Schools Creating Contingency Fund For Future Overruns

NEWARK – Future school system cost overruns will be taken care of through a $1.2 million contingency fund to be established this summer.

Worcester County Board of Education staffers are working on identifying cuts to make in the fiscal year 2009 budget, covering the 2008-2009 school year, to fund the contingency account. The school board will review the cuts and formalize the fund at the July 15 school board meeting.

“The County Commissioners said next year we will not provide any supplemental funding to the Board of Education,” said Worcester County Superintendent of Schools Dr. Jon Andes, explaining why the fund is being created.

The substantial amount of money kept in the contingency fund should cover the expected, continued increases in heating and cooling costs, diesel fuel, maintenance and unexpected special education costs.

The school system will also convene a committee of staff and representatives of local utility companies to consider ways to reduce energy demands.

The changes come in response to a contentious meeting between the commissioners and Andes and the Board of Education, on June 17. Harsh comments were made at that meeting, reflecting some commissioners’ frustration with the timing of the school board’s request for money to cover $385,000 in cost overruns. The formal letter requesting additional money is dated June 12, 10 days after the commissioners approved the fiscal year 2009 budget.

In 2006, a school board letter asking the commissioners to pay overruns, including the amount needed, was sent May 17, in advance of final county budget decisions. The schools did not need help with overruns in 2007.

Andes and the school board contend that the commissioners were informed in November 2007 there could be cost overruns, and the matter was mentioned in the budget, and in Board of Education meetings, as well as a budget presentation.

At the April budget request presentations, Andes only mentioned a ballpark figure for the overruns, County Commission President Virgil Shockley said.

Andes said last week he attempted to speak to the commissioners during the late May budget work session, but was told he could not. Shockley denies this, saying Andes was invited to sit at the table in front of the commissioners for the first time and participate in the budget work session, but Andes did not say a word.

The paper trail described by Andes is not enough when it comes to asking the commissioners for money, according to Shockley. County-funded entities must make a formal, written request for funding.

“It doesn’t matter if people are saying, we’re short,” said Shockley. “They know the steps that are supposed to take place … They know the process. They should have followed it.”     

Andes said the timing of the letter depends on the year.

“We send a letter to the commissioners in the May/June timeframe. We typically wait ‘til we have the May 30 financial report,” Andes said.

Waiting until the end of May to analyze finances allows the school system to make more accurate projections of anticipated June costs, according to Andes.

The commissioners would rather have seen the information before finalizing the budget on June 2, however, and contend the school board had the numbers and could have submitted them earlier.

“This is not acceptable. There’s processes in place,” Shockley said. “It’s about fiscal responsibility.”

Commissioner Louise Gulyas said the commissioners were frustrated from the tight budget situation and were then asked to find more money after making some difficult decisions. Gulyas said she was personally disappointed at the amount needed.

If the school board had come to the commissioners with the overruns before the budget was struck, the 3.5-percent school salary increases probably would have been reduced, Gulyas said. She added that she does not think the school board deliberately delayed their request to protect the FY09 budget.

Contrary to some accusations made by the school board, the commissioners did not set out to embarrass or lambaste Andes of the Board of Education, according to Shockley. “We were not guilty of anything,” he said.

In the end, the commissioners supported the funding request for $385,000, but a single vote could have landed the school system in hot water. The vote was 4-2 on a motion to transfer money to cover the school system overrun. The motion would have failed on a 3-3 vote. The Worcester County schools would then have entered the next fiscal year with a deficit, which is illegal in Maryland.

“There’s been a lesson learned here. I think you’ll see an improvement in communication,” said Commissioner Bud Church.

“On both sides, we have destroyed whatever good relationship we had and now we have to get together and rebuild that, There’s a lot of distrust on both sides,” Gulyas said. 

“We can get past all this,” Shockley said. “Obviously, it could have been and should have been handled different on both sides.”