Facing a barrage of criticism from Harford County Executive David Craig over their handling of the budget, the School Board on Monday fired back, defending their actions as a necessary response to the rising cost of doing business, unfunded mandates, and shrinking revenues.
The criticism from Craig, who is also a gubernatorial candidate for 2014, coincided with a backlash from parents this summer over the Board’s budget-driven cuts to bus transportation services, and the implementation of pay-to-play and student activity fees in the upcoming school year.
In a statement Monday, Board President Nancy Reynolds acknowledged the burden on parents, but said the budget moves were necessary to balance the budget with available funding.
Mind the Gap
In a presentation he called “Budgeting 101”, HCPS Chief of Administration Joe Licata said that the school system, like other Maryland public school systems, is fiscally dependent on funding provided by local, state and federal government.
For the fiscal year 2014, Licata said that the School Board had a $21 million gap between revenues and expenditures, driven by a $6 million revenue drop, mainly in state aid, and a $15 million increase in planned expenditures.
The costs of doing business and mandates underlie expenditures, Licata said. The expenditure increase in fiscal year 2014 also included raises for employees, later scrapped to help balance the budget.
State aid was down compared to last year, mainly due to a relative increase in the county’s wealth compared to the other 23 Maryland jurisdictions, said Jim Jewell, HCPS assistant superintendent for business services. In such cases, the state funding formula cuts aid to the local school system, assuming that county government will use local tax revenues to make up the loss, he said.
County funding did increase slightly this year, but not enough to offset the loss in state aid, and far from the $21 million requested by the Board to close their budget gap.
As a result, the Board made “drastic” cuts, such as cutting 85 teaching positions, Licata said, in addition to cutting back on bus service and adding the new pay-to-play fees. Overall, the school system’s $424.7 million operating budget for the fiscal year 2014 was $5.3 million less than last year, Licata said.
Responding to prior statements by Craig that the school system had added 550 positions since he became county executive, while the student population had declined, Jewell said that from fiscal year 2005 to 2014, a total of 434.8 positions had been added, many of which were required by law.
Of the total, Jewell said that 184.9 were inclusion helpers for special education students; and 131.2 were teachers and counselors, mainly for special education.
Jewell said that since 2011, 227.3 positions had been eliminated because of increased costs and not enough revenue, later noting that the county executive had requested and received $3.9 million in funding back from the school system in one prior year, and $500,000 in another.
Licata said that enrollment declined by 354 students last year, but the distribution of the losses among 54 schools didn’t allow for teaching positions to necessarily be saved as a result. The enrollment loss also contributed to the decline in state aid, he said.
Craig’s most recent critique came in a letter to Board President Reynolds, read into the record by a spokesman at the Monday meeting.
Craig’s letter questioned the school system’s need for an overall $25 million “fund balance”, including what he said was an unassigned fund balance of $13 million. The fund balance is an accumulated excess of revenues over budgeted expenses at a particular point in time.
Craig’s letter was greeted with applause by parents at the meeting. However, Board Member Jim Thornton warned the public: “It’s important… to understand that this is a side of the story,” he said. “…We hopefully will not leave here with the misimpression that this school board had in excess $25 million to use to offset the shortfall of the $21 million that we requested from the county executive.” Thornton asked staff to elaborate.
Jewell said that of the $25 million “supposed” fund balance on hand as of June 30, 2012, about half, or $12.6 million was assigned, primarily to cover budgeted expenses in the 2013 fiscal year that just ended.
Since the economic downturn, HCPS has been using year-end fund balances to offset expenses in the following year.
Of the remaining half, or $13.1 million, Jewell said that $7.3 million was held in reserve for the Health Care Consortium Rate Stabilization Fund, a self-insured group of government agencies that also includes Harford Community College and Harford County Public Library. While the school system paid in excess of $70 million in annual healthcare and dental benefits for employees, Jewell said the reserve was needed to cover unexpected claims when premiums didn’t cover the cost of benefits plus administrative costs: “If it doesn’t, then you have to write a check to the insurance carrier, “Jewell said “…So, there is no $25 million or $13 million lying around unused.”
