Two school districts in fiscal distress are nearing the point at which the state is mandated by law to reorganize their operations.
But on Monday, Pulaski County Special School District Superintendent Jerry Guess and Helena-West Helena Superintendent John Hoy appeared next to Arkansas Education Commissioner Johnny Key at a joint House and Senate Education Committee meeting to reassure lawmakers that they are working on their districts' problems.
The districts are both in their fifth year of fiscal distress. After a district has been in fiscal distress for five years, the state Education Board is obligated by state law to either return the district to the control of a locally elected school board or, if the district has not corrected its financial problems, "the state board, after a public hearing, shall consolidate, annex, or reconstitute the school district."
The Pulaski County Special district was classified by the Education Board in May 2011 as being in fiscal distress because of widespread financial problems and mismanagement uncovered in two investigations by the Arkansas Division of Legislative Audit in the previous year. At the urging of the Joint Legislative Audit Committee, the state took over management of the district in June 2011.
Jacksonville is forming its own school district that will detach from the Pulaski County Special School District on July 1. When Jacksonville detaches, the Pulaski County Special School District will shed some expenses, but it will also lose about $40 million in state revenue a year.
"I think the detachment of Jacksonville presents a considerable challenge to this district," Guess said in an interview. "It's a long-term benefit to the Pulaski County Special and to the Jacksonville/North Pulaski districts, but, I think, in the short term there is a great deal of exposure for both.
"They are fixing to put together a school district that has never had a budget before," Guess said about Jacksonville. "They are dealing with a lot of unknowns. We are fixing to detach 4,000 kids. There are a lot of unknowns and a lot of work to do on how we address the loss of those kids. We have to put together a budget for the 2016-17 school year that acknowledges their detachment. There is a lot of short-term risk, I think."
The resolution of a long-running desegregation case in Pulaski County means the district is also set to lose $20.8 million in federal money in 2017. The district ran a fund balance of about $18 million in 2015.
Arkansas Code Annotated 6-20-1910 says the state Education Board may grant additional time for a public school or school district to remove itself from fiscal distress if it was not able to do so within the five years "due to impossibility caused by external forces beyond the control of the public school or school district."
Guess told lawmakers he believed the district met that definition. The Pulaski County Special School District is a defendant in the federal school desegregation lawsuit and is under court supervision of its desegregation efforts. That precludes the state Education Board from consolidating it or reconstituting it for fiscal distress -- unless the state gets permission from the federal court or until the district is declared unitary and released from court supervision.
Hoy said the Helena-West Helena district isn't facing budget shortfalls. The district has posted fund balances of $6 million for several years.
Key said Monday that the Education Board has classified the district as in fiscal distress because of audit findings -- not because the district lacks the funding to operate.
That was a point that Rep. Charlotte Douglas, R-Alma, and Rep. Michael John Gray, D-Augusta, emphasized.
"Should we keep a school district held hostage because of coding errors or a bookkeeper that's not qualified?" Douglas said. "The school itself is not creating these problems. It's under [the Arkansas Department of Education's] control."
Key said the state is involved with the district for support and cannot fire employees who perform poorly.
The state Board of Education will review the status of the Pulaski County Special School District during a work session set for 6:30 to 8:30 p.m. Thursday.
The work session will be in the auditorium at Mills University Studies High School, 1205 E. Dixon Road, Little Rock.
Public comment will be accepted at the work session, as time permits. People who wish to address the board regarding the district may sign up to do so on the day of the meeting.
The Education Board is also meeting at 10 a.m. Thursday and 9 a.m. Friday at the Arch Ford Education Building, 4 Capitol Mall, for its regular monthly session.
Metro on 01/12/2016