Audit financial highlights for Richard Hardy Memorial School
$1,824,953 - Amount school's liabilities exceed its assets.
$404,421 - Amount of deficit from school's total governmental activities for fiscal year ending June 30, 2011.
$2,229,374 - Surplus from previous fiscal year that was partially spent in fiscal year ending June 30, 2011.
Source: Tennessee Comptroller of the Treasury
A private audit of the Richard Hardy Memorial School in Marion County says it missed a principal and interest payment in September and the auditor expressed "going concerns" about the K-12 school's finances.
School board Chairman Bill Norman said Wednesday that the school's financial problems "are not a recent thing" and developed over time, including an $87,114 annual bond payment to Rural Development Corp. that was skipped in September to keep the budget balanced.
Rumors swirled following the audit presentation Tuesday night by Chattanooga accounting firm Johnson, Murphy and Wright, but Norman said any talk of closing the school or layoffs are a "worst-case scenario."
"We don't have a solution yet," he said. "We're going to meet and come up with some ideas on what we need to do. I think it's workable; it's just something we've got to buckle down and do."
Director of Schools Stan Mannon did not return calls requesting comment.
Richard Hardy Memorial School is a K-12 school with about 300 students just beyond the southern limits of South Pittsburg, Tenn. The school was built in 1925 for $300,000 by Dixie Portland Co., the concrete business that built the town of Richard City, according to the Tennessee Encyclopedia of History and Culture.
The company-built school building, which remains the most prominent structure within the community, opened in 1926 as the Dixie Portland Memorial School. The district and its school operate separately from Marion County Schools.
According to the audit filed with the state Comptroller's Office, in the fiscal year ending June 30, 2011, Richard Hardy had long-term debt totaling $3,081,577. One bond issued in 2000 totals about $1.29 million and another issued in 2004 totals about $1.88 million, the audit said.
"[T]he school has not made principal and interest payments on their outstanding debt, which raises substantial doubt about its ability to continue as a going concern," the audit states.
Author of the audit, Paul Johnson, was out of town on Wednesday and could not be reached.
Meanwhile, state officials are keeping an eye on the problems and progress.
"It's definitely a district that we have been monitoring and we're very aware of their financial situation," Tennessee Department of Education spokeswoman Kelli Gauthier said Wednesday.
"The auditor told them last night that they'd need to come up with $300,000 this fiscal year or they wouldn't be able to stay in business," Gauthier said. "As we do with all districts, we will continue to provide Richard [Hardy] with technical assistance in regards to their finances."
Norman said the three-member school board has a lot of work ahead. He said he wasn't sure where the $300,000 figure comes from and that it would be a subject of board study.
"It's not an overnight problem and it's not an overnight fix, but its something we've got to fix," he said.