613 budgeted, and the year finished $1,757 ahead after the planned draw. That schedule leaves out state-paid retirement contributions and school activity accounts and counts encumbrances as spending, so its totals differ from the audited statement.

The revenue gap was mostly state and county money. State revenue was $775,759 under budget and county revenue $264,124 under. In both cases, the district's budget notes say, unspent Community School funds must be restricted and deferred for future use. Interest income was $185,600 short because cash balances were lower than expected, which the notes attribute to payments to construction vendors and grant revenue that arrived late.

On spending, the notes say higher utility and contracted-service costs pushed plant operations past its original budget, so the district amended the budget for that line upward by $400,000, from $4,995,109 to $5,395,109, according to the audit's budget schedule. The district then postponed some contracted-service purchases to cover other necessary costs, and it postponed other repairs because revenue fell short. Special education spending came in $140,960 under budget. The district attributed the savings to fewer students than expected attending nonpublic special education schools.

The food service fund spent $3,949,535 and took in $3,458,733, a $490,802 gap, and ended the year with $1,227,504.

UHY of Salisbury wrote, in a report dated Sept. 28, that the statements present fairly, in all material respects, the board's financial position as of June 30. Jones and Audrey McKenrick of UHY were listed on the Nov. 11 agenda to present the audit. The board's next meetings are a work session Monday, Dec. 7, and a regular meeting Wednesday, Dec. 9.