Asked for further clarification about the unassigned fund balance, HCPS Finance Director Jay Staab told The Dagger on Thursday that the $7.3 million for the Healthcare Consortium Rate Stabilization Fund was a required reserve, leaving an actual unassigned fund balance of $6.1 million as of June 30, 2012. The operating budget for that year was $427 million, according to published reports.
Staab also said that the school system was required by law to have a positive year-end balance in each of the 14 budget reporting categories established by the state. “We can’t overspend in any of the categories,” he said.
Healthcare Consortium Rate Stabilization Fund
Craig on Tuesday conceded that some of the $7.3 million he counted as unassigned may have been necessary for the Healthcare Consortium Rate Stabilization Fund, but he questioned the amount set aside. “It’s way over what’s needed,” he said, declining to name a figure but suggesting that the reserve could have been cut by $1 million to spare the transportation cuts and roll back pay-to-play fees.
The school system should rely on the county for rainy day funds, Craig said, and their year-end unassigned fund balance should be “zero.”
Craig’s letter also questioned what he said were dozens of line items in the school system’s budget that were ‘overbudgeted’, or budgeted in excess of the amount spent in prior years. Using legal fees as one example, Craig wrote that $59,000 had been budgeted for the line item in fiscal year 2014, but only $8,000 had been spent in the last two years reported – the fiscal years 2011 and 2012. Board President Nancy Reynolds said on Monday that the actual expense in fiscal year 2013 was $52,000.
Board Vice-President Rick Grambo and Board Member Jim Thornton raised the specter of the school system’s growing unfunded obligation to retirees for health, life and dental insurance, known as Other Post-Employment Benefits or OPEB. Thornton warned that the school system depended on government authorities to fully fund the necessary annual contributions, and cited unfunded obligations in the bankruptcy of the City of Detroit.
Jewell said that the school system’s $163 million net unfunded obligation in OPEB, up from last year’s $127 million, would continue to grow “exponentially” because the contributions continued to be underfunded. “… if you don’t fund it, sooner or later, the bill is going to come due,” he said, “It’s going to be a huge problem.”
A former treasurer for Harford County, Jewell said that county government funded 100% of the required annual contributions for their retirees, but the school system didn’t have the money to do the same.
Finally, Board members bristled at the list of recommendations in Craig’s letter, including his prescription for internal budget committees and increased public engagement. “We have a budget committee”, Thornton said, and he cited the number opportunities for public input on this year’s budget, along with previous warnings from School Board members that the budget would be tight: ”It’s not as if we haven’t tried to inform the citizens…that we were faced with a very, very flat budget,” he said.
Board Member Bob Frisch said the public’s desire to be engaged was also a factor. However, in what may be the one area of agreement in a summer of discord, Frisch has long advocated for the School Board to establish a citizen’s budget advisory committee – which just happens to be Craig’s recommendation #4.
ALEX R says
Good picture of Craig and I particularly like that very expensive new HCPS logo in the upper right hand corner. Kudos to Mr. Craig and the County Council for spending all of that money for a new logo.
For those of you who are not at the top of your game, the previous sentence was sarcasm.
Licata said the State cut funding $6MM. Get it? The State. That would be the same State that just announced record high gambling revenue increases as a result of the new legislation expanding gambling which was sold to us as an education funding bill and for the children. The State collected a lot more and gave us a lot less. Thanks to Lib/Dems who run the State.
