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Schools to get more money from county

Washington County Budget Committee members are recommending an allocation of 2 pennies from the Debt Service Fund and a 1 percent increase in budgeted sales tax revenue during 2013-14 to meet the county’s maintenance of effort requirement for the school system.
When the committee reconvened Aug. 8, Mayor Dan Eldridge said there are two issues to consider regarding the schools funding shortage for the current fiscal year.
“There is a deficit in the regular budget and a deficit in the Maintenance of Effort,” he said. “How comfortable are you in budgeting a sales tax increase?”
Overestimated sales tax revenue that fell short during 2012-13 is the reason the MOE was not met, according to Eldridge.
“In my time (in office), we have not been in this situation before, and we need to be conservative with the revenue budget for the schools this year,” he said.
Because revenue toward MOE must be recurring, the county has a limited number of funding options, with use of fund balance not being one of them.
“For me personally, I would not want to project more than a 1 percent increase,” Eldridge said.
“One percent sounds good to me,” Commissioner Mitch Meredith said, and Commissioner Joe Grandy agreed.
“If you look at the change in the state economy, we are typically slower in the cycle,” Grandy said. “The economy seems to move from west to east, so this may be our year to catch up.”
Schools Finance Director Beverly Thomas said auditor Melissa Steagall is uncomfortable with a 1 percent increase.
“She was concerned with what we collected (in 2012-13),” Thomas said.
While additional pennies from debt service and an increase in budgeted sales tax revenue will take care of the MOE requirement, a transfer from the schools reserves will still be needed to address the $1.5 million deficit in the 2013-14 operating budget.
“These are our options,” Eldridge said. “We can ask the school board to look at cutting more (expenses); we can move 4 pennies; or we can agree to an amount of fund balance we would be comfortable with the school board using and not make any cuts.”
According to figures distributed at the meeting, the schools fund balance as of June 30 was $4.1 million.
A transfer of $1.1 million will be necessary to meet the current budget if the county moves 2 pennies from Debt Service and budgets for 1 percent additional sales tax.
Projected fund balance for the schools as of June 2014 is $3 million, which includes the $1.8 million the state requires to be kept in reserve.
Director of Schools Ron Dykes said 4 pennies would provide almost $1 million on top of the required fund balance.
“Otherwise we cut bodies,” he said. “We’re looking right at a $2 million fund balance that could be tapped.”
Eldridge said he was comfortable moving 4 pennies, but Grandy made a motion to transfer 2 pennies, increase sales tax revenue by 1 percent and request the BOE use $1.1 million from reserves to balance the 2013-14 budget.
Commission Chair Greg Matherly said there is a lot of support among commissioners for the 4 cents.
“I would like to be over the minimum (MOE) amount, and pennies are one of the very few adjustments that can affect it,” he said. “There is something we can do here today that we have control of. I’m offering a compromise of 3 pennies even though I fully support 4.”
No other commissioners were at the Budget Committee meeting to offer input.
Commissioner Ethan Flynn, who was absent, voiced his objection to transferring 4 cents earlier in the week.
“I’m on the Budget Committee, and I’ve voted for the (debt offering), but now I’m concerned about the budget and the maintenance of effort,” he said. “I don’t want to have cash flow problems down the road, and we’re setting ourselves up to have to find $1 million for Debt Service.”
Eldridge said the commission set $4 million as the minimum reserve to keep in the Debt Service Fund, and the county will fall below the minimum reserve during 2015-16, which will require pennies be put back in from another source.
“Are we creating a fiscal crisis? No,” Eldridge said, adding his priority is to use the surplus now.
Flynn predicted the Debt Service funds would be used.
“This commission is just like Congress, and if they can kick it down the road, they will,” he said last week. “I don’t think that’s how government should operate.”
Grandy’s motion passed, with Speropulos opposed. The BOE will now consider the recommendation at a called meeting on Aug. 15.