Budget Stress Strains Schools

In a preemptive budget letter issued by Board of Supervisors Chairman Michael Hobert last week and just hours before CCPS Superintendent Dr. Michael Murphy was scheduled to present his FY12 budget to both the School Board and the public, Hobert expressed empathy for the school system’s financial challenges – including decreased Virginia Department of Education funding associated with 10% decline in CCPS student population over the last five years, as well as unfunded education mandates stemming from the Virginia General Assembly – but also sent a clear message; No county funding increase for school operations.

Even so, in a courteous but deliberate response, both Murphy and the School Board appear to be positioning to connect the educational and human implications that continued financial conservatism is having on the school community with what some believe is a voluntary reluctance by the Supervisors to contribute funds.

As Clarke County Public Schools face yet another budget reduction, after $1.387M of previous reduction over the last three budget cycles, some school officials are questioning whether the Supervisors’ austerity plans have gone to far and why purse-strings are being held so tightly given the county’s financial resources.

“The Supervisors have money in the bank that should be used in times like these,” said one school official. “While it’s good to have contingency funds, the money was contributed by taxpayers and it seems like the amount has gotten out of proportion with respect to the overall county budget.”

According to the Clarke County Financial Report for the fiscal year ending June 30, 2010, the county had just over $14M in  unrestricted net assets which “may be used to meet the County’s ongoing obligations to citizens and creditors.” The current unrestricted net asset balance is up from $8.2M as of June 30, 2005, climbing to $10.5M in 2007, $11.9M in 2008 and 13.7M in 2009. Although the unrestricted net asset categorization may sound like a source of liquid capital that could be transferred to school spending, Joint Administrative Services Director Tom Judge says that the reality is more complex.

“There are budget obligations associated with the unrestricted net asset balance,” Judge said. “Things like debt payments, cash for future capital projects, grants that the county has received but not yet spent are included in that amount.”

While the CCPS budget shrinks due to a lack of funding from both in Richmond and at home, controversy has been fueled in Clarke County over how best to use school carry-over funds as well as potential personnel cuts in school staffing levels. The potential fiscal and administrative scenario now appears to be building into a “perfect storm” for Clarke County students where declining enrollment, reallocation of existing fund balances, and increasing government mandated student programs are all combining to debilitate Clarke County’s tradition of educational stewardship.

At last week’s school budget presentation Dr. Murphy outlined requirements for an additional $519K of CCPS budget funding needed in order to maintain current education service levels. Murphy’s budget projection is comprised of $365K to cover cost increases for teachers related to the Virginia Retirement System and $154K needed for capital improvements including technology upgrades, a new school bus, asbestos abatement, painting, roofing, and other items.

The $154K is effectively the difference between last year’s capital budget and this year’s capital budget request. However, of specific interest to both Supervisors and school officials is the source of the funds necessary to meet Murphy’s $154K capital request.

School officials say that when the Supervisors agreed to increase this year’s capital budget, some believed that the funding increase was incremental and would not come at the expense of the CCPS operating budget. However, that belief was called into question with a February 7th letter from Supervisor Chairman Michael Hobert to School Board Chairman Barbara Lee.

On Friday Chairman Hobert said that his February 7th budget letter to Chairman Lee indicated in part;

“We commend you for conserving your carried over funds and request School Board consideration of applying a portion of these funds to any proposed increase to FY 12 capital expenditures.”

“This was intended to communicate a request that consideration be given by the School Board to funding its proposed increase in capital expenditures for FY 12 over FY 11 from the carried over funds in its $493,718 fund balance designated for their continued use for capital expenditures,” Hobert said.
Carry over funds, by law, return to the governing body for use in the general fund unless action is taken to allow the funds to remain with the School District. The source of the dispute between the two boards may lie in the facts that the carried over funds in question are unspent CCPS operating funds from the previous budget year.

“It does not come at the expense of the operating budget as they were not needed for the operating budget the year appropriated,” Hobert said.

The policy of both the School Board and the Board of Supervisors for many years has been to return carry over funds to the School District for use in “one-time” expenditures, typically for capital improvements. The carry-over policy stems from the county’s conservative fiscal policy intended to discourage end of fiscal year spending simply because the funds may otherwise be lost and to discourage use of one-time funding not guaranteed to be available in subsequent years for ongoing expenditures.

“There can only be a ‘cutting’ if the School Board decides during a fiscal year that cuts are appropriate, for any number of reasons, and then the ‘saved’ funds are carried over by our policy for use in subsequent years for one time expenditures,” Hobert said. “Approving the carryover did not result in a reduction in operating budget funds for the School Board in the following year. The budget was approved long before the carryover was formally authorized in December of 2010.”

