KRECR is scrambling as misuse of funds discovered
Due to a budgeting error, officials at fast-growing Klamath River Early College of the Redwoods are anticipating a $168,000 deficit for the 2012–13 school year and are looking for ways to cut expenses and raise funds.
Most of the deficit developed last fiscal year when the school mistakenly used restricted funds to close a deficit in its unrestricted fund balance, according to KRECR Director Bernadette Johnson. The school has also had problems with its cash flow due to the state funding KRECR based on last year’s enrollment rather than this year’s higher number, Johnson said.
The school, which operates campuses in Klamath and Crescent City, currently has 124 students with two more expected in January, Johnson said. KRECR’s enrollment last year was 45 students. It will be a few more months before the school’s state funding reflects its actual enrollment, she said.
“We’ll be making as many cuts as we can although our budget is pretty tight,” Johnson said. “We’re already doing fundraising activities. We just have to look carefully at all of our line items and prioritize everything as conservatively as we possibly can.”
Johnson presented KRECR’s first interim financial report and multi-year budget projection to the Del Norte County Office of Education Board of Trustees on Thursday. Board members unanimously accepted the report, but gave it a negative certification and directed Superintendent Don Olson to send a letter to KRECR.
A negative certification is assigned when a local educational agency will be unable to meet its financial obligations for the remainder of the current fiscal year or for the next fiscal year, according to the California Department of Education. This certification means the agency’s County Office of Education may intervene in its finances.
Olson said he would be sending a letter to KRECR asking the school to secure an outside agent to help with bookkeeping. Olson’s letter would also require the school to come up with a written plan to remedy the situation and show it could be financially viable by the end of January. KRECR would also have to come up with a plan for closing the school and meeting its debt, Olson said.
“This is such a serious situation, if we cannot be convinced that this is really doable we’re going to be having stronger conversations on the future of (KRECR),” Olson said.
According to Johnson, KRECR had a deficit of approximately $230,000 at the end of 2011-12 due to using restricted funds for its operating expenses. The school has budgeted to reconcile that mistake and has returned the restricted funds, which were intended for scholarships, to their original purpose, she said. The scholarship funds were part of a grant, Johnson said.
“We are beginning a fundraising campaign and we feel confident that we’re going to stay open and make whatever needs to happen happen because we’re committed to our school,” she said. “It will be a little bumpy.”
Johnson added that both parents and students were already coming up with ideas to raise funds for KRECR. The school will also likely do some local fundraising in the community as well, she said.
Olson said KRECR’s financial situation will be brought before the board again in February.
School Board members approved the layoffs of two part-time school activity monitors at Bess Maxwell Elementary School on Thursday.
The positions were being budgeted out of restricted funds that were intended for another purpose, according to Pamela Holloway, the district’s director of personnel. There is no more funding available for those positions, she said.
The restricted funds were supposed to be used for instruction, said Deputy Superintendent Rodney Jahn.
Board members voted 3-2 in favor of laying off the two student activity monitors. Jennifer England and the newly elected Judie Cordts dissented.
Bess Maxwell, which has 270 students, has spent most of its working budget on personnel, said Superintendent Don Olson. It has more classified personnel than Redwood School even though its student population is smaller. But Bess Maxwell can’t afford the number of classified employees it has with its budget, Olson said.
Olson said one of the employees may be able to move to Crescent Elk Middle School. Eliminating the positions will result in a savings of about $8,200 for the remainder of the school year.
According to Bess Maxwell Principal William Einman, funding the five classified positions at the school would have cost $57,000 in unrestricted funding. The school only has $48,000 for classified personnel, he said.
“The work was being done by two wonderful monitors,” Einman said. “We hate to lose them. I’ve spoken with teaching staff to cover the work that needs to be done. This isn’t an easy situation.”
During public comment, Patti Rommel, a local California School Employees Association representative, said Bess Maxwell has more classified personnel because it serves more students with special needs. She also said with voters passing Proposition 30, CSEA representatives at the state level anticipate changes that will affect funding for education.