Money sits unused in low-interest accounts because spending it would create accounting "deficits" that are forbidden by provincial law.
Victoria (27 Aug.2010) - Cash-strapped British Columbia school districts have a pool of $1 billion in badly-needed funds that they cannot access because of restrictive provincial accounting rules, says B.C. Auditor General John Doyle.
A report released this week examines how school districts and colleges manage working capital. It concludes that most are holding excess cash in short-term investments.
Doyle says most of the unused money is sitting in low-interest accounts rather than being invested. The result is that the province is losing up to $40 million a year, he estimates.
The report says the problem for the boards is provincial legislation requiring school districts to balance budgets. If they access the money, it will be logged as an expenditure and with no balancing revenues to offset it would create a bookkeeping deficit if used.
"The fact that they've got cash in the bank account is not income," Doyle told CBC News. "It's money that's trapped in the system."
Doyle says the money has been building for years. Four years ago, the pool totalled about $600 million.
Several B.C. boards face multi-million-dollar budget deficits. The hardest hit is the Vancouver board, with an $18 million budget shortfall.
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