IPS board members got a huge surprise, an almost unbelievable surprise, at Tuesday night's meeting.
The struggling inner city school district isn't in the dire financial trouble, board members, parents, residents and lawmakers have been lead to believe. Instead of wrestling with a $30 million projected budget deficit, Indianapolis Public Schools finished 2013 with an $8.4 million balance - a surplus.
Dr. Lewis Ferebee discovered the budget facts during a top-to-bottom review of the books.
"We have a situation where we have overprojected our expenses and we have been reducing our expenses all at the same time," he said.
Under previous Superintendent Dr. Eugene White, who left last year, budget planners assumed higher expenses and lower revenues. The district didn't implement some programs and last year laid off about 100 staff members, all of which saved more money.
Everyone on the board stopped short of blaming White.
"We don't want to live in the past. We want to take this and become better and become stronger," Commissioner Gayle Cosby said.
"Together we can get this thing together. We are very motivated to help our students reach the highest level," Ferebee said.
Earlier Tuesday, Ferebee called the fiscal news "a grand opportunity for IPS, the new IPS."
IPS board members, who were surprised by the discovery, say it's a new day for the district.
"We are not pleased. This has been a widespread miscommunication regarding our finances," said Commissioner Andrea Roof said.
"It was very much a surprise to us," said Commissioner Diane Arnold.
How did that happen?
An investigation done by new Ferebee found that, for years, IPS "intentionally overstated expenses." In a meeting with reporters prior to the meeting, Ferebee called the budget process "flawed" and lacking "transparency."
The annual budget, released to board members and the public, reported expected revenue and expenses. Apparently, administrators did not share the actual year end revenue, expenses and balances.
Here is a look at the 2013 General Fund numbers supplied by IPS:
Projected Revenue $244 million Actual Revenue $246 million
Projected Expenses $274 million Actual Expenses $238 million
Projected Deficit -$30 million Actual Balance $8.4 million
How did IPS not spend as much money as expected?
Ferebee says academic programs, such as the expansion of pre-Kindergarten, were not implemented or weren't as big or as expensive as planned.
Even with the surplus, IPS isn't swimming in cash. That $8.4 million balance amounts to less than 3.5% of the school system's General Fund Revenue. Those dollars pay for teachers, academic programs and other classroom costs.
Ferebee says it is too early to project the state of the 2014 school budget, which began January 1.
"We still need to be efficient and effective. We still need to be lean. We will continue to right size," he insisted.
"We do not have extra money. Rather, thanks to our superintendent's investigation, we have found that we are not cash poor," Commissioner Michael Brown warned.
So the district will follow through with planned administrator cuts at IPS headquarters, which has been one of Ferebee's top priorities.
What will this surprise financial health mean for children?
"It's an opportunity to enhance students' outcomes and support our students," Ferebee answered.
He does not expect to close any schools for the 2014-2015 or a reduction in the teaching force.
The superintendent wants what he describes as greater transparency in the budget process. He is calling for an independent audit of all financial operations, monthly financial reports comparing actual revenues and expenses to the budget's expectations as well as quarterly budget briefings.
A school system with scores of schools and thousands of employees, responsible for educating 30,000 children, is getting an apparently long overdue and needed lesson in accounting.