Yet as county and school officials wrangle over how to divide a seemingly ever shrinking budget pie, Commonwealth mandated education costs continue to rise. At the CCPS budget public hearing School Board members pointed to Clarke County Public Schools’ increasing level of students requiring special education as just one example of why continued pressure to hold budget levels flat can no longer be sustained.

At the budget hearing meeting Dianne Lasky, CCPS Director of Special Education, told school board members that the growing numbers of students with diagnoses related to autism spectrum disorders, changing legislation, and increased caseloads are growing beyond her department’s ability to provide effective and efficient services.

Lasky told school board members that the CCPS special education student population has climbed from 166 students in 2006 to 194 students in 2010 and now accounts for nearly 10% of the total student population. According to Lasky, the growth in students with special needs is rising throughout the region.

“My colleagues in surrounding districts tell me that they are seeing the same increasing trends,” Lasky said.

The combination of increased student percentages in state-mandated programs, declining enrollment in mainstream student populations, and stagnant local and state budget support has lead Superintendent Murphy to explore solutions that have quickly been met with resistance by both parents and school staff.

“Our enrollment decline presents an opportunity to fund unfunded and underfunded needs and, in some cases, reduce annual recurring expenditures,” Murphy said in his recent budget presentation. “The Division can capitalize by shifting related salary costs to areas where there is an emerging or greater need.”

The definition of “greater need” will undoubtedly be the subject of continued debate, however Dr. Murphy’s preliminary suggestions include adding three Instructional Technology Resource Teachers at the elementary and secondary school levels along with an additional SPED Autism teacher while reducing eight instructional staff in other areas (two elementary teachers, two world language teachers, two instructional assistants, secondary elective staff and an ARRA funded position.)

Whether the proposed staffing cuts and other budget-forced changes to Clarke County education will be realized will likely be the subject of on-going deliberations over the coming weeks. The deadline for School Board budget presentation to the Board of Supervisor is March 1, 2011.

Comments

  1. Travis Goodwin says:

    So…the county is sittin on $14M, that’s earning interest for it in the bank? At even 2% interest per year, that will generate $280,000. That’s MORE than enough to meet ALL of the CCPS capital requests, PLUS purchase a decent financial software package, and STILL have enough “undesignated” funds to look at other critical needs – like sorely needed technology upgrades in the schools and other divisions.

    To dictate to the School Board, after it already set aside $500K of the carryover (at the Supervisors’ insistence before the BoS granted approval) for construction costs, that an additional $154,000 should come out of what’s left over for capital enhancements is just wrong…especially when the county is sitting on such a large “undesignated” fund balance.

    How can a government entity be “non-profit” yet run a $14,000,000 cash surplus? Yes, put some away for a “rainy day,” which teh above graphics show. But, there’s a difference between being fiscally smart and downright Scrooge-esque.

  2. How many people on the BOS have kids that attend CCPS? My guess is very few if any. The BOS are detached from the true needs of our public school system. Just lookk how long it took to get a new high school built, yet how fast was that government center approved and built? Lightening speed compared to the high school. And just because enrollment is down doesn’t mean we should cut corners for the kids still here. New technologies are going to be the most important items for these students along with quality teachers that are retained with fair wages comparable to wages around the region. As stated above, use some of the surplus. The need is here now. Our BOS also choose to keep new business out which translates into a very limited tax base aside from what the county citizens are increasingly asked to bear. It seems to me they like to badger the school board for their own amusement. But you can’t preserve your quaint little one-horse town forever.

  3. Nancy Martin says:

    Hmmmmmm, how many CCPS students can define Red Herring? Regular or Special Ed?

  4. livein22611 says:

    The 14m is in the “rainy day fund”. Don’t know about you but I’ve been hearing the rain on my roof for a couple of years now. What exactly are they waiting for? Or do they have plans for this money? Please, while I understand and applaud conservation easements, let’s not lose sight of what the kids of Clarke County need. Release some of the fund to cover some expenses so the school board can give the teachers a raise!!! I love Clarke County and do not want it to change like our neighboring counties have but I’m thinking it’s time for change in the BOS so we can focus on our kids. The current board seems so single-sighted and worried about developement and other things suffer. Lord knows we could some paid firefighters too!! You take our money, now spend it on what we NEED!

  5. Tony Parrott says:

    I applaud the BOS for keeping a “rainy day fund” but there is a line between fiscal conservatism and fiscal stupidity? Who would hoard water and not drink when they are dying of thrust?
    Feels like rain to me……..