‘Deteriorating financial picture’ now a ‘point of crisis’ for Hillsborough public schools

By LINDA CHION KENNEY

Hillsborough school board members have been told to fix the school system’s financial crisis or step aside and have the state do it for them. That’s the word from Florida Education Commissioner Richard Corcoran, who, in a tersely worded letter dated April 22, demanded a financial recovery plan that would avoid the unprecedented step of financial receivership.

In the letter he addressed to Lynn Gray, chair of Hillsborough’s school board, Corcoran said, “Make no mistake about it, if your board possesses neither the will nor the ability to develop an approvable plan that will improve your fund balance to meet the requirements outlined in statute, I will be forced to utilize the totality of the powers delegated to me by the legislature and state constitution to take emergency action to bring the Hillsborough County school district into compliance with state law.”

Corcoran also said state officials must receive a sufficiently detailed plan within 20 days of receipt of the April 22 letter. Moreover, the plan must show “how expenses have been and will continue to be reduced and that reasonably demonstrates that the district has a plan to resolve its financial emergency for this fiscal year and the next.”

Noting a “lack of attention to this issue since 2015,” the letter outlines concern over Hillsborough’s deteriorating financial condition, which has reached “a point of crisis.”

Addison Davis, the first superintendent in 50 years to be hired from outside the school district, stepped into his job in June.

State law requires school districts maintain a positive fund balance of at least two percent. According to Corcoran’s letter, Hillsborough school officials alerted the state in December that the district’s “assigned and unassigned balance was projected to be negative $107 million as of June 30, 2021.”

Deputy superintendent Mike Kemp, hired by superintendent Addison Davis shortly after succeeding Jeff Eakins as superintendent in June 2020, said the negative balance after recent cost-cutting measures now amounts to around $80 million.

The financial crisis was addressed Friday, April 23, at a special meeting called by Gray, the school board chair. Also on her agenda was the release of a superintendent survey created, distributed and tabulated by the Hillsborough Association of School Administrators, whose ranks include principals, assistant principals, directors and supervisors.

Survey results did not paint Davis in a flattering manner, with concerns about his communication, collaboration and decision-making style coming to bear in an assessment based on close to 400 respondents.

The school board was to address the issue again at a meeting Tuesday, April 27, at which time a “corrective action plan,” also referred to as a “professional development plan,” was to be considered.

Meanwhile, Davis for months has been telling board members the funding issues they face have been festering for years, driven in part by the practice of using capital outlay and grant funds to cover a general operating shortfall. Also affecting the bottom line are losing students to charter schools and funding that since the first budget of the 2007-08 school year, when the Great Recession struck, has not kept pace with inflation, student growth and new expenses required by the legislature.

Tensions have deepened after school officials notified nearly 100 educators this month that their jobs would not exist after the end of this school year. Those affected learned of the news in a batch email addressed to “HCPS educator,” a practice Davis later said was unfortunate and should not have happened and that union officials called “callous” and “appalling.” These jobs were among the nearly 1,100 most recently nixed for the new school year to help fill the budget shortfall. The other losses have been offset by normal attrition in the workforce.

Meanwhile, Corcoran, in his April 22 letter, said he believes “it is the collective desire” of Hillsborough’s superintendent and school board “to do everything possible within the constructs of the law to prevent the district from entering into what amounts to a financial receivership.”

However, Corcoran added, “I have grave concerns regarding sometimes chaotic local discussions and actions that, left to their own devices, could expedite this outcome.”

School officials at the April 23 meeting discussed using CARES Act funding to address the fund balance shortfall, along with the prospect of selling school district real estate property, but Kemp said that money would go back to the capital fund and not to the general operating budget, which accounts for roughly $1.8 billion of the district’s $3.3 billion budget.

Corcoran, himself, put the kibosh on using pandemic-relief funds to address Hillsborough’s financial crisis. “If there is a thought on solving this recurring financial issue by using one-time stabilization funds, I strongly encourage you to remember that fixing a long-term problem by using a short-term resolution will not get the district on solid ground,” Corcoran said.

He noted that “as far back as 2015” the district’s main reserve account had dropped by $200 million.” He also pointed out that by the district’s “own very public admissions,” a leading driver of financial concerns “is Hillsborough’s long-standing overstaffing by a few thousand employees.”

By state law, districts facing a financial emergency face a series of requirements, including a forensic audit and investigation. Should a district be placed in financial receivership, state corrective measures include requiring approval of the district’s budget by the state education commissioner, authorizing a state loan and establishing a “financial emergency board to oversee the activities of the district school board.”