District 113A: Negative Cash Balance Caused by High Benefit Costs, Lower Than Expected Revenue

School board officials in say a negative cash balance in the district's Education Fund last month was caused by lower than expected revenue and higher than expected benefit costs.

In a statement released Monday, District 113A Board Member and newly appointed spokesperson Lisa Wright finally addressed questions surrounding the district's Education Fund and its projected cash balance of negative $329,568 at the end of June 2011.

According to the release, the cash shortfall was caused by inaccurate projections of expenditures and revenues made earlier in the month.

"As soon as the fiscal year-end financial statements were completed, it was then confirmed that revenues did not meet projected targets, and expenditures for medical benefits were higher than projected for the Education Fund," the release stated. "Consequently, the result was a negative cash balance for the Education Fund before final accrual entries were made."

Board members were informed of the issue in which former District 113A Treasurer Jay Tovian presented a draft of the tentative budget for the 2011-2012 school year.

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.

Last week, District 113A board members voted unanimously during their monthly business meeting to address the negative cash balance. The decision was made after consulting with ISBE officials and an independent auditor, the release stated.

Under modified accrual accounting, "transactions are recorded when they occur, even if cash is not directly impacted," the release said.

Despite the deficit in the Education Fund, the district was never short cash, the statement said.

District 113A maintains a single bank account for its operating funds: Education, Operations and Maintenance, and Transportation. All operating cash is pooled into one account, but each fund operates separately, maintaining its own financial statements and reports of revenues and expenditures.

Although there was sufficient cash to cover all checks issued, District 113A administrators decided to hold some checks until they received $5 million from tax anticipation warrants issued to . None of the payments were late, according to the release.

Tentative budget for fiscal year 2012

Under the tentative 2011-2012 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 June 2012.

The budget will be on display for 30 days before the board holds a public hearing and votes to adopt a final draft during a Sept. 20 business meeting.