POWHATAN – The Powhatan County Board of Supervisors and School Board met last week to discuss the complicated issue of figuring out how to plan for the fiscal year (FY) 2021 operating budget when so much is still unknown.
The two boards met in person on Thursday, June 11 to discuss the issue of the school division’s budget. The supervisors approved 90 percent of the county portion of the school board budget on May 14 with the understanding they would work with the school board to determine how to handle the other 10 percent, or about $2.33 million.
Last week’s meeting was about continuing the dialogue about the 10 percent that is still up in the air and what losing it or a percentage of it would mean for the upcoming school year.
Dr. Eric Jones, superintendent, gave a presentation that he had already shown the school board on June 1 about what losing anywhere from 2 percent ($466,935) to 10 percent ($2,334,675) of the school division’s budget would mean.
Just in the 2 percent range, some of the more stark areas the school division would have to look to first if cuts are required include eliminating field trips, eliminating stipends for all athletic, extra-curricular and co-curricular activities, and cutting all department budgets by 10 percent. Anything above that would mean laying off employees.
The board debated a wide variety of topics during the three-hour meeting, but no votes were taken and no official decisions were made. The supervisors had already stated their intention to wait to adopt the county’s budget until the last possible date – their June 29 meeting – to give them as long as possible to gather pertinent information to make their decision.
At varying times during the night, the discussion didn’t center specifically on the schools but on the current economic uncertainty at the root of why the two boards are talking about the need to look for possible reductions within the county and school division budgets.
They talked about the uncertainty of the county’s tax collection rate and the supervisors’ job of setting a tax rate with that unknown hanging over their heads.
Meanwhile, the school board is faced with the huge unknown of how restrictions from the state are going to impact the upcoming school year and what financial implications that will carry.
In that context, some supervisors seemed in favor of the school board’s request for full funding, its argument that it has already cut $1.36 million from the budget it created in April, and the idea that changes can be made later if there is a shortfall.
Others were not in favor of the wait-and-see approach. Supervisor Karin Carmack, District 5, pointed out that over the past 10 years, student enrollment has decreased by 3 percent, but county funding has increased by 17 percent. She said that the schools receive about 58 percent of the county budget as well as the county paying the schools’ debt service. But the supervisors also have to fund all of the other departments that keep the county running, she said.
Carmack said she is worried about the state of the county when you consider issues such as high unemployment rates, people losing their jobs, tax collections possibly being down, and the unknown long-term effects of COVID-19. She is resistant to arguments to raise taxes, which would disproportionately affect people on fixed and lower incomes, or to wait until November to see how bad the situation becomes.
“I ain’t raising people’s taxes in November if it gets rough. I am not doing it. I would rather do a little more nitty gritty digging in now,” she said before asking the school board members to help come up with a reasonable solution.
Cox pointed to data for the last five years, which he said shows the schools have done a good job of managing their resources, including putting more than $800,000 in a capital maintenance reserve fund and instituting energy savings plans.
Jones had prepared a document that showed in the last 10 years, between the Virginia Retirement System, salary, and health insurance increases, the schools have had to adhere to almost $8.7 million in mandated increases. Yet in the same amount of time, the division only increased its total expenditures by $7.8 million.
Revenue stabilization fund
A few weeks ago, both boards began mentioning the topic of creating a revenue stabilization fund as an additional safety net for the county. While the county maintains a 15 percent fund balance, or “rainy day fund,” actually dipping into it in an emergency could hurt the county’s bond rating, according to some of the supervisors.
The discussion about a revenue stabilization fund continued at the joint meeting as Jones explained that the school division is currently anticipating a year-end savings of about $980,000, largely due to the schools closing because of COVID-19. In the last few years, county policy says that any funds the school division hasn’t used by the end of the year could be rolled over into a capital maintenance reserve fund for the schools to use on capital projects.
However, the discussion at the joint meeting suggested that for this year only, they are considering rolling the almost $1 million in savings into a county-controlled revenue stabilization fund that could be used for any of the county departments if budget shortfalls became an issue.
Chairman David Williams, District 1, owned that the board of supervisors was remiss in the past not to already have such a fund as an additional safety net for the county.
Not all members agreed the schools’ money should be transferred back to the county. Supervisor Mike Byerly, District 3, said that since the schools were the ones that saved the money, even if it was COVID-19 related, it should be used for the schools.
Board members also discussed the need for strict guidelines on how and when a revenue stabilization fund could be used.
Supervisor Bill Cox, District 4, said it is not a “get-out-of-jail-free card” but a way to spread the hurt of a revenue drop over time. The biggest unknown in the current budget is how much revenue the county will receive in taxes. Cox said the county has the money it needs now, but they don’t know what will happen with collection rates in November. The stabilization fund is a “Plan B” if collections rates are below what is anticipated.
Williams said both board leaders and key staff members would work together to create a draft agreement for their review.
As he had previously with the school board, Jones went through a budget reduction discussion guide he had created to answer the supervisors’ question about what cuts might be made if the schools didn’t receive full funding.
The discussion covered a variety of topics and stances:
* Cutting stipends for athletic coaches and extracurricular sponsors and field trips: Part of the discussion centered around how much of an issue this would actually be. Carmack pointed out that schools don’t know what athletics and extracurricular activities will even be allowed or feasible once the new year starts. They also don’t know if field trips would be possible, especially give the 6-foot restrictions that are already causing concern about how regular school bus transportation to and from school will be feasible (for more detail, see Schools story on bottom of Page 1A).
Jones said that some of the activities would be possible. The Virginia High School League had announced earlier in the day that it was allowing off-season workouts to resume but pushing back some sports may be necessary. For example, while Jones didn’t think a fall football season was possible, there have been discussions about pushing the season back and possibly having an abbreviated season later.
Supervisor Larry Nordvig, District 2, said that while he is not in favor of cutting extracurricular activities, if they don’t happen because they are not allowed by the state, costs associated with them would realize savings for the school district.
* Staff reductions – Jones answered questions about early retirements (the numbers increased slightly but are still minimal) and furloughs (a one-day furlough of all employees equates to $161,000 a day).
Little was actually said on the specific topic of reducing staff members in the future. There were mentions about staff reductions made in the past for various reasons, including the Great Recession in 2008.
* CARES Act – The two boards discussed the CARES Act and how it might help the schools with some of its budget. Multiple people pointed out how many restrictions there are on this money to expenses specifically related to actions taken as a result of the pandemic that they will have to adhere to when using those funds. Jones said the schools, like the county, are carefully tracking all COVID-19-related expenses to try to get reimbursed.
Laura McFarland may be reached at Lmcfarland@powhatantoday.com.