In a stunning announcement, Indianapolis Public Schools, which had been touting huge deficits in the range of $30 million to $40 million dollars for the past few years, actually is in pretty good financial condition.
IPS Superintendent Dr. Lewis Ferebee related the news at an IPS School Board meeting recently, announcing that for the calendar year 2013, IPS had a budget surplus of $8.4 million.
That was in sharp contrast to what the board and community had been told would be a projected budget deficit of some $30 million.
Ferebee uncovered the financial discrepancies as he reviewed the financial data of the district several weeks ago as part of working with the efficiency effort that IPS conducted with the Indianapolis Chamber of Commerce.
The reason for the discrepancy was that for a number of years IPS had been announcing its financial results based on “projections” or what district officials thought their revenues and expenses would be. And then when the fiscal calendar year ended, IPS officials wouldn’t inform the public and the School Board what the district’s actual financial conditions were.
But the big disparity was in actual versus projected expenses. For 2013, IPS had projected $274.4 million in expenses, but actual expenses were $237.8 million; a miss of $36.6 million.
Ferebee explained that some of the wide variances in projected versus actual expenses in IPS came in programs that were proposed but never implemented. Like IPS’ plan to create a specialized high school for STEM subjects or IPS’ original expansive plan for pre-kindergarten classes.
A detailed spreadsheet shared with the Recorder shed insight into some of the overestimated expenses. For example IPS estimated it would spend $14.8 million busing the remaining Black high school juniors and seniors from IPS neighborhoods to Decatur, Perry and Franklin townships. But actual spending was just $4.3 million; a nearly $10 million overestimated.
IPS overestimated salaries and employee benefits by some $15.1 million and overestimated purchased services by $8.1 million. Originally in 2013 IPS planned to reopen four schools. That didn’t happen resulting in $5.3 million in projected but not used expenses. Bottom line in 2013 IPS overestimated expenses by some $40.2 million.
One of the confusing things about IPS’ budgeting process is that while IPS employees are hired on a school year basis – July through June – IPS’ finances are based on a calendar fiscal year. That means in preparing a calendarized budget, IPS must factor in expenses and revenues for the last six months of one school year and the beginning six months of the following school year.
The stunning news that IPS is not a deficit ridden school system, but one that’s in better financial health than many thought, is a shock to the community. In a briefing with media, Ferebee acknowledged the confusion.
Ferebee went out of his way to reassure residents and employees of the district that for the upcoming 2014-2015 school year there will not be reductions in force of employees. Though Ferebee did indicate that he and the board would continue to look for staff efficiencies.
Ferebee also said that there would be no school closings for the 2014-2015 school year.
In the near term, the fiscal picture for IPS is a bit brighter because the deficits that had been talked about for years apparently aren’t the reality.
Obviously such a wide gap between what the community was told about IPS’ financial condition and the actual, more positive results raises questions about the quality of work performed by those IPS employees in charge of the budget and preparing financial data.
Ferebee wouldn’t directly comment about those employees saying it was “a personnel matter.” But sources tell the Recorder that the community shouldn’t be surprised if at least one high-ranking IPS employee with responsibility for the budgeting and financial processes isn’t separated from the district.
Ferebee and the IPS Board promise that there will be public releases monthly of budget reconciliations of project versus actual spending and revenue as well as quarterly updates on the district’s budget.
