District 113A Approves Tentative Budget; Addresses Negative Cash Balance

A budget was unanimously approved during a business meeting Tuesday night.

The Board of Education approved Tuesday night a tentative budget for the 2011-2012 fiscal year, which includes a new accounting method.

District 113A board members voted unanimously during their regular business meeting to approve the tentative budget, which will be on display for 30 days before the board holds a public hearing and votes to adopt a final draft.

Under the tentative budget, the district is projecting $21.52 million in revenues and $18.17 million in expenditures—giving the district a positive balance of about $3.35 million at the end of fiscal year 2012.

During the meeting, District 113A Business Manager Barbara Germany and auditor Ed McCormick of Mulcahy, Pauritsch, Salvador and Co. said the budget is being presented in an accrual accounting basis in order to address a negative cash balance in the district's Education Fund.

District 113A board members  during their July 19 board meeting. Jay Tovian, the district's former treasurer, informed the board during the meeting that projections showed a negative beginning cash balance of $329,568 in the Education Fund.

Per Illinois State Board of Education guidelines, school district budgets must show a zero or positive balance at the end or beginning of any fiscal year. In order to “zero out” the cash balance, two resolutions for interfund loans were presented to the board by Tovian, who is still serving the district as a consultant to new business manager Barbara Germany.

During the discussion, however, confusion arose over the date on both resolutions. According to district documents, the transfers would have been effective June 29, 2011, leading Board President Mike Aurelio and Board Member Al Malley to question whether funds had already been transferred without their authorization.

Per the request of District 113A Supt. Tim Ricker, the board tabled the discussion to seek the advice of legal counsel and ISBE officials. Ricker denied that any illegal fund transfers had occurred, and that the resolutions were only offered as an option for reconciling the negative cash balance before submitting the budget to the state.

Deb Vespa, ISBE division administrator for business services, told Patch last month that the modified accrual method of accounting was an option for addressing District 113A's cash balance.

Under the modified accrual basis of accounting, both paid and unpaid expenditures are recognized when incurred against the account, but revenues are not recordable until they become measurable and are able to finance expenditures, according to the ISBE website.

"Checks will sit in funds and will show up as payable, but won't be sent out until money is in the funds," ISBE spokesperson Mary Fergus told Patch last month.

A public hearing on the 2011-2012 budget will be held Sept. 20.

Jack Mikolajczak August 17, 2011 at 06:44 PM
Wait a minute...WHAT?!?!?! The Board voted "unanimously" to approve the budget...get out of here! Group hug for the Board.
Nora Waliczek August 17, 2011 at 07:19 PM
Where did the negative cash balance go???
Amanda Luevano August 17, 2011 at 08:05 PM
Nora, the negative cash balanced was addressed by implementing the new method of accounting—the district will now report their budget on a modified accrual basis. It's incredibly confusing, I know. I'm told the district will be releasing more information today to let the public know about everything.
Joanie Bradford August 18, 2011 at 03:21 AM
Nora, what question are you asking about? Just wondering?
Lee Ristow August 18, 2011 at 12:13 PM
@ Joanie: The $300,000 + one mentioned in the article above that came up in July that was going to require a "retroactive" resolution to transfer money from one fund to another to cover checks that had already been written and when he questioned the legality of that resolution, resulted in attacks against Mike Aurelio.


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