Nevada County Picayune and Gurdon Times Newspaper Archive

PS district facing financial crisis

The Prescott School Board voted in special session to approve a loan for $200,000 to complete some required improvements on the schools facilities. Citing potential problems with repaying the loan and the possibility of asking voters for a millage to fund needed projects, the board declined a proposal presented by Prescott Superintendent Hyacinth Deon to borrow $500,000.

The discussions took place during a special meeting on May 24. The board had tabled Deons proposal during the last regular school board meeting on May 16 after requesting additional time to consider the proposal and asking Deon to gather some information.

The issue has arisen following a state-mandated renovation plan. Needs were identified and categorized across the district, with several projects listed as immediate needs. Those projects were to be completed during the current school year, but only some minor work has been done at this point. An architect has put a roofing project out for bid and security cameras have been installed, but the actual roofing project hasnt begun.

Funding for those projects was approved by the board during the most recent meeting.

Deon told board members that the projects currently needed are related to keeping students dry and safe. In addition to roofing one building at McRae Middle School and the surveillance cameras, the immediate projects also include installation of emergency lighting and exit signs in several of the buildings.

Deon told the board to keep in mind that these projects were to have been completed for the 2005-6 school year. That means that another round of projects is slated to begin in July - the beginning of the 2006-7 school year. Her proposal to the board was to borrow enough money to cover the districts portion of the projects for the coming year as well.

The state will pick up a portion of the cost of these projects. Deon said the amount the state picks up depends on enrollment. At the current level, the district is responsible for about 40 percent of the cost of the renovation projects. Deon said that the lower the enrollment, the less the state will be picking up and the more the projects will cost the district. When the talk turned to the potential for a continuing lower enrollment, Deon said that is one reason that the board should approve the funding for the project now, rather than waiting.

But board members Jo Beth Glass and Shane Meador each questioned the districts ability to meet loan payments.

The projected budget was among the items provided to the board, and Glass questioned the figures. She cited the fact that the districts enrollment declined this year, and that enrollment determines the amount of funding from state and federal sources.

This year, we took such hit, but next year your fund balance is going to grow? Glass asked.

Deon said the apparent increase is largely from other sources, but she didnt outline what those sources were.

Remember that the facilities project is not a one-time thing, Deon said. Its not going to go away. It just keeps stacking up.

Meadors also questioned the apparently larger ending balance being projected for the 2006-7 school year. Meador said his thought was that the district should use at least some of that money to fund the 2006-7 projects rather than taking out a loan.

Have we taken into consideration that we might drop another 30, 40 students? Glass asked.

Yes, we have, answered Deon.

And youre 100 percent confident that were going to increase our fund balance by that much? Glass asked.

Deon responded that the figures are projected balances, and later said, Youre looking for something more concrete than we can give you.

Deon reminded the board that the smaller enrollment figures will mean that the state contributes less to the projects.

But if you wait to borrow, you dont overextend yourselves, Glass said.

Deon then said that teachers in the district are not going to understand the process if the district ends with a larger balance but spends that money on facilities repair rather than giving salary increases.

Glass also questioned the fact that the district has already paid for the cameras. She said she didnt recall seeing that the expense had been approved.

But you knew the cameras were there, Deon said. Its an immediate repair. You have to do it.

Deon confirmed that the district has paid the cost of installing the high school cameras.

So we spent $47,000 for high school? Glass asked.

Yes, said Deon.

But now were looking at taking a loan out to cover that?

Yes, Deon said.

She said that money is now in a reserve fund and will eventually go back into the schools general fund.

After some additional discussion, Tom Cornelius made a motion to borrow the $400,000 from the Bank of Prescott. That motion was never acted on, but never formally tabled.

Deon presented the board with a plan to repay that money over a 10 year period.

Glass objected to the plan, saying the trend has not been to bring in more money each year.

How else are you going to fund it? Cornelius asked.

Can you assure me, 100 percent, that we can make the payments? Glass asked.

No, Cornelius answered.

Then how can you put the school on the line like that? Glass asked.

After some additional discussion, Meadors proposed that the district simply borrow enough to fund the 2005-6 mandated projects, and to deal with the 2006-7 projects over the coming months.

He said that could mean that the district would need to borrow again, but said if theres surplus money it could save the district going into further debt. Another option, Meadors said, is to have a trickle of money dedicated to the ongoing repairs.

A millage would be a solid plan Meadors said.

What if it doesnt pass? Deon asked.

If they dont approve it, well be in trouble, Meadors said.

School Board President Patricia Blake said, The question on the table now ... are we going to address those needs or are we going into facilities distress?

Meadors proposed that the board address the immediate needs and take some time to look at options for the rest of the projects.

While there were no formal plans made to request a millage, Meadors said that a millage might be an option. Deon said that puts the issue before the voters of the district, allowing them to decide.

We have to consider what a community is without a school, she said. And what the community is willing to do to keep the school.

And if you ask for a millage and it doesnt pass? Glass asked.

Then you ask again, Deon replied.

Brought to a vote, the plan to address only immediate needs first, and to borrow $200,000 to fund the districts part of that project passed with only Blake voting against the measure.