A budgeting ‘mistake’ will result in $4.5 million in cuts to Richland 1’s budget

An accounting error is responsible for more than half of the $9 million Richland 1 must cut from next year’s budget, according to documents obtained by The State.

At a budget work session last week, district staff told school board members Richland 1 needed to cut $8.8 million from the 2019-2020 budget, which the district attributed to unfunded, mandatory teacher pay increases and less-than-expected revenue. The school board was set to consider freezing vacant positions and cutting programs to balance the budget, but those discussions were tabled so the administration could continue working on the budget.

That means the district started the fiscal year on Monday without a new budget. The board isn’t scheduled to meet again until July 30, so the budget may not be approved until three weeks before classes start on Aug. 21. However, the board could call a special meeting before July 30 to consider the budget.

For now, officials are temporarily following last fiscal year’s budget. Teacher hiring and program funding will continue, said school board Chairman Jamie Devine.

The $4.5 million ‘mistake’

So what was the mistake? In short, the district relied on money it already spent to balance the 2019-2020 budget.

Last summer, Richland 1 was projected to receive $224.5 million from county tax revenue, according to Richland County Auditor Paul Brawley. However, the district wanted to be more aggressive in its spending, so it successfully petitioned Richland County Council last fall to allow it to increase spending to $228 million, county documents show.

The district argued it could afford to spend the roughly $3.5 million extra during the fiscal year because it was expecting $4.5 million in surplus, or “carry-over,” revenue from tax collections by the end of the 2018-2019 fiscal year, which ended Sunday, according to county documents, school board Commissioner Darrell Black and Richland 1 Chief Operating Officer Ed Carlon.

“Our district was looking at mirroring the surrounding districts to alleviate a carry-over,” Black said. The point of adjusting the budget was to get “the full amount up front,” he said.

However, when the district prepared its 2019-2020 budget, it still anticipated having $4.5 million in surplus from 2018-2019.

“That was a mistake,” Brawley said. “The district...should have known they would have no carry-over.”

Asked why he didn’t change the budget after Richland 1 spent its carry-over, Carlon said he did not receive an updated carry-over projections from the auditor’s office, so he did not change it.

“They could have collected more and still had a carry-over,” Carlon said. “I don’t know that until they tell me what their carry-over is.”

Asked if it was important to use the best possible estimate when making a budget, Carlon said, “It doesn’t matter. Any estimate is good. You have to start somewhere.”

Any doubt about whether the district would have a carry-over should have been cleared on May 21. That’s when the Richland County Treasurer’s Office told Carlon that the final tax revenue total for the 2018-19 fiscal year would be roughly $226.1 million — $1.9 million less than the district budgeted for — emails show.

But even after that, the district still based its 2019-2020 budget on having $4.5 million in carry-over, budget documents show.

When Richland County Council considered Richland 1’s 2019-2020 budget on May 23 and on June 10, the district still relied on $4.5 million in carry-over to balance the budget, according to Richland County Council documents.

Richland County Council members told The State they weren’t aware of the budget discrepancy, and have only limited powers controlling specific school district expenditures and revenues.

“We can allocate what we allocate, but we don’t have a line-item say in the budget,” said Councilwoman Allison Terracio.

The district’s current budget draft, dated June 20, projects a $0 carryover into next year, according to documents Carlon showed to The State.