Pender County Commissioners respond to School Board's claims

Pender County Commissioners respond to School Board's claims

BURGAW, NC (WECT) - Commissioners in Pender County are responding to the Board of Education, regarding complaints that Commissioners did not provide "adequate funding" in the budget to operate county schools. The two boards sat down in a special meeting June 29, when school board attorney Richard Schwartz outlined the Board's claims.

County Manager Randall Woodruff sent an email statement Tuesday night with the Commissioners' response to those claims. It says:


In the interest of working through the mediation process in good faith, the Pender County Board of 
Commissioners do not feel it will be productive to respond to each item presented in the Board of Education presentation. Citizens of the County fully understand that Pender is not the same from a tax base stand point as either New Hanover or Brunswick, despite sharing a border with each.

The claim that the BOE’s request can be funded without raising taxes simply must be addressed as it simply is not factually correct. The Board agonized over the Budget, and certainly did not include 2.6 Million dollars of unnecessary funds. The BOE identified three areas where it claimed the funding could be obtained, which will addressed below.

COUNTY FUND BALANCE:  The County fund balance has declined in 4 of the 5 most recent budget years. The average fund balance of counties in NC is over 27%(LGC Memorandum #2015-10). The suggestion that Pender should further decrease its fund balance would risk increasing borrowing costs for the upcoming $75 Million in school bonds. Further, the BOE’s request are for recurring funds, and the Local Government Commission advises that “appropriation of fund balance is a one-time revenue source and should not be used to balance reoccurring expenses.” (LGC  “Policy Manual for Local Governments”, Section 10, Part III (F), pg 16). This is consistent with County policy that fund balance is to be used for one time uses.

DEBT SERVICE FUNDING: The BOE then suggests that the approximately 11 cents built into the budget to pay for school debt service can be reallocated to pay for current expenses instead. Their presentation asserts that not all of the increase need be used for this year’s debt service. That ignores that in 2009 the Board did not implement a 3.5 cent tax increase that was scheduled to repay the 2005 school bond debt. The County has used fund balance and made cuts to other County programs in excess of Eight Million Dollars to compensate for the 3.5 cents which was not imposed in 2009. The BOE asserts that 8.2 cents would fund school debt, leaving 2.8 cents which could be reallocated to their needs in this budget year. The revenue neutral number of the forgone 3.5 cent tax increase is 2.6 cents. Thus even under the BOE’s reasoning and math, only 0.2 cent in funds would be available. That small amount is well within the potential increased cost from the unknown interest rates on the bond, and is nowhere near enough to fund the 2.6 Million requested by the BOE. Further, in this budget year the County allocates $2,580,000 from interest and sales tax refunds from previous bond projects, which is a one time source. This one time funding will not be available in future years. 

ACTUAL REVENUES EXCEED BUDGETED REVENUES: This claim apparently arises from a basic misunderstanding of budgeting. The BOE claims that because actual revenues have exceeded expected revenues by an average of$ 2.6 Million per year, that the County should assume there will be an additional $2.6 Million in revenues for next year and plan to give all those revenues to the BOE. Leaving aside the well known risk of what happens when one assumes, this ignores that even though revenues increase, expenditures may increase as much or more. In fact of the three years upon which the BOE relies, the County fund balance decreased in 2 of the 3 years which means actual expenses exceeded actual revenues.

There are a variety of other issues which need to be considered, such as that the County Commissioners fund an additional $377,000 for School Resource Officers and $150,000 School Nurses in the County Budget. That amount is not included in the current expense allocation in the BOE’s calculations of per pupil funding. There also is no final determination on the Driver’s Education funding until a State Budget has been adopted.

It also is important to remember that the sole issue for mediation between the Board of Commissioners and BOE is whether the funds allocated to the BOE by the Commissioners is sufficient to fund a sound, basic public education. The Commissioners will refrain from picking apart the BOE’s budget for items outside that minimum requirement as it would have to do at trial. It is worth wondering why if the current expense funding falls below that minimum, that the BOE has a fund balance of 3.7 Million dollars. This fund balance comes almost exclusively from County funds (with a small amount from other sources such as fines and forfeitures). This means that the BOE has chosen not to spend its full County funding in past year’s, but now is claiming that its funding level is insufficient to meet the bare minimum to provide a basic education.

The Board of Education passed a resolution June 25 saying the amount of money set aside for the schools in the 2015-16 budget is "not sufficient under North Carolina law." The declaration is the first step in a process that will likely send the disagreement into mediation.

"This is the most delicate and sometimes politically dangerous thing that a school board can undertake," Richard Schwartz, an attorney for the school board, said. "You don't step on the goose that could lay your golden egg and do it very lightly, so this is really a decision and a process of last resort. The school board wouldn't be here if it wasn't absolutely necessary."

According to an email from the school system, there is a $2.6 million difference in what the Pender County School Board requested in funding, and what Pender County Commissioners allotted in the county budget (the funding difference for the schools' expense fund is about $1.8 million).

North Carolina General Statute 115C-431 says:

If the board of education determines that the amount of money appropriated to the local current expense fund, or the capital outlay fund, or both, by the board of county commissioners is not sufficient to support a system of free public schools, the chairman of the board of education and the chairman of the board of county commissioners shall arrange a joint meeting of the two boards to be held within seven days after the day of the county commissioners' decision on the school appropriations.

An agreement was not reached during the special meeting June 29. According to Woodruff, "the next step will be a private mediation meeting with representatives from both entities later this week."

David Williams, the Chairman of the County Commissioners, said the School Board's action to move toward mediation surprised him."I'm at a total loss of the poor taste from the School Board," Williams said. "I can't tell you how disheartening this is. I consider it a slap in the face to our board and to the citizens of Pender County."

Williams said adding more to the massive 17.3 cent property tax increase Commissioners passed last week is not an option he will consider. He said it would take adding another 3 cents on the rate to generate the $1.8 million requested for the school system's expense fund.

"We're not raising taxes any more than we already have," he said. "We have to answer to the taxpayers, the School Board doesn't."

According to Williams, another option for Commissioners is not immediately funding the entire $75 million for the school bonds passed last year by taxpayers. He said the Commissioners could fund part of that total now, and fund the rest at a later time.

To see the state law covering disagreements between a Board of Education and a Board of County Commissioners, click here:

Copyright 2015 WECT. All rights reserved.