DENVER – Durango School District 9-R missed two financial benchmarks, according to state auditors, which the district says is the result of previous over-staffing.

The Office of the State Auditor on Tuesday released an annual school district fiscal health report, highlighting indicators that warn of potential financial stress.

Seventy out of Colorado’s 178 school districts missed at least one financial benchmark out of five indicators, which is down from 76 school districts identified last year. Twenty-eight of the districts identified this year were found to be at a higher risk because of missing two or more financial benchmarks, including Durango’s school district.

Auditors looked at financial statements from July 2012 through June 2014. The Durango district was flagged after examining whether revenue covers expenditures. For the 2013-14 school year, expenditures exceeded revenue by more than $2.6 million. The district also hit its lowest general-fund balance in a four-year period, dropping to $6.6 million from $9.3 million the previous year.

But the district has made significant progress. The 2014-15 school year will show deficit spending of less than $50,000, according to district leaders.

District 9-R said staffing was the underlying cause for missing the benchmarks. The district has since cut 24 licensed staff positions and reduced administrative expenditures, while offering retirement incentives.

“Right now, our challenge is, with the kick in the teeth from the Legislature of not affording more money, we’re faced with, do we advance salaries? Or do we not advance salaries?” said Durango 9-R Superintendent Dan Snowberger.

He added that the district built up a reserve to preserve staffing and programming during economic downturns: “It has prevented significant cuts during the most recent recession,” he said.

“It’s a challenge,” Snowberger added. “At this point, we’re still cutting (the budget).”

pmarcus@durangoherald.com