Lawrence school district facing budget shortfall after receiving nearly $500,000 gas bill
photo by: Dylan Lysen/Lawrence Journal-World
Story updated at 4:06 p.m. Wednesday:
Members of the Lawrence school board want the school district to investigate whether it should have to pay a nearly half-million-dollar monthly gas bill that the district received following a period of intense cold in February.
The district’s finance director, Kathy Johnson, informed the board of the bill during a study session Monday evening regarding the district’s budget. Johnson said the bill was unexpected and amounted to close to 10 times what the district typically pays per month.
“Our average gas bill is about $54,000 a month, and our gas bill was almost $500,000,” Johnson said. “So it’s 968% over what a normal monthly bill is and not something that we would have budgeted for.”
Specifically, the gas bill was $498,000 for one month of service for the district’s various buildings, and there could potentially be additional costs. Johnson said the district was still gathering some of the electric bills for that period, which could also represent expenses beyond what the district budgeted. She noted for example that the former Wakarusa school building, which the district uses for its virtual school program, is all electric.
Johnson said after the unexpected gas bill and a 15% insurance rate increase that equates to about $100,000 in additional costs, the district currently estimates it is facing a shortfall of about $550,600. She said other districts have been using cash balances, reserves or unspent allocations to offset shortfalls, but the district had used unspent allocations to cover revenue losses and must seek other solutions to pay for the gas bill.
“There’s no funds that we’re aware of right now for coverage of this from an outside source at this point,” Johnson said. “We’re still looking, but at this point it’s due and something that we have to navigate.”
School board President Kelly Jones and board member Shannon Kimball both asked about the possibility of retaining legal counsel to dispute the gas bill, as some other districts that received such bills have done. Kimball, who has a legal background and has also served in leadership positions with the Kansas Association of School Boards, said discussions have occurred about whether the massive increases in gas bills were appropriate or legal and that they could potentially be price gouging. At a minimum, Kimball said, the district should seek legal advice about how to handle the situation.
“I very much believe our district should hire legal counsel to at least give us advice about what to pay on this bill in the short term,” Kimball said.
Johnson said that even if the gas company allowed for a payment plan or the district decides to dispute the charges, the district needs to budget for the unexpected bill in the 2020-2021 budget year, which ends on June 30.
As part of the budget study session, Johnson provided an update on the 2020-2021 budget, which in addition to the unexpected gas bill included revenue shortfalls. According to presentation materials, the district expects to lose about $1.87 million in funding for 2020-2021 because of enrollment declines.
Johnson said the district was able to balance out that loss with an increase of $900,000 in state aid for the district’s virtual school and about $1 million that went unspent due to savings associated with virtual learning during the coronavirus pandemic. Johnson said those savings included $492,000 from vacated classified positions the district did not have to immediately refill, as well as savings from unspent allocations for extra duty hours, substitutes, transportation routes, field trips and library costs.
Superintendent Anthony Lewis told the board that some districts have contacted KASB about their gas bills and that the district could also reach out for guidance.
Johnson said that some of the figures shared Monday may shift as an audit is still pending and that the district would bring final numbers to the board once known. She said that in the next two months the district would continue to look at all building budgets and evaluate where costs could be contained, and that as it gets closer to year’s end she would come back to the board with more details.
The Journal-World has reached out to the school district with additional questions about the gas bill, including the name of the gas company and whether the $498,000 bill is due solely to increased use during the extreme cold or if the company also increased the gas rate, among other details. District spokesperson Julie Boyle said the district was continuing to research options with regards to the bill and that it would provide the additional details when they were available. On Tuesday evening, Boyle said Constellation was the district’s gas service provider and the bill was for 17 of the district’s buildings.