School district budget gives distorted picture
June 4, 2003
An analysis shows discrepancies in Salem-Keizer’s finances and as much as 38
percent of its operating funds are in accounts not shown to the public.
When the Salem-Keizer School Board adopts next year’s spending plan Tuesday,
neither its members nor the public will know exactly what they’re getting for
Spending within the Salem-Keizer School District bears little resemblance to the
budget figures that go before the public, a Statesman Journal analysis of school
district financial reports has found.
Examples of this include discrepancies between budgeted amounts and actual
spending and maintaining operating dollars in accounts outside the general fund.
Last school year, the school board exceeded its budget by 17 percent; school
principals spent 27 percent more than budgeted; and library services went over
budget by 28 percent. Meanwhile, the school district spent 8 percent less than
budgeted on direct instruction.
The public also doesn’t see more than a third of the district’s spending on
operations, which is accounted for outside the $248 million general fund — a
move discouraged by the state but used more by Salem-Keizer than other school
For example, the general fund — the only one put forth for public scrutiny —
lists only $1.4 million, or about 4 percent, of the $35.3 million that the
district plans to spend on its human resources department this school year.
It lists only $1.5 million, or about 15 percent, of the $10.4 million budget for
its financial services department.
And it lists only $2.4 million, or about 6 percent, of the $42 million it has
set aside to purchase noninstructional professional services.
The newspaper undertook the analysis after complaints from parents, taxpayers
and the district’s own Budget Advisory Team that they were not getting a
complete picture of district spending. The analysis used audited spending,
budget and employment figures reported by the school district to the Oregon
Department of Education — figures that are not included in the district’s public
Among the findings:
Actual vs. budgeted
Last year, in the general fund alone, spending on instruction was 8 percent less
than budgeted, while spending on support — such as principals, administration
and building maintenance — was 8 percent more than budgeted.
Ron Turner, the district’s fiscal services director, said part of the
discrepancy is a result of unexpected events, such as a cold winter that
requires more heating fuel, or high enrollment in a special education program.
“We budget it in one way, but we may spend it in another way,” he said.
Also, schools receive money based on budgeted amounts for teachers, materials,
and other items. But they can spend that money however they like, Turner said.
Some may choose larger class sizes to fund a special program.
“All they care about is that they have enough money on the bottom line,” he
Still, the variance is wider in Salem-Keizer than in comparable Oregon
In Portland — the only Oregon district larger than Salem-Keizer — spending on
instruction last year was 1 percent less than budgeted, and spending on support
services was 1 percent more than budgeted.
In Beaverton, which is slightly smaller than Salem-Keizer, spending on
instruction was 3 percent less than budgeted, and spending on support services
was 1 percent less than budgeted.
Salem-Keizer School board member Michael Parker said that worries him.
“The school board anguishes over this budget every year,” Parker said. “We would
expect the administration to put the money where it’s supposed to go. If we’re
underspending on instruction, that’s a great concern.”
General fund vs. all funds
Most parents probably think that funding for sports and activities has been
slashed in the past two years, during which the district has cut middle school
sports and raised participation fees.
Indeed, the general-fund budget has decreased, from $9.4 million in 2000-01 to
$3.1 million this school year.
What the district’s public budget documents don’t show is that the district
increased spending on sports and activities from other funds.
In 2000-01, spending increased from zero to $8.4 million for a total growth of
That scenario is repeated throughout the budget, making it hard for taxpayers to
know what they’re really buying.
“It makes me mad,” Parker said. “When we start hiding money in the risk
management fund or the asset replacement fund, that makes me nervous. I don’t
think we’re telling the truth.”
Salem-Keizer keeps more operating funds in accounts outside the general fund
than most school districts.
In addition to the general fund, the state Department of Education includes
special revenue and internal service funds as operating accounts. It does not
include construction bond or debt repayment funds.
The state tells school districts to keep as little as possible in those other
accounts in order to present a clear financial picture to their school boards
and the public.
Salem-Keizer keeps 38 percent of its operating funds in accounts outside the
general fund, more than Portland and Beaverton, at 24 percent each. The state
average is 22 percent, and the average of the 15 largest school districts is 26
School board member Craig Smith said that although several million dollars are
transferred from the general fund to other funds, much of the other fund revenue
comes from fees, grants and self-supporting services. Although that still is
public money, it doesn’t come directly from taxpayers, so the district doesn’t
give the public as much detail about spending in those funds.
Superintendent Kay Baker said the gap between budgeted and actual spending is a
sign of good fiscal management. She tells department directors to spend only 95
percent of the amount budgeted to them, Baker said.
“Administrators in this district have been really great at sticking to that,”
Baker also said that although people say they want to know how money in other
funds is spent, they often lose interest after a brief explanation.
“They really want to know about the general fund,” she said.
Mark Adams, the school board’s vice-chairman, said the newspaper’s analysis does
not indicate wrongdoing or intentional deception within the district. But it
does point out that the public is getting a distorted picture of the district’s
finances, he said.
“Unfortunately, things are not as clearly categorized as they should be,” Adams
said. “If you’re going to buy apples, pay for it out of the apples budget. Don’t
pay for it out of the oranges budget.”
The analysis lends weight to the budget committee’s recommendation that Baker
hire an independent auditor, reporting directly to her, to examine all aspects
of the district’s spending, Adams said.
“Right now I don’t believe we have a true checks-and-balances system,” Adams
School board member Bonnie Heitsch defended the current system.
“It’s complicated, and we do the best we can with the information we have at the
time,” Heitsch said.
Tracy Loew can be reached at (503) 399-6779.
ANDREA J. WRIGHT / Statesman Journal
Martha Garcia, an instructional assistant at Myers Elementary School in Salem,
teaches reading Tuesday to four students.