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New Westminster school district grapples with $2.8-million deficit
The New Westminster School District has a $2.8 million deficit from the 2011/12 school year, and the school board chair says much of the problem stems from a failure to properly track spending.
It's a very disappointing circumstance to find ourselves in," said James Janzen on Wednesday. "We're given a budget from the provincial government and it's our duty to live within that, and now we're going to have to deal with it."
The board already had a deficit of about $500,000 from the previous year that it had hoped to retire this year. Not only was this not achieved, this year the deficit grew another $2.2 million to reach the current grand total.
Key drivers for the deficit's growth, Janzen said, were overspending of about $500,000 each on the district's online schools, general teaching costs, and maintenance and renovations on school district facilities respectively.
In the case of the online schools, the hiring is done at the beginning of the year and the provincial grant comes in May, and is based on actual enrolment. In that case, Janzen said: "We should have been aware that enrolment was not where it was supposed to be."
On extra teaching costs: "Again, it should have been tracked. We should have known about it."
In the case of the extra half million on facilities, he said in the course of working on one school project the district discovered more work was needed than anticipated.
In sum, though, he said, "What we obviously have is a problem with tracking expenses during the year."
The school board was briefed on the situation by school district secretary-treasurer Brian Sommerfeldt at its Tuesday night meeting.
Now, the school board and staff must come up with a plan to tackle the issue, said Janzen, starting with a full assessment of what went wrong.
They will also look at how much of the deficit is structural, as in ongoing costs, and whether the school district needs to be more realistic in its expectations in certain areas.
Finally, they need a plan going forward, Janzen said.
"And those things have to happen pretty quickly," he added, targeting early October as when a deficit-recovery plan should be in place.
Trustee Casey Cook says despite regular finance updates at committee meetings, the school board was caught completely off guard by the situation.
"There was nothing to indicate any kind of difficulty until two weeks ago," Cook said. "When you have a deficit of this enormity, there had to have been indicators."
Deficits like this are "not common" for school districts, he added. Usually, issues are flagged over the year and adjustments made before things get out of control.
Cook said it comes down to a "failure in planning, execution and monitoring of expenses and revenues."
"We just need to take a cold look at the capacity of our organization."
The school district's annual budget is about $60 million. Janzen said he hopes the provincial Ministry of Education will give the school district three years to recover the deficit, something it did a few years ago when New Westminster had a deficit of more than $3 million.
"We've been on track for a couple of years, and this is really disappointing," Janzen said.
Sommerfeldt said a number of added costs came to light late in the year, at a time when it was difficult to do anything about it.
“Essentially 90 per cent of the board’s budget is salaries. If you get a surprise late in the year it’s difficult to make adjustments,” Sommerfeldt said.
“It’s difficult to make changes in staffing as you go through the year.”
When asked why this is not a widespread problem, given that at all school districts likely have similar cost drivers, Sommerfeldt declined to speculate.
“I don’t want to project what I think they’re doing,” he said. “Simply, I don’t have enough knowledge of other school districts.”
In future, he added, “I think we can do a better job of monitoring.”