POWHATAN – The Powhatan County Board of Supervisors last week decided in a split vote to fund 90 percent of the county’s portion of the public school budget with the understanding it will work with the school board in coming weeks to determine how to handle the other 10 percent.
During the board’s workshop on Thursday, May 14, the supervisors spent two hours discussing what action to take on the school division’s fiscal year (FY) 2021 operating budget given the uncertainties ahead caused by COVID-19’s devastating impact on the economy. Board members acknowledged how much is still unknown about the impact on Powhatan’s revenue stream caused by businesses being shut down and people being laid off or having their hours or pay reduced.
Each supervisor offered a proposal on how to move forward during the discussion. But while their dollar figures varied, the split was ultimately between deciding whether to outright reduce the county transfer of funds to the schools and move on or approve 90 percent of the budget and work with the school board to see how much the remaining 10 percent could be reduced.
The final decision was a 3-2 vote in favor of adopting 90 percent of the county transfer, or $21,012,075. The two boards will discuss the other 10 percent, or about $2.33 million, in upcoming meetings and the supervisors will decide how they want to proceed before adopting the county’s final budget at their June 29 meeting.
Chairman David Williams, who represents District 1; Larry Nordvig, District 2, and Bill Cox, District 4, voted in favor of the proposal. Mike Byerly, District 3, and Karin Carmack, District 5, voted against it.
Only moments before the successful vote, Carmack had made a proposal to reduce the county transfer to the schools to $21.5 million, a decrease of about $1.85 million, with no further action regarding working with the school board. That vote failed in a 2-3 decision, with only Byerly supporting it.
While the board of supervisors approved part of the budget, it did not allocate any funds at the workshop. However, the supervisors did unanimously adopt a new policy that, starting with the FY 2021 budget, they will handle fund allocation on a quarterly basis for not only the school division but all county departments as the year progresses and more information is known.
The supervisors’ decision only impacts the county portion of the school division’s operating budget and not federal or state funds. The budget the school board members approved on May 12 totals $50.2 million, including $1.4 million for a transfer for food services.
The $50.2 million budget the school board adopted on May 12 represented a $1.36 million reduction from the numbers they had been working with in April. It dialed the budget back to a level funding request for local transfer funds. Instead of the projected $904,438 increase in local funds the division was originally projecting, the schools asked for the same amount of local dollars adopted in the FY 2020 budget.
The school division, which was originally counting on a $1 million increase in state funds, saw that number reduced by $460,206 when the General Assembly amended its budget in April. The remaining $543,088 increase in state dollars PCPS will receive will mostly be used to cover a 1 percent increase to the Virginia Retirement System and a 10.7 percent health insurance increase, both of which are mandated.
Taking action on the school division’s portion of the budget last week was driven by two main factors. Per state code, the county has to adopt the schools’ operating budget by May 15.
Also, a huge consideration was the school division’s desire to issue contracts to its full-time employees, which administrators were hoping to do starting on May 18. Dr. Eric Jones, superintendent, had previously said that a neighboring county has been trying to lure away some Powhatan employees, so the division wanted to get their contracts in place.
Larry Johns, assistant superintendent for finance and business operations, represented the school division at the May 14 supervisor meeting. When asked, he told the supervisors that personnel costs – salary and benefits – total about $41.3 million, or 84.7 percent of the schools’ operating budget.
After the meeting, he explained that the contracts the division wants to approve this month total about $36 million. The rest of the personnel costs cover line items such as sports stipends, hourly/temporary employees (site-subs or recess monitors), unemployment, workers compensation insurance, and other various costs.
With only 90 percent of the division’s funding from the county guaranteed with the board’s decision, Johns said school staff would be meeting to discuss their next steps.
“We’ve got to have some internal discussions about contracts. I think at the end of the day, those discussions will be that we are going to go ahead and issue contracts,” Johns said. “Then we are going to have to come up with some scenarios of, if this baseline $21,012,075 transfer from the county is not increased, what actions are we going to take?”
When Jones spoke to the board of supervisors at a previous meeting, he pointed out possible areas the school division had already identified where cuts could be made: eliminating $759,089 in salary increases; $166,748 for stipend and position increases, and $354,063 for various line items. Further reductions would likely lead to reducing positions and/or benefits, he said. One such reduction already worked into the budget involves leaving the position of director of transportation empty for the upcoming school year, a savings of $84,744.
