01/10/06 — Schools' reserves drop to $1.5 million

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Schools' reserves drop to $1.5 million

By Phyllis Moore
Published in News on January 10, 2006 1:59 PM

The school board voted Monday night to send a formal resolution to county commissioners about the school system's critical fund balance situation.

Expenditures over the last year - including teacher salaries and supplements as well as rising fuel costs - exceeded revenues, according to the year's audit report. As a result, what were considered "reserves" for the school system dropped from $2.5 million the previous year to $1.5 million, Penny Lanier of Pittard, Perry and Crone told the board.

"Looking at two comparable districts, there's not enough in unappropriated general funds to pay your expenses," she said. "It would be a concern. Consider if one funding source were cut off, where would that leave you?"

If it typically takes an estimated $2 million a month to pay the school system's expenses and there is only $1.5 million on hand, board member Shirley Sims suggested officials consider what would happen in case of an emergency.

"If we go by the federal suggestion - that we always keep at least three months' (worth on hand) to take care of at least salaries, if we try to keep anywhere near that, we're really in trouble," she said. "If some catastrophe happened, and we had to pay for three months, we're going to have to close schools. If you all didn't find any hidden money during this audit, then we can't even function for a month."

Board member Lehman Smith suggested that at the rate the funds appear to be going, dropping from $2.5 million one year to $1.5 million currently, "We have got one more year, and we'll be broke."

He said considering all the expenditures the school system is mandated to pay for, at a drop of $1 million a year, there is no way to continue to operate without additional funding.

Mrs. Lanier said with increases to teacher salaries, retirement salaries and supplements, "The funds aren't there. You had to go over your reserve to pay all that. It was nothing that the board had a choice over."

The fund balance is down, not because of irresponsible spending but because of mandates from the state that have not been funded at the local level, board member George Moye said.

"Without some relief, this will be the last year of some of our programs in existence," he said.

Board member Pete Gurley called it a critical issue, one of which the county commissioners should be made aware. After suggesting that a formal resolution be drafted and sent to the commission, he made an observation about the shared history of the two boards.

"The most harmonious years that we had were up until three or four years ago when the county commissioners told us how much money we were going to have (each year). We knew what we were going to be faced with when we went in. I think that's the reason that our fund balance is where it is now," he said.

Board Chairman John P. Grantham said that ever since he joined the board, "County commissioners have questioned how much money we have in reserve. Most of the time it's been $2.5 million to $3 million. Even at that, we have been having to reduce it and not increase it."

Moye said the only ways to get around the problem would be to secure additional funding from the commissioners or through the lottery money, but he expressed doubt that the lottery could be used for reserve funds.

"I certainly agree that we need to take whatever steps are necessary to make the county commissioners aware of the critical financial condition that we're in," he said. "Some of them apparently in the past have thought that we had some money somewhere. If they know where it is, they need to tell us."

Superintendent Dr. Steven Taylor said the school system has tried to manage its money the best it can with diminishing revenues.

"It's a task sometimes, one that we can't get around," he said.

"We're concerned about our financial situation. When your expenses increase but your revenue does not, there is concern. We do not want to be in a situation where if we have an emergency, we cannot cover that."