BY DANIEL SCHMIDT
THE OBSERVER
OPELIKA — Lee County Schools is reporting stable finances four months into the current fiscal year, but officials are sounding a cautionary note about the district’s reliance on a state appropriation that could begin shrinking in the coming years.
According to documents presented at the school board’s March 10 meeting, the district has spent 34.2% of its general fund budget through January.
While that figure is slightly above the benchmark the district is looking for by this point in the year, it is still close to the acceptable range officials typically target.
“As long as we stay within 1% overage in our budget, I think we’re fine,” Chief Financial Officer Ken Roberts told the board. “In terms of target reserves, the things that we talk about big picture-wise, that 34% is still a solid number.”
Regarding revenue, collections appear lower than expected on paper, sitting at 41% of projections.
That figure is misleading according to Roberts since the county recently shifted responsibility for collecting sales and use tax from a third-party vendor to its own revenue department.
That has created a one-month reporting lag, and the funds have been collected and are sitting in district accounts while they wait to be posted on the books.
Roberts said he expected the discrepancy to resolve itself by next month and confirmed that distributions to partner education entities are going out on time with no disruption.
“[Our] surplus today is the primary metric that we follow in the general fund, and it shows we’re $1 million less than last year in surplus today through the first four months,” Roberts said. “All of that is the sales tax. I expect us to actually be ahead of last year’s pace, if not February, by the end of March. So that’s not indicative of where we’re at.”
The district had projected a 6% increase in local revenues between both sales and property tax revenue collections this year. Those targets remain unchanged.
Historically, the district averaged roughly 5% annual local revenue growth, except during the COVID-19 pandemic, when revenues remained flat rather than declining as in many other school districts.
With that and other factors in mind, the district has deliberately built in conservative estimates that project at least 1% below historical averages as a cushion.
At the same time, expenditures are running about 6% higher than the same period last year, slightly above the budgeted 5% to 5.5% increase.
Officials attributed the overage to expenses from programs absorbed into the general fund in the post-pandemic period.
“We’re dealing with the school consolidation plan [and] some other unknowns,” Roberts said. “We’re still in that post-COVID era of taking on programs, committee programs like the general fund. We’ve talked about the last two years being kind of a challenging time. We get it close in terms of our expenditure and revenue estimates.”
The most pointed portion of the financial presentation focused not on the current year, but on the longer-term picture surrounding the district’s allocation from the Alabama Advancement and Technology (A&T) Fund.
That funding, which comes from a state-level appropriation intended to enhance campus security, communication and emergency responses, among other uses, delivers millions of dollars annually to school districts across the state.
Over the past seven years, Lee County Schools has received around $29 million through the A&T Fund. More than $12 million of that funding has been directed toward capital projects, and the remaining $16 million-plus has gone into the district’s reserves.
The numbers tell a striking story.
Lee County Schools ended last fiscal year with a general fund balance of $33 million, which amounts to roughly 3.3 months of operating expenses. That is comfortably above the district’s stated 2.5-month minimum and its three-month target.
Strip out the seven years of A&T fund deposits, however, and that balance sits closer to $17 million — just 1.7 months of operating expenses.
“[The AMT funds are] almost half of our total fund balance,” Roberts said. “It’s not a fear thing or any kind of additional exposure. I just want you to know how important that A&T is, that it’s half of our current fund balance. Because the previous year, we just put it in the general fund to pay ourselves back for some of the things the state doesn’t pay for.”
While the state still holds a significant surplus to continue distributing those funds, officials acknowledged the landscape is shifting.
This year’s allocation came in a few million dollars lower than prior years, and the trend is expected to continue gradually downward rather than suddenly drop off.
The district stressed it would adjust if funding meaningfully declines and that the board would make decisions accordingly.
In other news, the board addressed several other items of business:
- The board recognized 14 high-performing support staff employees for their achievements and service.
- The board approved numerous out-of-state or overnight trips for sporting events and field trips.
- The board gave a first reading of an update to the district’s Title IX, prohibited conduct and sex-based discrimination policies.
- The board approved a new textbook review and adoption process to better comply with state criteria and standards.
- The board voted to rescind an HVAC servicing contract originally awarded to Energy Savers. The district will now rebid the service.
