Schools may sell ads on buses, Internet

Terry Webster

Friday, Oct. 27, 2000 | 11:26 a.m.

Desperate to offset dwindling reserve accounts and a projected $13.3 million 2000-2001 budget deficit, the Clark County School District may resort to selling advertising on school buses and the Internet.

Chief Financial Officer Walt Rulffes is calling the deficit serious.

Most of the shortfall is related to a projected $9 million cost for an anticipated arbitration agreement with the teachers union. The other $4.3 million is for increases in fuel and utilities.

"I believe the total will be $13.3 million, and it could be more if the arbitration ends up being more," Rulffes said. In a report to the School Board, Rulffes projects the salary increase at 1 percent.

He is recommending the district take funds from accounts used to keep additional money on hand for the district.

As a result, a plan to begin restoring one of those accounts, the fund balance, would be put on hold.

"I think we could accommodate $5 million out of that," said Rulffes. Another $1.7 million would come from a "budget stabilization fund."

According to information provided by the district, the amount of money available for use from the fund balance is estimated between $11,383,431 and $16,383,431 for 2000-2001.

Taking $5 million from the fund balance would mean the district would have between $6.3 and $11.4 million remaining. The district's entire budget totals about $1.1 billion.

And the district still has to cough up another $6.5 million to cover the anticipated deficit. Between now and December, district officials will hammer out where that money will come from.

"It's serious, but I think we can do it without taking money out of the classroom," Rulffes said.

In the meantime, Rulffes is looking at creative ways to raise money.

That includes selling advertising on school buses. And while a full-fledged program would raise only several hundred thousand dollars a year, Rulffes says that's a start.

"It could be significant," Rulffes said. "Fuel costs are going up $400,000 to $500,000, and this could be revenue to offset it."

In a report to the School Board, Rulffes suggests the district also look at selling Internet advertising on the district's website.

The district has other financial and accounting issues to deal with, as well. An auditing firm is criticizing the district's cash management of its federal programs, equipment management and records relating to property and improvements.

Those points, outlined in a draft copy of a letter from Kafoury, Armstrong & Co., have been presented to the School Board and will be followed up with a full report Nov. 9.

In its letter, the auditing firm states that an apparent lack of training in understanding federal and state regulations contributed to problems with federal programs.

Specifically, the letter says that more than $6.7 million was advanced from the general fund as of June 30, 1999, to cover expenses until federal dollars arrived. And, the district's procedures did not meet federal guidelines.

The auditing firm's letter says that funds were often taken from federal grants and used for programs those dollars were not intended for.

School officials said the department used federal grant money designated for specific uses for cash flow purposes. Specifically, Title 1 money, which is typically used for programs for disadvantaged children, provided a cash flow vehicle for all grants.

Terry Lizotte, director of the federal grants program, said that in the end, all of the money works out and is accounted for.

"Nothing illegal or wrong was done," he said.

Because it found the discrepancy, the accounting firm was required to report it to the federal government.

Additionally, it recommended the district take tighter control of dollars going in and out of federal programs and also requested employee training.

In its written response, the school district agreed to follow the recommendations. But it also asked the firm to cite the dates and amounts advanced by the district that were in violation.

Turning to another area, the district also failed to follow federal regulations, the letter says.

"Significant amounts of federally purchased equipment were deleted from asset records without proper approval," according to the letter.

The district, in response, pledged to follow proper procedures to dispose of equipment.