As anyone without a degree in accounting who’s ever tried to decipher a school or municipal budget can attest, trying to “follow the money” can be an exhausting, fruitless task at times. Even though best practices call for the fewest number of accounts to be used, with so many sources of revenue and so many varying expenses, trying to figure out where funds came from, what they were spent on, and what remains is an arduous task.
Because they are overseeing public funds, public officials are required to ensure the books are balanced and every expenditure is warranted. Think of tax money as butter. A public budget is like an English muffin — full of nooks and crannies into which that money might disappear.
For that reason, it’s understandable that even those tasked with balancing the books for a city, county, town or school district might sometimes falter. Most such entities, being the financial equivalent of a small- to medium-sized business, therefore hire professional business managers to keep things operating smoothly. Given the complexity of a budget that annually runs in the millions — or tens of millions — of dollars, it’s impressive how well New Hampshire’s school districts and municipalities fare in successfully tracking their budgets.
Still, because of that complexity, and perhaps to take away any temptation to siphon off a crannyful of that money for personal use, state law is clear that those who handle public budgets be subject to audits. RSA 197:25 demands school budgets be audited annually, either by a designated internal auditor (presumably not the same person creating and balancing the budget) or by an independent auditor.
When that doesn’t happen, things can go badly.
Such was the case in the Winchester School District, where officials recently announced a nearly $750,000 deficit that arose over an eight-year span. According to school board Chair Lindseigh Picard, the problem started because no audits were conducted from 2012 to 2016, meaning, in Picard’s words, the district was “basically using [its] most educated guess on what that final audit number is, and therefore, what that number will be carrying on to that next year’s [budget].”
It turns out those guesses weren’t great, and for the past eight years, the district has been sending an average of about $109,000 back to taxpayers as a surplus each year, when in fact, it only had a surplus in one of those years.
Picard stressed a week ago that “the deficit is not the result of over-spending the budget.” Rather, she said, it was a case of “over-returning money” to the taxpayers. Not that anyone got a check from the school district. Because when schools (or municipalities) “return” money, they actually use it to offset the amount of taxes to be raised in the next year’s budget. That means whatever the anticipated expenses for the following budget, the revenue side of the ledger needed to pay for them is lowered by the “surplus” amount.
Since, in this case, that surplus didn’t exist, one would have to be well-schooled in accounting to discern the de facto difference between “returning” and “spending” the money.
In any case, the solution the district proposes is a $400,000 additional appropriation, aside from the budget, for the 2021-22 school year, plus using $125,000 in special education trust fund money, to reduce the deficit to $220,402. That amount would be made up the following year — unless the district somehow ends next year with — you guessed it — a surplus, which would be used to reduce the deficit further.
For Winchester, in particular, having to deal with such a deficit is particularly difficult. A year ago, voters pushed through a school budget cut of $1.6 million, inexplicably adhering to the proposed logic that since the town’s schools have perennially underperformed on state assessment tests, cutting spending would somehow improve the situation. We suppose the real thinking was that since they weren’t getting the educational results hoped for, why throw good money after bad. It’s a terrible line of thinking that can only harm the town’s students, but to be fair, taxpayers’ interests count, too.
So here we are, heading into the district’s 2021 election, with those taxpayers being asked to pony up an extra $400,000, draw down special education funds put aside for the suture, and hope for a surplus in a year marked by a pandemic.
State lawmakers don’t always make the best decisions for the citizens of New Hampshire, but it seems they had a pretty good idea when they mandated all school districts be audited annually.