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Facing a projected $17 million shortfall when the year started, the East Baton Rouge Parish school system managed to come out roughly even financially at the end of 2016-17, this despite a disastrous flood and a big decline in student enrollment.

That’s the conclusion of the annual audit of Louisiana’s second largest public school district for the 2016-17 fiscal year, which ended June 30. It was prepared by the firm Postlethwaite & Netterville.

The parish School Board debated the audit on Nov. 2 and then approved it without discussion on Thursday.

“You basically broke even for the year, which is better than you budgeted,” Freddy Smith, an auditor with Postlethwaite & Netterville, told the School Board on Nov. 2.

The school system ended the 2016-17 fiscal year with $61.5 million in the bank available for emergencies. That's almost $10 million more than it was predicting back in April, and it’s $2.3 million more than the amount the school system had at the end of the prior fiscal year.

Those reserves likely will likely come in handy in the near future.

At least five charter schools are set to open in August, all approved by the parish School Board, likely educating more than 2,000 children in that first year and more in the future. Most of those students are expected to come from other public schools in Baton Rouge, furthering reducing state funding to the school system. Charter schools are public schools run privately via charters, or contracts.

At the same time, the school system is spending money on a range of new magnet programs, as well as a new career center, to combat the competition from charter and private schools.

The flood and its aftermath has also taxed school resources. As of late October, the school system had obligated more than $41 million for repairs and reconstruction, less than half the $83 million it’s expected to spend. Yet it had taken in only $17.4 million through flood insurance and FEMA reimbursement.

Since 2010, the school system has cut its budget annually because of a mix of tight state funding, a variety of expenses and growing competition from charter schools that have drawn money and students from the parish system. That budget-tightening, plus conservative revenue forecasting has allowed the system to maintain its financial reserves.

During the 2016-17 fiscal year, the school system overall took in $616 million and spent $610 million. The general fund, which accounts for 70 percent of spending, followed a similar pattern with revenue slightly outpacing expenses. The general fund is the system's primary source of unrestricted money to pay for operating expenses, finance new initiatives and cover emergencies like the recent flooding.

At the beginning of the fiscal year, the picture was far less rosy. The school system estimated it would spend $17 million more than it took into its general fund, drawing down reserves. A windfall of post-flood sales tax money, as well increased property tax collections, more than offset decline in state funding due to declining enrollment.

Meanwhile, spending for general operations came in 4 percent less than predicted. Spending grew in spots. For instance, traditional classroom spending, or “regular education,” which had come down in the past few years, increased by more than 5 percent in 2016-17, despite the enrollment decline.

The current fiscal year, which began July 1, is beginning in a similar fashion. Expected spending is outpacing anticipated revenue by $19 million, which means a projected deficit that is even higher than a year earlier.

As part of his new contract, Superintendent Warren Drake has a new set of performance goals. One calls for him to submit to the board a balanced budget, one where spending matches revenue.

To get there, Drake has tapped Chief Budget Operations Officer James Crochet to lead in-house committee looking into “zero-based budgeting.” That’s a budget method where you start with zero and consider item by item every expense to see if it’s justified. Drake said he expects that committee will conclude its work by January.

The school system is cutting its expenses in other areas. In September, after four months of negotiations, it struck a deal with Philadelphia-based Aramark to handle school maintenance and other support work for $5.3 million less per year than the company did previously.

The audit did cite some problem areas. For the second year in a rule, auditors questioned the accuracy of student graduation records. The firm flagged this issue in its 2015-16 annual audit. And in 2014, it conducted an extensive review of graduation records in the wake of an investigation by the Louisiana Department of Education. The investigation occurred after a student was allowed to graduate despite being short a required course credit.

Smith said the school system has improved its record-keeping but it’s still not up to par.

“I will say that documentation improved,” he said.

Despite that repeated finding, the auditors have issued an "unmodified opinion" saying the school system's basic financial statements are sound. The school system's finance office this year again received a certificate for excellence in financial reporting from the Chicago-based Government Finance Officers Association.

Follow Charles Lussier on Twitter, @Charles_Lussier.