Neighboring Coatesville school district operating with negative fund balance

There are more than a dozen school districts throughout the state operating with a negative fund balance, but Coatesville Area School District is the only school district in Chester County on that list.

School districts are required to maintain a balanced budget every year. As a part of maintaining a secure budget, school districts set aside an allotment of money to aid in unexpected costs in the future — or a fund balance. Those costs help prevent high tax increases on their residents as well as aid school districts in planning for future finances.

CASD has experienced issues with maintaining its fund balance for a number of years. For 10 different school years since 2000 the school district’s fund balance didn’t align with the established policy that regulates the overall amount in the account. Seven out of those 10 school years, the CASD’s fund balance was negative.

According to school district business administrator Ronald Kabonick, it’s difficult to determine how long it will take for the school district to reach a positive fund balance due to unexpected expenditures that may arise in the future. However, the school district is working diligently to restore its fund balance.

“There are so many things that can affect that (the fund balance),” Kabonick said.

Budgets from the 2009-10 to 2014-15 school year show CASD invested $7.64 million into the reserve. About 60 percent, or $4.54 million, of that total was designated in 2014-15.

Kabonick said the difference between the school district’s reserve and the fund balance in a reserve is what the school district expects to spend on miscellaneous items for the next school year. If those funds are not spent, it can be transferred to the fund balance, he said.

Pennsylvania School Board Association representatives said the unassigned fund balance, or reserves, can be used for general fund expenses only. Other funds must be classified as “nonspendable, restricted, committed or assigned.”

CASD Superintendent Cathy Taschner said she wants to public to see what happened to the school district’s finances in the past and create a future solution that would pull the school district out of financial detriment.

“It’s important that the people have seen what has happened here (in the school district) over time,” she said. “We will do what we need to do to bring financial stability back to this district.”

For the 2014-15 school year, the district approved a $148 million budget with a 2.6 percent tax increase. The school district also had to fill a $4.35 million gap in the budget after the termination of the sale of delinquent taxes.

Recently, the school district announced school taxes are expected to increase nearly 5 percent for the 2015-16 school year to help the school district fill a gap in the budget possibly caused by the school district deferring $208.6 million in general obligation bonds since 2007.

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