PORTLAND — With the federal economic stimulus package expected to restore $1.8 million to the current budget, the School Department expects to pay back money overspent in the fiscal 2007 and 2008 budgets by the end of next year.
The announcement came in meeting of the school Finance Committee, which also anticipates developing a policy to boost its reserve fund and, perhaps, also establish a contingency fund.
The district allocated $600,000 in the current budget to repay the city’s reserve fund, tapped for $1.2 million to close the school’s fiscal 2007 books. Many of those budget flaws, however, carried into 2008, and the district also over spent last year by nearly $240,000.
Since the governor ordered a cut to eduction spending statewide of $27 million, $1.8 million of which targeted Portland, the district has been pinching pennies – freezing nonessential hiring and spending.
Now, interim Superintendent Jeanne Whynot-Vickers said she expects the district could be $400,000 in black when the current fiscal year closes on June 30, thanks to the $787 billion federal stimulus. If that’s the case, the district could repay its remaining debt of $800,000 by the end of next year, with some money to spare.
“I can’t tell you exactly how much (the surplus) will be,” Whynot-Vickers said, noting there disagreements about the exact figure. “But it’s going to be at least several hundred thousand (dollars) and it could be a lot more than that.”
Whynot-Vickers said she intends to budget another $600,000 toward school debt in next year’s budget, to be presented Wednesday, March 4. If it holds, she believes that figure could be sustainable in future budgets, giving the district a cushion for difficult times.
School Committee member Jaimey Caron, who is on the Finance Committee, said the department should commit itself to establishing a reserve fund policy, much like the city’s attempts ahead of borrowing more than $19 million this fall to build the Ocean Avenue Elementary School. (The bond will be reimbursed by the state).
Caron said the city is hoping by 2015 to commit itself to carrying 15 percent of its overall budget in reserves, which credit agencies use when setting interest rates on bonds. Because the city and schools do not carry a large enough fund balance, the city’s credit rating suffers when that fund is tapped.
While the city is not capped on how much it can carry in its reserve fund, the schools cannot exceed 3 percent of their overall budget, or about $3 million.
School Committee member Robert O’Brien suggested the district also establish a contingency fund, which was slashed to balance the budget in recent years. That fund could be tapped for unexpected capital expenses, he said.
“It’s one thing to hold people accountable, but it’s another thing when the entire shock wave affects the entire city, borrowing and the taxpayers,” O’Brien said. “That is something we should try to buffer ourselves from.”
The Finance Committee also discussed progress towards meeting the issues highlighted in the audit of last year’s budget.
Whynot-Vickers said that about a dozen people applied for an accounting supervisor position, whose primary responsibility will be reconciling school accounts with the city’s on a monthly basis. That task was being performed every few months, if at all, opening the possibility that false statements could be contained in school finance reports, according to auditors.
Also, the district continues to revise job descriptions for finance staff to ensure everyone knows their role and how to fill in during extended absences. “We now have back-ups for back-ups,” Finance Director Herb Hopkins said.
Whynot-Vickers said an new account supervisor should be hired by the end of March.

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