A long-time employee of Carroll County Public Schools, Carroll County Supervisor Bob Martin believes he has a solution that will pay for a proposed school board funding request increase of $1,937,035 without a tax hike.
Earlier this year, the Carroll County School Board announced it was facing a shortfall of close to $2 million for Fiscal Year 2012-2013. If the school board’s request for an additional $1,937,035 from the county is not met, the school board proposed several cuts, including up to 40 teaching positions, which would create a savings of $1,944,520, and the closure of Gladesboro Elementary School, further eliminating five teachers, one clerical position, one principal and two custodians to save an additional $529,000.
Since that time, Fancy Gap Supervisor Phil McCraw has made the point that funding the school board’s full request of $11,304,898 for Fiscal Year 2012-2013 would most likely cause the current tax levy of 59.5 cents per $100 of real estate valuation to increase by nearly 12 cents. After reading that in a March 28 article in The Carroll News, Martin sent out an e-mail to employees of the school system with figures from the June 30, 2011 Carroll County Fund Audit. Martin’s e-mail points out that Carroll began the Fiscal Year of July 1, 2010 with a beginning fund balance of $14,515,465. That number increased $1,809,237 over the next year for an ending fund balance of $16,324,702 on June 30, 2011. With a $16 million fund balance, Martin said he doesn’t think Carroll County needs to raise taxes to cover a $1.9 million shortfall in the school budget.
Martin said he plans to make a couple of proposals to fund the school board’s additional request this year. The first would be to withdraw an offer made by the Carroll County Industrial Authority during its Feb. 14 meeting to purchase a pair of old Kentucky Derby Hosiery (KDH) buildings from Gildan in the Carroll County Industrial Park for $1.6 million. He said that money could be combined with nearly $300,000 in additional state funds the school system is expecting to receive now that the state budget process is moving forward in Richmond.
“There are some things in the county that bother me greatly. Frankly, it makes absolutely no sense to me to buy these Kentucky Derby Buildings. Even though it’s the IDA, the Board of Supervisors provides the money to the IDA,” Martin said. “This came up in executive session at our March meeting and it was presented as if we had had these buildings, we would have landed a big prospect. But because it was tied up with KDH, we didn’t get it. The only problem I had with that is they dropped us anyway, the company that was going to put 150 jobs here. Within 1,000 feet of those two buildings sits that shell building the county did with state funds close to 20 years ago and it has been sitting vacant the whole time. So if that building won’t move I am leery about these other two buildings.”
With that in mind, Martin said he would support a plan to use the money offered for the two KDH buildings to go toward the increased school funding request.
“If we don’t buy them, that is $1.6 million I would like to see offset this budget deficit in the school budget,” Martin said.
Martin said he wouldn’t stop there, however. Because of the budget crisis across the state affecting all counties and school systems, Martin said he would immediately like for the school board and board of supervisors to start meeting each month to start cutting budgets in case the economy doesn’t pick up and a similar situation arises next year.
“You have a year to make hard-nosed decisions and you prioritize these things. The school board and supervisors could agree that if next year if we have to get into big deficits again, that this is the first thing that will be cut, this is the second thing, and so on,” Martin said. “And it gives you a year to start making these cuts.”
If purchased, Martin said the KDH buildings would come out of county fund balance. If his fellow board members still want to purchase those KDH buildings, Martin said he would then propose for the county to pull $1.6 million out of the county’s fund balance to combine with the additional $300,000 in state funds to make up the school budget shortfall.
“So then you are looking at a $14.4 million surplus. I don’t think we need to raise taxes. For the people that say don’t come up with this $1.9 million, I can understand that, but the flipside is we have been through the worst recession in the history of this nation and these people in Carroll County want to know why did we sit on a $16 million surplus?” Martin said. “If anything they could reduce the taxes on these people. If you take the hardline the other way that a $12 million surplus wasn’t enough, it increased last year almost enough to cover this deficit.”
But just because the June 30, 2011 Fund Audit shows more than $16 million, that doesn’t mean there is $16 million in the fund balance, Carroll County Board of Supervisors Chairman Sam Dickson said. That money is used throughout to year to help cover unexpected expenses and other items that are already obligated to be paid for, he said.
“The paper shows $16 million, but you also have to remember there is $1.5 million that has to be paid on the new school construction right up front. Then when you look at it through the year, there is still money that has to be obligated,” Dickson said. “If you spend all your reserves to balance the budget, what are you going to do the next year? And how many years can you continue to balance the budget and still have a reserve? What if the HVAC system at the high school goes bad and we don’t have any money. It would cost $4 million to $5 million to get it fixed, so what would you do?”
Dickson said supervisors also passed a resolution in recent years that requires them to keep 12 percent of the county’s operating budget in the fund balance. This year that figure equates to roughly $7.5 million.
“That is a common practice that you want to have at least 10 percent. By county ordinance we are obligated to keep 12 percent of the total budget, of course that could be changed. I’ve have never heard of anything wrong with having a good fund balance,” Dickson said. “The last four years we haven’t had any problems passing the budget and I don’t think we will this year, it’s just a matter of working through it. I would say if Wytheville has about same number of students we have and they can run their school with less money, do we need more money or better management? That is what we are trying to look at.”
Carroll County Administrator Gary Larrowe said when he came on board in 2005, the county was actually borrowing revenue anticipation money to make payroll until December of each year because it didn’t have a fund balance at that time. So one of the first things it did was borrow $1.5 million to make payroll. He said the county doesn’t want to get into the practice of borrowing one-time money to pay for the future again.
“What you are doing is kicking the can down the road,” Larrowe said.
He noted that the Carroll County Board of Supervisors adopted a fund balance policy on Jan. 13, 2011 and revised on July 11, 2011 that defines the use of fund balance. The policy also defines how the usage categories will be calculated. According to those calculations, there was $2,573,049.84 in unassigned fund balance as of June 30, 2011. All fund balance calculations, per the policy, are based on the Treasurer’s cash balance as of June 30, 2011, which was $13,700,135.30.
According to a Carroll County fund balance calculations worksheet, of that $13.7 million, $1,023,000 is already committed to courtroom security, Highway Safety, and grants received and not yet expended. Another $7,504,660.20 makes up the 12 percent unassigned for fiscal stability the board voted to put into place previously. Additionally, $849,425.23 is unassigned for grants for a total of $9,377,085.47, leaving $4,323,049.84 in unassigned fund balance.
But of that $4.3 million, $1.5 million will have to go to stabilize the debt service school construction and $250,000 is earmarked for IT improvements. The remaining $2,573,049.84 is set for Other Capital Projects. Any unassigned items would fall under the Other Capital Projects classification to cover unexpected county operational expenses.
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