Financial picture improving for Timmonsville schools

Florence School District 4 is still in tough financial straits, but the small, Timmonsville-based school district has reason to be optimistic.

David Enzastiga, partner of Rish & Enzastiga Certified Public Accountants of Lexington, presented a draft copy of the annual audit of for fiscal year 2010-2011 to the school board Tuesday evening. The district is still operating in the red with a general fund budget deficit of $843,000 — an improvement over the prior fiscal year’s deficit of $1.3 million. Most of that debt is owed to the state for employee insurance and pensions.

“Last year we issued an unqualified opinion with a going concern, a going concern means financially the district was doing very poorly,” Enzastiga said. “In technical terms it would mean that for the district to last one more year would be — there’s doubt that it would — I’m standing here today after issuing that report, we made it through that year.”

A good rule of thumb, Enzastiga said, was that the district needs to get in the black and have a surplus of one to three months of operating costs in their coffers to be fiscally sound. But that is a few years away.

“It will be about a half year to a year or two until you’re back on your feet,” Enzastiga said to the board. “In 2011-2012, you should be getting closer to getting that deficit down.”

Though Enzastiga said the district is still in dire financial need, he issued an unqualified opinion for the district, which means the financial statements are sound and free from material misstatements. A good sign for the district, especially since the past year it saw three different finance directors and needed state help just to make it through the year.

Glen Steigman consulted with the district on their finances from April to July 2011 and helped draft the 2011-2012 budget that he’s optimistic about.

“I do think they’ll come out pretty well for 2011-2012 if they stay with that budget,” Steigman said. “The budget did show they could end up with a potential surplus.”

Steigman worked on the district’s general fund and capital fund budgets. The district won’t know the result of the current budget until this summer.

Board member and secretary David Morris said the board should consider another Tax Anticipation Note (TAN) from the Florence County Treasurer’s Office similar to the $1.3 million note obtained in August to fund operating costs. On Tuesday the board announced that it paid back the roughly $300,000 that it needed from the note.

A TAN is like a cash advance. Borrowing from the treasurer’s office in the form of a TAN is not uncommon for South Carolina municipalities and school districts, but Florence 4 had been rebuffed by private institutions and even by the governor’s office in its efforts to put together a borrowing plan earlier this year.

District 4 continued its revenue problems, coming in under budget for the year revenues by $268,000 that Enzastiga credited to falling state revenues and budget cuts. However expenses had a favorable variance and came in under budget at $198,000.