04/22/09 — School officials say they will appeal state decision on funds

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School officials say they will appeal state decision on funds

By Phyllis Moore
Published in News on April 22, 2009 1:46 PM

Lottery funds for Wayne County Public Schools have been frozen.

Word came down late Monday afternoon that the state will not release the district's $5 million, approved earlier in the month for distribution and expected to be used for bids on construction projects.

"The actual lottery money that they said they were going to take, and they even shifted it to the county's account for us to draw down, now because of a cash flow (problem), they say they're not going to be able to release any of that money until July 1," said Sprunt Hill, assistant superintendent for auxiliary services.

Nan Barwick, assistant superintendent for finance, said she was notified via e-mail by the Department of Public Instruction that the Office of State Budget had frozen all state funding.

The news came as a shock, she said.

"We were like we had the wind knocked out of our sails," she said Tuesday.

Officials had been anxiously awaiting the fate of the district's lottery funding ever since the state's budget shortfall had been announced. In a memo dated March 31, they received notification that $5,031,604 was approved to be released for distribution.

The response came in time to coincide with bids received for the first three construction projects -- at Brogden Primary, Greenwood Middle and Mount Olive Middle schools. The contract was expected to be awarded to Bordeaux Construction Co., which submitted a $4.1 million bid.

Hill said at the time that the surplus could be used for additional projects, particularly air conditioning the gymnasiums at Greenwood and Mount Olive.

At its April meeting, the Board of Education accepted the bid, in turn voting to sign over the projects to the county to access the lottery funding and sales tax refund.

But Tuesday morning, when it came time to present the proposal to the county commission, Hill instead announced everything had been stalled.

"Everybody's in a whirlwind," he said afterward. "We are all on hold -- the county commissioners are on board, but the financial officer for the government has put on hold anything purchased with state dollars."

It was attributed this time not to the budget shortfall, but rather "cash flow problems," he said.

The problem with the anticipated July 1 release date, however, is that the bids received are only good for 60 days, Hill said. There is no guarantee costs will stay the same, positioning the district in a tenuous situation.

Hill and Mrs. Barwick said there is a possibility the commission might award the contract contingent upon receipt of the funds. In so doing, Mrs. Barwick said, whenever the lottery funds are released, officials would not have to return to the commission again with the same request.

"We felt like once it was transferred over, once it's been tagged and approved, then it would be smooth sailing," Hill said. "They're saying because the project has not started -- that's where we get into a difference of opinion -- the project has started. We have already gone through that process. The Wayne County Board of Education has approved Bordeaux, now the county has to approve it."

Hill said some of the money for initial work came from county sources.

""The county's already spent local dollars paying for the architect," Mrs. Barwick said. "It's not like we're just starting the planning. ... Money has been spent and now we're at the point of putting the shovel in the dirt, so to speak. We're hoping to plead our case (to the state). We're so far into the process it would be detrimental to wait until July."

"Yes, it's frustrating," Hill added. "But are we going to quit? No. We're going to roll up our sleeves."

Some hope might come, he said, in the form of a waiver.

"There's a waiver we can go through to see if we can actually get the funds," Mrs. Barwick said. "It's kind of like an application-type thing that we have.

"We have to provide information like how much money we're talking about needing for this fiscal year for the project and then the total dollars that would be needed and the impact if we didn't get that funding."

Down but perhaps not out, school officials remain diligent in their efforts. Mrs. Barwick said it has been challenging.

"We thought once we had gotten the approval that it was, I guess, safe so to speak," she said. "But because I guess we haven't had to draw down that fund at this point because we haven't expended it yet, they kind of shifted it over to the County of Wayne ... it's still waiting in the state dispersing account."

The state doesn't actually send the money, in this case $5 million, Mrs. Barwick explained. Instead, it's a "drawdown process" similar to a bank account, where the money is released as needed.

"In the past that would have been sufficient, but we're in new times, new territory so every day provides new adventures," she said. "It's going to take some time to gather the information that we have to submit because we want to have it be as close to accurate as possible. We're kind of in a sit and wait mode."