O’side schools’ finances still under scrutiny

The Oceanside School District has landed on the state comptroller’s susceptible-to-fiscal-stress list for the second year in a row.

“We do have a plan to improve, but it’s going to take a few years,” said Chris Van Cott, Oceanside’s assistant superintendent for business. The district, he said, had used its reserve funds to keep programs intact, which initially landed it on the list.

Also as a result, the district’s Moody’s rating fell from Aa2 to Aa3, which impacted the district’s interest rates for bonds.

Van Cott explained that the district had to pay up front for expenses like portable classrooms at the middle school, which were destroyed by Hurricane Sandy, and wait to be reimbursed by the Federal Emergency Management Agency. Reserves will be replenished at the end of June, when state aid for the current school year comes to the district, as well as staff’s unused vacation days and retirement funds.

Last year, the state did not release aid numbers until after this year’s budget was finalized. The district planned for about $18 million from the state, but received $19 million.

Van Cott said that if the district could add $1 million to its reserves, it would be taken off the susceptible-to-fiscal-stress list. Ideally, the reserves would total 4 percent of the current year’s budget, or $5.8 million.

The state comptroller grades districts for fiscal stress on a 100-point scale. A score of 25 to 44.9 means a district is susceptible to fiscal stress, 45 to 64.9 means moderate fiscal stress, and those with scores of 65 or above are judged to have significant fiscal stress.

This year Oceanside had a score of 31.7, up from 30 last year. The increase is the result of the district’s issuance of tax anticipation notes in the past three years. The notes are issued so a municipality can borrow money that it needs before tax revenues are transferred to the district in July.

“We borrow money every year to help with the cash flow needs of the district,” Van Cott said. “That is a reflection of our cash flow cycle. You borrow, and you pay it back in the same year.”