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BOTCHED BUS BUY: County buys $600,000 worth of buses 13 days too early to use bond for reimbursement

A startling discovery confirmed during the Nov. 15 Budget Committee meeting revealed Washington County commissioners and Board of Education members are not on the same page regarding the purchase of new buses, which could mean additional pressure on an already troubled schools budget.
Mayor Dan Eldridge referred to an unbudgeted expense of almost $638,000 in the transportation line of the school system’s financial reports. “What did we do?” he asked, adding, “I think I know.”
As it turns out, the Board of Education gave Director of Schools Ron Dykes the go-ahead during its Feb. 2 meeting to order six large buses and three small buses, which account for approximately $592,000 of the unbudgeted cost. Two pick-up trucks and a van for schools use make up the remainder of the total.
Dykes explained in February that 19 large buses and five small buses would be purchased over the next three years, following a staggered system that corresponds with the requirement to take the buses off the roads after 16 years of use.
“The decision to purchase is designated by law based on when the buses have to be replaced,” Dykes said. “We issue a request for proposals, and it takes about six months for the buses to be built.”
The sequence of purchasing, discussed annually during the budget process according to Dykes, includes six large and two small buses for 2013-2014, and seven large buses for 2014-2015.
“Buses fall into the category of ‘must do,’ and we have no choice once the life (of a bus) has ended,” Dykes said.
In an effort to address the need, county commissioners in September approved using $1.85 million of low-interest bonds to finance three years of bus purchases
However, the first year of buses had already been bought by that time. Dykes said it “was always our understanding” the board would be reimbursed by the sale of the bonds.
But a timing issue related to the date the commission adopted the resolution to issue the bonds and the date the buses were paid for may make that reimbursement impossible.
Reimbursements can only be paid for purchases made up to 60 days prior to the Sept. 24 adoption. The school system wrote the check for the buses on July 13, nearly two weeks too early for reimbursement.
The structure of the bond issue restricts the use of the funds to the purchase of buses, which means Washington County could be sitting on four years worth of new school buses by spring.
“From the standpoint of our fleet, that’s not a bad thing. We’ll have a newer fleet with lower maintenance costs,” Eldridge said. “But the school board will have to figure out how to pay for (those already purchased).”
The Board of Education is already facing a potential $450,000 deficit from a series of unbudgeted projects, including a new roof for Fall Branch School, a cooling tower for Boones Creek Elementary, and architectural services for a long-range facilities plan.
“Why are we approving money that’s already been spent?” Commissioner Ethan Flynn asked when considering funding requests during last week’s meeting.
“Because these are true budget amendments. The decisions have been made for us,” Eldridge said.
Dykes said the cooling tower was an unknown expense, but reminded committee members he made them aware of the building improvements needed at Fall Branch last year.
“You weren’t blind-sided,” he said.
During the May meeting, Budget Committee members denied the request to re-roof Fall Branch School, saying the school system should use its available cash and save taxpayers the additional 44 percent that would have to go to the City of Johnson City.
“Your school board sent back a budget that did not include $200,000 for a roof,” Commissioner Mitch Meredith said.
Meredith asked if schools are exempt from the policy that requires funds be designated in the budget before bids or purchase orders can be issued. According to Eldridge, all offices operate under the County Purchasing Act of 1957 that requires dollars be budgeted prior to any action.
Dykes argued the school system has been following the same purchasing procedures for decades and has never had an audit finding.
“If we had known the schools budget was going to take a $447,000 hit four months into the fiscal year, it would have affected its approval,” Eldridge said.
An analysis of sales tax revenue received through October indicates collections are down 6.4 percent compared to what was budgeted, he added. This could leave the schools with a deficit of almost $1 million by the end of the year if the trend continues.
Dykes said the spending is based on need, and the budget will be adjusted as they go forward. “We will not turn in a budget in the red, we never have,” he said. “There are a lot of options we have control over.”
Flynn wanted to postpone the vote and have more time to look at the budget, but Commissioner Joe Grandy said there was no sense in waiting if the numbers weren’t going to change.
“Guys, we’re on the hook,” Eldridge said. “And this is not the way we need to be doing business.”
Grandy made a motion to approve the amendments, which was seconded by Meredith. The motion passed with Flynn voting against.