School debt shrinks, deficit plan remains on schedule

Sunday Times Newspapers

SOUTHGATE – If it were a report card, the budget audit findings received last month by the Southgate Community Schools Board of Education would have earned mostly A’s, with some challenges still to address, but mostly passing grades.

During the board’s Oct. 20 meeting, school officials were told that that the general fund deficit had been reduced by more than $2.5 million.

According to representatives from the accounting firm Yeo & Teo, just $1.4 million of deficit remains to be addressed.

School officials said projections indicate a full resolution of that deficit by the end of the fiscal year on June 30, a timetable that was agreed upon when the district entered a debt-elimination plan under state supervision.

The district was placed on a five-year plan in 2010, with a one-year extension granted in 2014. District Finance Director Theresa McLachlan said that debt settlement has continued since in accordance with state recommendations.

“We’ve kept on track,” McLachlan said. “We’ve met our debt and were a little better than when we had filed with the state.”

The district’s annual $42 million budget has been streamlined in recent years while officials maintained spending limitations to erase what had been a $5 million deficit. Supt. Leslie Hainrihar said assets have increased and the deficit reduced through a variety of measures, not the least being concessions from employee unions which accounted for more than $1.5 million in savings.

“That’s a contribution by every employee in the district,” Hainrihar said. “That was a huge part of it.”

Hainrihar said officials and administrators have taken the necessary steps to bring the district in line with declining enrollments and reduced state funding. Employee concessions – due to expire in another year – and facility closings provided the time necessary to reduce and eliminate the deficit. In doing so the district was better prepared to respond to economic changes and, moving forward, to address problems before the budget is again strained.

“We’re doing a better job of reacting more quickly,” Hainrihar said. “We’re at the point of getting pro-active and looking at the future.”

Once the debt is eliminated the district will remain under state monitoring until the budget reflects a 5 percent fund balance.

“That will be our next challenge,” Hainrihar said, “to stay on course as we come out of deficit. That happens more slowly, but we’re in a good place.”

(James Mitchell can be reached at