School board members voiced their concern Monday after hearing a financial report showing the district is in better shape financially than it appeared when this year’s school budget was approved.

Preliminary audit work shows the district can expect to finish with no less than a $2.2 million surplus from the 2009-2010 fiscal year. This would boost the district’s fund balance from $3.77 million in 2009 to $6.29 million entering the 2010-2011 school year.

The projected results reflect a $2.9 million transfer from a 1-cent sales tax approved by voters in 1994 to help pay for a major school building program. The district’s healthier balance sheet comes after the school board lowered salary and benefit expenses and spent less money than expected on operating the food service program.

School trustee Billy Blackwell said he is concerned the school board did not find out about the additional money before this year’s budget was approved in June.

“We had to base our budget on figures given to us by the district administration, and when those figures are not correct, then it is bad all around. This is unacceptable,” Blackwell said. “We asked the finance director on several occasions whether there was any other money out there that we could use to balance the budget. Now we find out we have picked up at least $2.2 million in the general fund.”

The school board received the favorable report two months after approving a $56 million budget with employee furloughs, lower salaries and smaller school budgets. This year’s budget is $6 million less than the previous year.

School board chairman Donnie Lee Smith said the school board’s budget committee should have worked more closely with finance director Ben Childs to develop the final budget.

“He (Childs) wasn’t allowed to come to the meetings when the budget was being formulated and the process failed,” Smith said.

Interim Cherokee County superintendent Kim Bagwell took issue with Smith’s statement that Childs was not allowed to participate in district budget meetings.

“He was never told not to come to the budget meetings,” Bagwell said.

The interim superintendent said Childs was out on medical leave for much of the district’s budget process.

Interim financial consultant Charles Tillotson cautioned the projected $2.2 million budget surplus could change as the district is just beginning the process of balancing accounts to close out last year’s financial records. Tillotson was hired two weeks ago to assist the finance department while Childs is out on medical leave.

“There are always pluses and minuses when reviewing the balance sheet on final claims reports for federal and state special funds,” Tillotson said. “With the director being out for an extended period of time, end-ofyear activities that would normally take place in late June through early August are being dealt with now. For the year, our present estimate is the district should expect to see a surplus of no less than $2.2 million.”

Despite the positive news, the school district is still operating on a tight budget this year. School trustees voted in June to transfer $400,000 from 1-cent sales tax money to offset a projected shortfall at the end of the 2010-2011 school year.

The school board has adopted a Tax Anticipation Note resolution annually for the past several years to operate the school district in the fall months before tax revenues are received.

In June, school trustees voted unanimously to borrow a maximum of $13.5 million until tax revenues arrive in January. The Tax Anticipation Note will be paid back in May of 2011.