State reversions and pay raises exacerbate situation.
Despite making significant cuts to operational costs since last fall, Macon County Schools are in serious financial trouble for the remainder of the 2012-13 school year. The situation is not a complete surprise, as Macon County Schools finance director Angie Cook and Interim Superintendent Dr. Jim Duncan announced last September that without a fund balance, the school system would be in trouble by the end of the year.
Dr. Duncan informed commissioners in September that the school system’s financial problems are a result of years of overspending and allocating more in the budget than the school system had in funding.
“This did not just happen overnight,” said Dr. Duncan said in September. “We had more money to work with in 2008 than we do now. The state has been inconsistent over the last few years with their appropriation, making it hard to determine what funds we would receive each year.”
With several factors contributing to the remaining year's budget, the school system is looking at anywhere between a $250,000 to $400,000 shortfall this year. While they are still cutting costs in every area possible, the school board will inevitably have to go before county commissioners before the end of the year and request bailout monies. Just how much they will have to request is the only question.
The school system's financial troubles are a culmination of several things. While districts across the state had received federal stimulus dollars known as EduJobs money over the past several years, those funds expired last year. Under the direction of the school districts former leadership, Dr. Duncan explained that although the EduJobs money was never anticipated to be a constant stream of cash, for some reason, Macon County had allocated it to reoccurring costs and positions in the budget. So when the pocket of money dried up, the school system was left scrambling to find ways to retain those positions, some of which were valuable classroom positions.
The state's mandated reversion, which has become an annual expectation that started in 2008, has also placed an undue hardship on the school system. For the past several years, Macon County has received a state allocation for funding for the budget and then has been asked to return a discretionary reversion of some amount. This year, Macon County was mandated to return $1,064,424 back to the state, which is comparable to last year's reversion of $1.26 million.
In order to account for the $1.06 million loss, Cook has had to rearrange federal and local dollars in order to avoid laying off employees or eliminating programs. “We are trading in 18 teacher positions which will give us $1,010,862 and the additional $53,562 will come from teacher assistant funding,” said Cook. “We will pick these positions up from local and/or federal funds.”
One of the largest contributing factors to the schools’ more than a quarter million dollar shortfall, according to Dr. Duncan, is the state employee salary increase handed down by the General Assembly earlier this year.
“Our budget was already basically done and then the state passes a 1.2 percent salary increase, a 5 percent insurance increase and a 1.1 percent benefit increase, which amounts to about $350,000. Although on one hand we are happy the state approved the well-deserved raise for our teachers, they did it without giving us a way to pay for it. So we had to revisit the budget and find a way to come up with $350,000.”
While teachers are considered state employees, because of the state mandated reversion, Macon County currently has 54 teacher positions which are paid out of local monies, so when the state gave all teachers a raise, they failed to account for the teachers paid out of local funds. Macon County was tasked with coming up with those funds to support the raises.
With several areas of the budget being cut, the school system's greatest cost saving measure was estimated to be for public utilities (power) at an estimated cost of $177,202. “With the consolidation of the school systems and the new geothermal heating and cooling system at Iotla Valley, we hope to see significant savings there that helped when balancing the budget,” said Dr. Duncan said in September.
While the school system was able to reduce the budget through utilities savings, the increase in Duke Energy's electricity costs reduced the amount of savings the district was able to incur.
Other cost saving measures were done to the tune of: $10,000 cut in expenses related to garbage collection; $70,000 in network communications; $65,000 in general maintenance costs; and $25,000 in custodial salary.
An additional $32,798 was saved in software contracts that were not renewed or not needed based on the computers and programs needed for education purposes in the district.
Dr. Duncan informed the board that other cost saving measures were done such as only hiring interim positions after January, which allowed the district a significant saving in salary and benefit costs. The district also operated on minimum staffing, only replacing positions on a completely as needed basis.
According to Dr. Duncan, depending on the weather for the remainder of the school year and other factors, the school board will take another look at the budget before the year is over and have a better idea of exactly how much they will need from commissioners to finish out the school year.