School districts get a break as $43.8M surfaces in state fund

Auditor plans investigation into funding confusion as officials warn that cuts likely are still on horizon

School districts in Oklahoma received a short-term reprieve from some budget cuts they were expecting to receive details about this week.

Education Department officials have been warning school district officials for weeks to prepare to shoulder their share of a $19 million revenue shortfall relating to what is known as the 1017 Fund.

On Tuesday, however, state officials confirmed there was actually a “cash balance” of $43.8 million in the account and those particular cuts would not be necessary — at least for now.

Meanwhile, state Auditor Gary Jones said he plans to audit the state Education Department and budget agency after the money came to light.

“We’re trying to find out where that money was and why it was not accounted for at the proper time,” Jones said Wednesday.

Education and budget officials issued a news release Wednesday downplaying confusion about the funds in the account.

“There is no newly found money in the 1017 fund,” the release from the Education Department and the Office of Management and Enterprise Services reads. “Time will determine whether the fund is

solvent or fails this fiscal year.

This year, the 1017 Fund is expected to provide about $729 million for the operation of Oklahoma’s public schools. That amount represents nearly 39 percent of funding for schools, education and budget officials have said.

Money for that fund comes from individual and corporate income tax, sales tax, use taxes (Internet sales) and tribal gaming revenue, officials said.

The finance agency manages the fund, while the Education Department distributes the money to school districts.

“They are going to get their allocations just like they always do,” said Matt Holder, superintendent of finance and federal programs for the Education Department.

Holder, however, cautioned the fund could fail before the end of the current fiscal year in June if revenues decline dramatically.

“Our concern remains that we know cuts are coming, and we want our schools to have as much advance notice as possible,” he said.

State schools Superintendent Joy Hofmeister expressed concern over the stability of the fund.

“We tend to view this less than optimistically,” Hofmeister said. “We believe there is going to be less money, whether that is 2016 or 2017, and our priority is to prepare districts as early as possible for that shortfall.”

Norman Public Schools Superintendent Joe Siano said the projected $19 million budget cut to the 1017 Fund would have cost his district about $400,000.

“We assumed we would lose it,” Siano said. “If we don’t, that will put us in a little better position going forward.”

Although schools received a reprieve this week, there are more budget cuts on the horizon.

“School districts need to prepare for a deepening of the General Revenue failure and a failure in another account funded entirely by oil taxes,” the joint statement says.

John Estus, a spokesman for the Office of Management and Enterprise Services, said the agency is “reasonably confident” the 1017 Fund will meet its obligations this year.

“I understand and sympathize with the superintendent’s situation,” Estus said. “She has more than 500 school districts looking to her for guidance on their budgets for the rest of the year.

“We sympathize with her because we are in the same position with state agencies. We have more than 100 agencies looking to us for guidance the rest of the year.”

Jones, meanwhile, said he is obligated to look into why there is more money in the fund than anticipated.

“It looks to me that there was an accounting error of some type,” he said.