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The Frontier School District’s rainy day fund has diminished by $11.3 million in the last three fiscal years, prompting the district’s auditors to issue some stern advice for leaders to leave alone what it has left in savings.

While the district received a “clean report” from its auditors, Lumsden & McCormick managing partner John Schiavone didn’t shy away from talking about the uncomfortable numbers.

The district’s audit news comes at the same time that Frontier this week implemented an already planned spending freeze districtwide at the direction of Interim Superintendent Paul G. Hashem and school Business Manager Richard Calipari.

Schiavone highlighted the $11.3 million of fund balance spent by the district in fiscal years 2011, 2012 and 2013 – also pointing out that 77 percent of last year’s general fund expenses were tied to employee expenses.

Schiavone also noted that the district’s workers’ compensation reserves have dwindled from previous levels. “Things have deteriorated over the last three years. You certainly are not where you were three years ago.”

Frontier is no stranger to budget pain, having, like other neighboring districts, faced its share of unpopular budget and personnel cuts, and in some cases, adjusting programs to work within its budget parameters.

What remains in the district’s rainy day fund amounts to $7 million, and that caught the attention of the School Board.

“Should we not touch any fund balance money in the next year?” Board member Jack Chiappone asked.

Schiavone didn’t think long before he answered him. “Trying to hold your fund balance constant is the best advice I can give you,” he said. “Don’t touch it.”

As part of the fund balance picture, Frontier has $195,000 left in unassigned fund balance, which does not stipulate what the money can be used for. By law, the district could hold as much as $2.9 million in that category.

The much lower amount of unassigned fund balance also is a red flag to the district. “That is a big swing and a big change,” Schiavone said. “That is your cushion. That is going to make this fiscal year coming up very challenging.”

Overall, Schiavone warned Frontier that budget planning for the 2014-15 school year promises to be even more challenging than in the current school year. Board member Thomas Best Jr. said it’s going to come to a point where tough choices need to be made about possibly overriding the tax cap and taking a hard look at programs. “People are going to have to make a choice,” Best said.

After the board meeting, Calipari and Hashem stressed the need for the spending freeze that went into effect this week, similar to ones implemented in the last few years within the district. It had been in the works since late August and was not in response to the audit news.

“When someone wants to buy something, they need to think twice,” Calipari said. “For example, are pencil cases a necessity? No. We’re looking at everything, and should ask whether we need to buy something new or can it be repaired?”

However, field trips that had been cut last spring and have since been reinstated will be exempt from the spending freeze. Additional state aid of $30,000 is being used to cover the $26,000 field-trip tab, while the remaining funds are being used to pay for extracurricular programs that were recently restored.

Hashem said he hopes the district will save a significant amount of money between now and the end of the school year through the spending freeze. He also vowed to have a budget timeline forthcoming and said the actual work on the new budget will begin earlier than ever and already is under way.

Frontier saved about $1.1 million to $1.2 million in fiscal year 2013 through a spending freeze, Calipari said. “We hope to do at least that, if not better,” he said.

Hashem said: “We really need to.” The interim superintendent noted that since the state instituted the tax cap, Frontier has lost more than $10 million in state financial aid.

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