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'We've got to cauterize these wounds': Davenport Schools to seek forgiveness of $9 million in negative unspent balance
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'We've got to cauterize these wounds': Davenport Schools to seek forgiveness of $9 million in negative unspent balance

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J. B. Young Opportunity Center main entrance is shown Jan. 15, at 1702 N. Main Street in Davenport.

The Davenport School Board unanimously approved a proposal Thursday to request the Iowa Department of Education’s School Budget Review Committee to forgive more than $9 million of the district’s $12 million negative unspent balance.

During a special meeting of the school board, Superintendent Robert Kobylski said that as of June 30, 2019, the district had a negative unspent balance — language the state uses for when a district spends more from its general fund than authorized — of $12,044,567.

The negative balance is a result of the district overspending its budget authority in recent years. If that balance is forgiven, it would greatly reduce the number of staff that will have to be laid off in the next year. 

Kobylski said that while the Iowa Department of Education will not consider forgiving $2,769,078 in overspending in fiscal year 2016, there were indications at a Dec. 17 meeting that the School Budget Review Committee, or SBRC, may consider, under the right circumstances, reducing or eliminating $9,275,489 of that more than $12 million negative unspent balance.

While Kobylski noted he does not want to back the SBRC into a corner, he said if the district does have to make cuts to make up for the full $12 million, “it would have a deleterious effect on our instructional programs as an overall school district, and as an overall school system for our citizens.” Those cuts, he said, would also have an adverse effect on the students.

“Our concern is that if we have to make those kinds of cuts in the time frame we’ve been given, it’s going to put the whole district in a downward spiral that could decimate the district,” said board President Bruce Potts. 

District officials are set to meet with the SBRC on Jan. 28. The district’s proposal, along with all the financial documentation, was due to the Iowa Department of Education Friday.

The board hopes the SBRC will see the district has made significant cuts in staffing and other areas to significantly reduce spending, and is on track this fiscal year to slash an estimated $6.7 million. In the past year, the district reduced 127 positions through layoffs and teachers leaving. 

“We’re looking to break the cycle in terms of how we operate with the SBRC,” Kobylski said. “In the past when we’ve had a negative balance and we would come up with a plan," but each time the plan would somehow fall through, he said.

This time, though, there are solid numbers clearly showing the district has the “intestinal fortitude” to make the necessary cuts, Kobylski said.

Claudia Wood, the district’s chief financial officer, told the board that through December of fiscal year 2020, the district has spent $2,189,000 less in salaries during the first six months than in fiscal year 2019. By the end of the school year, that number is expected to jump another $2,189,000, totaling about $4,378,000 in savings for the year.

Wood added that the district still has two insurance holidays to take in February and March. Each of those insurance holidays come to $1,370,000 in savings, totaling $2,740,000.

Kobylski said that asking the SBRC to forgive some or all of that $9 million in negative unspent balance is a bold approach, but, he added, “If you don’t ask the question the answer is always no.”

He added that with the numbers showing the financial progress, the district is proving to the SBRC that the district has actual plans and is sticking to those plans.

Naturally, he said, the SBRC could say no, or they could only grant a part of the request. To make it more palatable, the district is asking for the forgiveness over two fiscal years, $6,956,617 the first year and $2,318,872 in the second year.

Tom Lane, assigned by the Iowa Board of Education to advise the Davenport School District, said the state school board “has never had a district of this size in this financial strait. They’re used to dealing with 1-A schools that just have run out of kids basically and have gone bankrupt in their programming before they go bankrupt financially. That’s what they’re used to dealing with, districts of maybe less than 100 children.”

Lane said the SBRC has “no desire to dissolve this district and I’ve reminded the Department of Education, if you break it you own it. The SBRC recognizes it has ownership of the learning of the kids in this district and that they have a responsibility to the taxpayers of this district, so I think they take this very seriously.”

But other districts are watching what the Davenport district is doing and what the SBRC is doing.

If the SBRC does not forgive that money, in fiscal year 2021 the district will have to cut 100 more teachers and 56 other administration and staff.

If that money is forgiven, the district will need to shed only 25 teachers, which likely will come through attrition and retirements so no one likely will be laid off. And only 24 other administrators and staff would have to be let go.

The biggest problem with the district is declining enrollment, Potts said. But to deal with that issue effectively, the financial situation has to be solved.

“We’ve got to stop the bleeding,” Potts said. “We’ve got to cauterize these wounds financially. Then we can build.”

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