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School system’s $64M budget rejected

Members of the Washington County Budget Committee voted unanimously to reject the county school system’s proposed budget of more than $64 million when they reconvened June 19.
“We can appreciate the challenges you are faced with,” Commissioner Mitch Meredith said to Director of Schools Ron Dykes and Finance Director Beverly Thomas.
Meredith, a certified public accountant, offered recommendations from a personal analysis of the proposed budget.
“I’m trying to identify what (expenses) are over and above those from fiscal 2012,” he said during the meeting, referring to the schools’ requested increase of more than $3 million for fiscal 2013.
Meredith proposed a list of needs to be funded from the county’s General Fund, which include the state-mandated portion of the 2.5 percent minimum salary increase, the county’s share of the BEP funds, and increases for textbooks and buses. In addition, the county will provide more than $1 million for guidance personnel, formerly paid with federal funds.
Not included in the list of items was the reimbursement of the $1.6 million the school system agreed to provide from its fund balance to cover the deficit in the 2012 budget because that money was not needed. As of May 31, the system’s fund balance was $13.3 million.
After paying June’s expenses, Meredith’s analysis predicts the system should finish the fiscal year with a fund balance of almost $7 million.
Despite not meeting the full request, Meredith said the recommendation of funding from Washington County offers $2 million more than what the school system expected to spend in fiscal year 2012.
Mayor Dan Eldridge said the big items left out are the $500,000 for instructional assistants and the $120,000 increase in diesel fuel and gas. “As we’re looking at the county’s General Fund, we’re also not including increases in diesel fuel,” he said.
The proposed recommendation from the Budget Committee would leave the school system’s budget with a deficit of almost $2 million to be covered by the system’s fund balance.
Eldridge said two issues have to be considered when requesting the schools fund balance be used.
“If funding from the schools General Fund, we are required to maintain 3 percent, so we know what the floor is,” Eldridge said. The system’s state-mandated reserve of budgeted expenditures would be more than $1.8 million for fiscal 2013.
Eldridge said the second issue, which the auditors recommend, is paying close attention to cash flow.
“We have to ensure the potential to use $2 million cannot jeopardize the schools cash flow,” he said. “If it does, the county has to step in.”
According to Eldridge, the system’s lowest fund balance during the current year was $6.7 million in July 2011.
“It doesn’t look like we have come close to creating a cash flow issue or put us in any kind of position where we would need to be concerned,” he said.
Meredith made a motion to reject the schools proposed budget, which was seconded by Commissioner Pete Speropulos.
Meredith then moved to recommend the system target expenditures to $61.6 during fiscal 2013. The motion was seconded by Commissioner Ethan Flynn and passed unanimously.
During a called Board of Education meeting that night, Dykes and Thomas shared the recommendations from the Budget Committee.
“By statute, the committee has no authorization to mandate the line items, which the mayor recognized,” Dykes said, adding the recommendations cut the $50,000 request for two additional school resources officers in half, and eliminated the $71,000 request for four additional grounds employees.
“For us to accept this, we would once again be using fund balance to (cover the deficit),” Dykes said.
Board member David Hammond made a motion for Dykes and Thomas to bring options to the Finance Committee meeting on Tuesday, July 10. Members moved the time to 3 p.m. to provide an additional hour for discussing the budget.