Worcester School Board Budget Not Adjusted

SNOW HILL – County officials opted not to make what they called a late change to the Worcester County Board of Education budget despite a staff recommendation.

The Worcester County Commissioners this week agreed to leave the school system’s budget as-is during a budget work session. Noting that the school system’s operating budget request had increased by $3.9 million–a change that will become permanent with the state’s maintenance of effort funding requirements–a staff committee had recommended instead reallocating $1 million of the budget from operations to post-retirement health insurance, as the school system’s OPEB (Other Post-Employment Benefits) liability is close to $300 million.

“We’re trying to build something into the budget so we have long-term funding moving forward,” Finance Officer Phil Thompson said.

As the commissioners reviewed the school system’s $101 million budget request during a work session Tuesday, staff presented a recommendation to transfer $1 million of that request to OPEB. Each year, the county sets aside money to cover the cost of the insurance provided to retirees. While Worcester County’s OPEB liability is more than 100% funded, meaning there’s enough in the account to sustainably fund annual retiree insurance costs, the school system’s nearly $300 million OPEB  liability is only about 8% funded. As a result of that, the commissioners on Tuesday agreed to break down the coming budget year’s OPEB allocation with an 80-20 split. In other words 80% ($7.6 million) of their annual contribution will be used to bolster the board of education’s OPEB fund and 20% will go to the county’s OPEB fund.

Chief Administrative Officer Weston Young said that the school system’s OPEB cost $6.7 million a year.

“We are putting a little more aside by doing the $7.6 million,” he said. “Not a lot.”

Noting that the school system’s budget request had increased by $3.9 million this year, staff suggested the board of education also devote $1 million of that increase to OPEB. While the commissioners said they wanted to see the school system put more aside for employee retirement, they didn’t think it should be in this year’s budget. Commissioner Joe Mitrecic said the school system could be advised that any remaining fund balance in future budget years should be put aside for OPEB.

“I think they might agree to that,” Commissioner Jim Bunting said.

Mitrecic said it was late in the budgeting process to have the school system reallocate $1 million.

“At this point in time, to cut a million is tough to swallow,” he said.

Commissioner Diana Purnell expressed concern about the lack of OPEB savings the board of education had set aside.

“They’re 90% behind with their funding,” she said. “If something goes down, we’re on the hook for that.”

Thompson agreed that school system retirees were effectively county employees.

The commissioners voted unanimously to make no changes to the school system’s proposed fiscal year 2023 budget.

About The Author: Charlene Sharpe

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Charlene Sharpe has been with The Dispatch since 2014. A graduate of Stephen Decatur High School and the University of Richmond, she spent seven years with the Delmarva Media Group before joining the team at The Dispatch.