Report: HCS financial standing 'not good'; some say near 'critical' status

Report: HCS financial standing 'not good'; some say near 'critical' status

HUNTSVILLE, AL (WAFF) - Huntsville City Schools is facing a "critical" financial problem. Superintendent of finance, Bob Hagood, confirmed the system only has a little over one month of operating revenue at the meeting Thursday night.

Hagood suggested the immediate freeze of all spending, unless absolutely necessary. He referenced eliminating unnecessary expenditures for the system, including travel and purchasing cards.

His outlook is that the system will come in tight to break even for August and September to round out the fiscal year. His office also projects growth, which generates more money.

Auditors say they found four errors, which made it look like the system had more money than they did. It resulted in a $5.5 million deficit from the fiscal 2017 that spilled over into fiscal 2018.

Alabama code requires the school system to have at least one months savings in the reserves. For Huntsville City Schools, that's a little over $18 million.

The auditor believes with current spending trends, the reserves could dip to $1.8 million by fiscal 2019. That could mean layoffs and more, but the board chair says we aren't there yet.

Hagood said the system still has time to turn things around.

The meeting was very emotional. Board members found out about this error Monday. They called this a week of "fury and fear" and a potential crisis situation.

"Our number one priority is the student. We want to make sure we keep the classroom as safe as we can, that we protect the classroom as far as finance and funding goes. That is all of our priority. We're going to do all that we have to do to make that happen. We may have to make cuts, but I don't know that yet because as I've said, we have a different number from our financial officer than we do from our auditor. So we need to find out where the actual number lies," said Elisa Ferrell, the Huntsville City Schools board of education president.

Ferrell decided Thursday night to organize a budget committee, the first of its kind for the board. Michelle Watkins, representative for District 1, will head the committee.

Each week, the board will meet with the systems finance team.

The city of Huntsville sent the following statement:

The City of Huntsville has full confidence in the Huntsville City School system and its new superintendent Christie Finley to manage financial concerns that have arisen from recent transitions in operations. The School Board members and Finley are proactively working to correct the situation and have the backing and support of the City of Huntsville.

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