BURLINGTON — Financial insolvency could be several years down the road for the Burlington-Edison School District — not one year — due to changes in how the district makes payments and through “tightening the belt.”

Finance Director Joe Stewart said the district could have until 2014 — rather than 2010 — to stave off insolvency.

The timeline change is a relief to district officials, who also say there is no room for complacency.

“We have time to be thoughtful, but we don’t have time to do nothing,” Superintendent Laurel Browning said.

In 2004 and 2007, School Board members voted to buy property using interest-only, nonvoted bonds. The district has nearly $7.5 million in debt from those two bond issues, including interest. Two other issues, the bus bond and an energy upgrade, bring the total debt to nearly $9 million.

The principal payments start to come due next month. State law allows school boards to take on debt without voter approval up to 0.375 percent of the district’s assessed property value.

Browning said she and Stewart have been trimming the district’s budgets for months to try to come up with ways to delay the onset of financial insolvency, after which the state could intervene.

This year alone the district has increased its cash on hand by $570,000 by not replacing staff who retire, changing staff hours, cutting district travel and using federal stimulus money instead of the district budget to preserve jobs.

The district has also changed and enforced policies that are making a smaller financial impact, Stewart said, such as requiring teachers to use purchase orders first instead of asking for reimbursement.

Stewart said the district will halt all bus purchases for the time being and will pay off a nearly decade-old nonvoted bus bond, which still has $1.2 million remaining, with state money earmarked for bus replacements.

The bus bond payments are roughly $180,000 per year. The district has been making those payments from its debt service fund. With the transportation fund paying for some of the district debt, the remaining annual payments will now be more forgiving. They would drop from an annual payment of $650,000 in 2010 to about $474,000. 

The lower payment from the debt service fund means it will take longer for the district to go into insolvency.

Board member Liza Bott said the 2010 date was a worst-case scenario.

“There is certainly relief in knowing that we wouldn’t be overseen by the state in the near term,” Bott said.

Board member Bill Wallace said that gives the district more time to form its community group, which will look at the district’s options to avoid insolvency and pay down its nonvoted debt. Browning is in the process of forming the group.

“It’s nice to have that additional time,” Wallace said. “We have time to make an informed decision with the community on how to proceed.”

But Stewart said the 2014 date could change depending on the economic climate. The state is currently facing a projected $1.7 billion deficit for the current biennium, and K-12 budgets could be cut again by lawmakers.

Much can go wrong that would require the district to make emergency expenditures from its general fund, Stewart said. Student enrollment could drop, or an emergency maintenance item could require a hefty investment.

Stewart said his projection does not include other revenue sources the district could have, such as selling unused property.

Jerry Jenkins, superintendent of the Northwest Educational Service District, said he’s met with Browning “a couple of times.” He also offered to work with the district finance department so the district can give its community group realistic numbers instead of hypotheticals as to what can happen if the district becomes insolvent.

“They have taken steps to reduce spending ... that show a responsible and proactive approach,” Jenkins said.