After the May 14 meeting, Johns said that if the $21.012 million figure doesn’t change because revenues are not realized, the school division has “some painful actions that will have to be taken during the year in order to stay under the appropriation from the county.” There are service contracts that could be reduced, such as how often the schools are cleaned or the grass is cut, but the division already took out capital equipment purchases and similar items, he said.
PCPS did not have to use furlough days during the 2008 recession, but it reduced about 100 positions, some of which were early retirements; reduced contract days for over 20 positions, and reduced pay by 3 percent for all employees. The pay cut was restored mid-year with federal stimulus funds, but the contract reductions remained in effect, Johns said.
On May 15, Jones said the school board is committed to working with the supervisors to create a fiscally responsible budget during these uncertain and unprecedented times.
“We look forward to having further discussions with the board of supervisors about the ramifications of reductions in the school system’s operating budget. Since 85 percent of our budget is personnel and benefits, any further reductions will impact our staff directly,” he said.
During the meeting, Nordvig briefly talked about the board of supervisors approving the creation of a stabilization fund for the school division. Instead of unused funds going into a capital projects fund at the end of the fiscal year, they could be rolled into the stabilization fund.
Jones told the school board on May 12 that staff has already projected about $850,000 in savings from this fiscal year, primarily in the areas of transportation, utilities, and substitutes.
The bulk of the May 14 meeting was spent discussing various scenarios proposed by board members and staff on possible routes forward. All of the supervisors acknowledged the uncertainty surrounding both commercial and residential tax revenue and the need to be good stewards of taxpayer money.
Byerly and Carmack pointed out that while the board will likely be armed with more information to make better decisions by the end of June, there will still be too many unknowns. They advocated moving forward with a conservative approach by reducing the county transfer to the schools outright.
Carmack said it was backwards to be passing the schools’ budget when the supervisors haven’t even set a tax rate, “and if we are not careful, we are going to be looking at a very significant tax increase for our citizens.”
“As we go along the process, if we are wrong and we are off base, we can certainly allocate and give you guys more money. But, in this day and age, we know we are not going to have as much money as we did last year, so why are we going to continue funding things at the same level that we did last year,” she said.
Byerly said he came prepared to make a decision, even if it is a tough decision. These are challenging times for everybody in the county who is trying to figure out the answer to their financial issues, he said. He also pointed out that the county is trying to figure out how much to give the school division when it hasn’t even set the tax rate used to calculate projected revenues, much less how much it will actually collect.
“I am in the boat of be as conservative as you can be – be below conservative – and if we come out with revenue that exceeds what we are planning or thinking we are going to get, then we can change the budget and add more funding into the schools,” Byerly said.
On the flip side of the vote, Williams, Nordvig, and Cox argued repeatedly that they wanted to collaborate with the school board on the issue since they and the staff are the ones who would have to make any potential cuts work.
While he did end up voting for adopting 90 percent of the local transfer, Cox’s initial proposal accepted the areas where reductions could be made in the school budget totaling $1.28 million, which Jones had previously outlined. However, his proposal took it all out of the county transfer instead of some of the reductions being taken from increased state funds. His plan would mean the local transfer would be $22.97 million, which is 1.6 percent less than level funding, or $23.35 million.
“This keeps us from initially getting into the bone and reducing head count in the schools. I don’t think we have to do that yet,” Cox said.
Nordvig was the one to propose adopting 90 percent of the county transfer as a temporary measure and work with the school board regarding the rest of the requested funds. Adopting 90 percent of the requested amount does not prematurely commit the board to level funding, which he said he is uncomfortable with currently.
“In keeping with the sentiment that I have been picking up from this board to plan for the worst but hope for the best, I would rather budget for the worst lower amount now and hope to give more as we gain more clarity,” he said.
Williams talked about how much had changed since the boards seriously began discussing budgets in early 2020. In the midst of those changes, the board of supervisors never gave the school board a number to aim for in its budget, namely because they didn’t know yet what kind of reductions may be needed, he said.
Yet since March 15 in particular, the county has “learned volumes more about our situation,” Williams said. He recommended that the school board should have the benefit of weighing in on any potential cuts to their budget.
“I think we owe it to each other. We are one county. We need to know if we are proposing something, how does it affect their budget? Give them an opportunity to come and present and explain. We can have that discussion and I think make a better decision going forward,” he said.
Laura McFarland may be reached at Lmcfarland@powhatantoday.com.