Bills target school-board finances

St. Vrain, Elizabeth problems inspire package to protect districts, taxpayers

By Monte Whaley
Denver Post Education Writer

Friday, January 31, 2003 - A package of bills aimed at protecting school districts from financial disaster and taxpayers from "fiscal moonshine" was introduced Thursday by lawmakers.

All five measures were inspired by revelations that mismanagement plunged both the St. Vrain Valley School District in Longmont and the Elizabeth School District southeast of Denver into multimillion-dollar deficits.

The proposals range from one that would shore up accounting procedures in school districts to one that would allow citizens to block bond issues if they felt they were misled by school officials.
Problems in the St. Vrain and Elizabeth districts were "a wake- up call," state Treasurer Mike Coffman said Thursday while being flanked by bill sponsors.

"We must do all we can to see that it never happens again," Coffman said. "Colorado's students and taxpayers deserve nothing less."

Bill sponsors and state school officials said they will work hard to get the bills passed this session.

Many of the bills were recommendations made by a special group formed last month to study the fiscal problems in the two districts.

Mostly, the proposals will help ensure school districts get timely and easy-to-understand financial information before it's too late to fix problems, Coffman said.

The St. Vrain and Elizabeth boards said the deficits caught them by surprise.

One proposal - Senate Bill 149 - includes several "common- sense" measures such as requiring school districts to adhere to generally accepted accounting principles and prohibiting spending over available revenue, Coffman said.

The measure also would require state-mandated reserves to be fully funded and for school boards to review their district's financial situation at least quarterly. It is co-sponsored by Sen. Ken Arnold, R-Westminster, and Rep. Nancy Spence, R-Centennial.

Arnold and Rep. Shawn Mitchell, R-Broomfield, are sponsoring a proposal to modify the state's Interest Free Loan Program for school districts. The lawmakers want the state to pass its interest costs on to borrowing districts.

"The program costs the state several million dollars per year in interest costs that it can currently ill afford," Mitchell said. "And school districts would still benefit from the state's ability to borrow at the lowest rates available."

The initiative would require school boards to formally vote on all loan requests.

A related proposal - SB 158 - would help districts that find themselves unable to repay loans by the annual June 25 deadline. It would allow school districts to engage in sale-leaseback transactions to satisfy restrictions on carrying debt from year to year, lawmakers said.

The legislation "will provide school districts the flexibility they need to comply with TABOR (Taxpayer's Bill of Rights) while meeting their financial obligations," said Sen. Ron Tupa, D-Boulder. He and Rep. Jack Pommer, D-Boulder, are co-sponsoring SB 158.

SB 139 would let citizens fight bond issues when they felt that a school board, city, county or special district withheld key information before a bond election.

Top St. Vrain officials knew of the district's widening deficit before last fall's bond election but did not tell voters, Coffman said.