- Last Updated on Wednesday, 25 November 2009 05:00
- Published on Wednesday, 25 November 2009 05:00
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The King George Board of Supervisors agreed again last week, as it had at a meeting on Nov. 5, to put off whether to grant a request by the School Board for some of the surplus money Superintendent Candace Brown was not able to spend last school year.
The decision was postponed because Donita Harper, Deputy County Administrator & Director of Finance, told supervisors she received some additional memos from Brown after her written recommendation went to the board in its meeting packet.
Because she had not had time to research the information contained in them by last week’s meeting on Nov. 17, supervisors said they would hold off on their vote again.
But supervisors have indicated they are not inclined to give more money to the School Board right now, because they might need to give some of it to them later.
Harper’s current recommendation is that the School Board’s request for $470,449 be denied.
She has recommended that the School Board’s unspent funds from 2008-2009 be placed into a new account “to supplement revenue/funding shortages” in the next two fiscal years.
That’s the direction that has been expressed on numerous occasions by members of the board, with Chairman Joe Grzeika repeatedly stating the position that the county needs to put unspent funds into a reserve for the future when federal stimulus funding runs out and to assist with revenue shortages from the state that have been strongly telegraphed.
That’s because the state has indicated that the governor’s proposed budget for the next biennium, which is due out on Dec. 18, will contain massive cuts to localities, including strong hints that K-12 education funding will take a hit this time around.
Besides wanting to hold any surpluses for when federal stimulus funding runs out, supervisors also announced last month they intend to adopt a budget amendment for the current year in January that will be smaller than the current adopted budget.
PROPOSED FINANCIAL POLICY
Harper’s recommendation was also echoed at last week’s board meeting by financial consultants, Davenport & Company LLC.
David Rose suggested the board establish a “revenue stabilization fund.”
Rose said it could be “a kind of a subset of your undesignated fund balance.”
He added: “Your revenue stabilization fund would be the first place to go to offset unplanned reductions.”
Rose’s presentation indicated that this proposed fund “would help offset unplanned reductions in state aid (Schools), federal aid, unplanned emergency expenditures.”
Rose suggested that the revenue stabilization fund be set at 3 percent of the general government operating budget, coming to roughly $1.8 million.
He noted that the county has a sufficient fund balance to create this fund without the need to identify additional revenues.
That $1.8 million corresponds to the total amount of the School Board’s and the county’s end-of-year balances added together.
It was previously reported that in addition to $1,192,001 left over by the School Board, the county also had a surplus at the end of June of $683,454 left after all expenditures were deducted from revenues.
BROWN & SCHOOL BOARD WANT THE MONEY
Through a Nov. 13 e-mail to Harper, Brown continued to push the county to accede to the School Board’s request for $470,449 of $1,192,001 leftover by the division at the end of the last fiscal year.
But it’s still not clear why she didn’t spend down at least some of the surplus when she had control of it, since she announced at a School Board meeting on May 13 that she expected to have about $600,000 leftover.
At that same May meeting, with the knowledge of an expected surplus, the School Board added an agenda item to discuss how they might spend $125,000, if they asked for it and got that pile from supervisors, as part of the money they left on the table from the previous fiscal year, 2007-2008.
A formal request for $125,000 was subsequently approved by the School Board meeting on May 27.
When the Board of Supervisors entertained that request for more money on June 16, they declined to take action to give it to the School Board, after receiving a detailed written financial report from Harper.
Harper’s reports indicated back in the spring and again in June that after conferring with Brown, the School Board was projected to finish the last fiscal year with a surplus. In June, it was expected to be at least $590,257.
Brown ended up with about twice that amount unspent.
Now, again, the School Board is trying to get an additional appropriation from the county, though no decision has been made by them on what how it would be spent.
First, they just want to get it.
When mulling the request, Brown had previously provided them with several spending lists, but they could not come to agreement, and have also discussed putting it into an account for use in the future.
Brown’s spending lists included a mix of both one-time and recurring items, from a lawn mower to salary raises across the board and lots of items in between.
None of the lists have been shared with supervisors.
Instead, Brown told supervisors at their meeting on Nov. 5, “The legislation this year has given school divisions a one-time opportunity to have those carried over into the operating fund and expend them at their will.”
Now it’s possible that the School Board could end up with a sizable revenue shortfall due to lower state funding because of declining enrollment.
An enrollment report dated Nov. 17 requested by The Journal from Brown the day after their last School Board meeting indicates the division is short 63 students from the number budgeted for the current fiscal year.
There was no enrollment report presented at last week’s Nov. 16 School Board meeting. Nor was there any discussion of declining enrollment at that meeting.
Yet, enrollment has dropped from 4,140 reported on Sept. 8 to the current 4,068 students.
That could mean a big state revenue shortfall that could come to light in the new calendar year.
The current year’s budget is based on 4,131 students.
The current number of 4,068 students is down 34 students from the number reported to the state for the Sept. 30 enrollment, on which the Governor’s budget for next year will be based, along with adjustments made to state basic aid for the current fiscal year.
DÉJÀ VU ALL OVER AGAIN?
Sound familiar? In January 2008, Brown revealed that declining enrollment that year could result in a large revenue shortfall.
And it did.
Two years ago, the division ended up with a shortfall of $896,921 due to 104 fewer students, when for 2007-2008, the division ended up with an average daily membership (ADM) of 3,882, which was 104 fewer students than forecast by a faulty state estimate of 3,986 students for that school year.
By July 2008, division financial secretary Annette Thompson indicated in a handout that the 2007-08 revenue shortfall came to $896,921.
Supervisors had been tapped for additional appropriations, with Brown actually asking for a “safety net” to cover any and all overexpenditures that the School Board could accumulate by the end of that fiscal year.
Supervisors nixed that idea and instead told Brown and the School Board they had to take responsibility for managing their budget and implement reductions to try to get their operating fund and Cafeteria Fund budgets out of deficits.
But supervisors also gave the division some cold cash. The Board of Supervisors provided a supplemental appropriation of $188,566 to pump up Special Education. It also transferred an additional $124,146 to cover overexpenditures by the School Board in its 2006-2007 Cafeteria Fund that came to light with the audit from the previous year.
Currently, the division has 63 fewer students than budgeted, so another state funding shortfall is a possibility that bears close monitoring.