Commissioners, Couch discuss school funding
CHESTERTOWN — While questioning Superintendent Karen Couch on school finances, the Kent County Commissioners pledged last week to keep the district solvent as is through next year.
The commissioners hosted Couch and the Kent County Board of Education at a joint meeting Tuesday, Oct. 18. The discussion focused on what the district needs for funding in the next fiscal year and how much money it has in reserve.
State law requires counties to fund their corresponding school districts at the same per-pupil rate as the previous year. The regulation, called “maintenance of effort,” is known for making counties wary of providing districts with extra funding in a given year because it would increase the annual requirement.
Last February, the Board of Education voted to close two of the district’s five elementary schools in an effort to cut costs. About a week later, amid public uproar over the planned closings, the commissioners offered to go more than $1.5 million above MOE to preserve the schools and to increase teacher salaries.
Concerns over the district’s fund balance later led the commissioners to withdraw their promised MOE increase, leaving Couch and school board members facing a budget deficit going into the next fiscal year, which begins July 1, 2017.
“Additional funding reductions has the potential for negatively affecting the progress we made in the last three years,” Board of Education President Jeff Reed told the commissioners Oct. 18.
William Pickrum, president of the commissioners, said the school board needs to come up with a multi-year plan.
Reed said the school board came up with a plan when members agreed to consolidate five elementary schools to three. He said it was discouraging to go through the process only to have the commissioners offer additional funding after the fact.
If the school board looks at consolidation again, will the commissioners support the board’s decision, Reed asked, or will funding come available at the last minute?
“Because you know as well as I do that when you dangle that cheese, that puts us in a very bad predicament because what are we going to say, that we’re not going to take it?,” Reed said, noting that he voted last March against shelving the consolidation plan in favor of accepting additional county money.
Commissioner Ron Fithian said the county is fourth in the state for per-pupil funding. The commissioners also have provided additional funds in recent years for one-time costs that are not factored into MOE.
“In the last three years, we have funded a million dollars above maintenance of effort,” Fithian said. “Now, we’re still not solving the problem of the declining enrollment and how much, how far do we continue to go.”
Because MOE is based on a per-pupil rate, the total amount of money the county is required to spend on schools decreases when the student population drops. Kent County Public Schools has seen enrollment drop annually for a number of years.
Couch said this year, as of Sept. 30, the district was down 14 students. She said just by rolling students up a grade each year, the district could see a loss of another 39 students next year and 48 students the following year.
Fithian said he would not apologize for holding the schools together for a couple more years and saving jobs. He said he thought the county had the revenue to ensure the district would be whole, as is, for the current fiscal year and for next year.
“I was never under the impression we bought a couple of years. I think we solved it for one year, with the idea that we were going to have to come back and figure out, you know, what needs to happen,” Couch said.
The consolidation timeline is currently slated to begin again Jan. 9, with Couch issuing a recommendation on any school closings to the Board of Education.
Commissioner Bill Short, who made the motion in the unanimous vote Feb. 23 for the county to increase MOE by more than $1.5 million, said he thought the school board made the right decision when members first voted to close schools. He said then “things got a little out of sorts.”
In the months following the Feb. 23 vote, the commissioners became concerned with the size of the district’s fund balance. This led them to not increase MOE after all.
That decision was made after the statemandated April 30 deadline to submit a consolidation plan, which the district had not done because of the Feb. 23 vote to in- crease MOE, and after administrators had already negotiated teacher pay raises that constituted about half the additional funding expected from the county.
To make up the $1.5 million, Couch said the district used $1.2 million from its fund balance and $300,000 in additional state money, neither of which are recurring revenue sources for next year.
Reed and Couch also spoke about the importance of maintaining competitive salaries for teachers to attract and retain top talent. Couch said KCPS is one of the county’s economic development drivers and a large employer.
“We’re not going to have the ability to bring in good people if we’re not competitive,” Couch said.
Add the financial hit of the enrollment decline and additional money for salary increases and improvements to the $1.5 million, and Couch expects a $2 million shortfall next year.
The commissioners questioned Couch on the district’s expected fund balance at the end of this year.
Pat Merritt, the county’s chief financial officer, said she looked at the numbers available on the KCPS website and expects the district to end the current fiscal year with a fund balance of $2.8 million, an amount Couch disputed.
Couch asked if the commissioners thought the district should maintain any fund balance, noting that the district had $130,000 in unexpected costs in the last three months.
County Administrator Shelley Heller asked what Couch thought the district needs in reserve.
Couch said generally accepted accounting principles call for maintaining two months of operating expenses in reserve, which would be $2 million for KCPS. She said the district should maintain $500,000 at a minimum.
“That sounds like a great number to me,” Fithian said of the latter figure. “I’ve always looked at the county as your fund balance.”
Short said the school board members need to do what they need to do and not wait for the county to say, “We’ll make you solvent.” He said if the district continues to maintain the current number of schools, he would not support an MOE increase.
“You are not going to go broke. We’re not going to allow that,” Pickrum told Couch and the school board.
Kent County Board of Education President Jeff Reed speaks to the Kent County Commissioners Oct. 18 about funding needs, as Superintendent Karen Couch looks on.