MD politics says
“The State collected a lot more and gave us a lot less. Thanks to Lib/Dems who run the State.” – by “us” I assume you are referring to the citizens of Harford County and by “a lot less” you are referring to less than 1% of the total operating budget of HCPS. Because of the wealth formula used by the state which is STATE LAW, Harford County was REQUIRED to receive less from the state of MD. The county, based on the wealth formula should be able to make up the difference. Clearly the county did not in this case. Even though Harford County received less from the state this year than last, the increased revenue generated from the gambling legislation was partially responsible for almost every other county in the state (20 out of 24 – Harford, Garrett, Carroll and Kent being the four receiving reductions – all by the way are predominately Rebublican controlled – http://marylandeducators.org/uploadedFiles/Gov%20Budget%20Proposal%20-%20education%20aid%20by%20county.pdf) receiving more money for education this year without reducing funding to other state programs. Now I’m sure the democrats in Annapolis had a huge grin on their faces when they reduced the funding for education in Harford County this year, but they were simply following the law. Maybe the democrats in Annapolis would find less enjoyment in making it more challenging for Harford County government to pay its bills if Harford County politicians were willing to work with them instead of against them every chance they get. Otherwise, Harford County will no doubt continue to be treated like the backwoods redneck-infested outhouse that so many of its citizens demand that it is. Unfortunately, the citizens here that want Harford County to join the twenty-first century are the one’s that are penalized. Thanks a hell of a lot for redneck pride.
ALEX R says
So, what do you want Harco officials and citizens to do? Roll over and get raped by the Dem/Libs and then say “no, don’t even bother lying to me, I know you won’t respect me in the morning but I just do it for the money, honey”.
Not going to happen. And if the price is what it seems to be then we will live with it just like we have been. If the petty political actions of Annapolis hurt your kids then let Annapolis answer for that. Or the HCEA and the MSTA who have supported them at every turn.
George Willbury says
This is total BS – the problem is not that Maryland is ‘controlled’ by Democrats – the problem is that our delegation is completely unable to come together on pretty much every front! There are other counties that are far more conservative (or as conservative) as is Harford that still get their fair share of state money and services. The difference is that the delegation of other counties can get it together and do what is right for their county! Not so in Harford. Infighting has hamstrung our delegation, and now one of the architects of our failed delegation is running to be the County Executive.
You can go on blaming what you like to call “Lib-Dems” all you want – the truth is that party is irrelevant in Annapolis when it comes to working for your county. The delegation must work together to come to a consensus. With consensus comes a state that works for the county. As long as we have insane delegates like Impallaria, James, and Stifler along with Senators like Jennings and Glassman that have no backbone and are unable to control the delegation – Harford County will get limited resources.
Blame these jokers, not the “Lib-Dems”; the so-called Lib-Dems would just as soon do what is right for our county as it would only help them; but how can they help a county that is unable to help itself???
Otto Schmidlap says
Make like a Travelling Willbury and vamose, Lefty.
George Willbury says
Seldom does one gain wisdom by trying to squelch opposing views.
When is the Board of Education going to learn that they will lose any political battle with the county executive and county council. The executive controls the budget. the board of education needs to get off of their political high hourse and work with the executive and cut areas of the school budget that need to be trimmed. There are many positions that can be cut that would not harm the schools and students. Cutting these positions would provide more classroom teachers and save money. When is the board going to establish the advisory board on the budget so meaningful cuts can be made. Working with the county executive and not getting into a political battle would help the board solve its problems.
If this problem has become political it is because the County Executive and County Council have made it so. Millions have already been cut. There isn’t much left that can be cut without doing real damage to the school system and adversely affecting large segments of the student population, their parents and the staff of the school system.
ALEX R says
Nothing has been cut. The budget has gone up every year. Did you learn your math in HCPS?
You ignore the 200+ positions that have been cut from the school system, the reductions in staff development, the elimination of student programs, cuts in bus service, etc. The budget may have gone up (but not by that much) although not enough to cover increasing costs. I see you are still insulting people.
Jaguar Judy says
I guess Alex is ‘still insulting people’ if you claim that stating facts can be an ‘insult’ to those who would prefer to ignore them when the facts don’t support their position. Maybe a class in remedial mathematics would help you. And if you consider that an insult well, it was.
along the trail says
Craigs’ office is counting on the “letter ” being published and read . They expect very few people will hear about the misstatements corrected at the Board meeting . Mr. Craig is well versed is using media to get his point the most publicity. I don’t think they expected to BOE to come together so quickly and try to dispel his guilt switching tactics. I think the BOE misspends a lot of money , they happen because of “mandates”, Federal and State.
A teacher retiree says:
I suggest Mr. Craig resign his position as Harford County Executive now. He already has begun to campaign for the Governor’s seat in 2014 and the citizens of Harford County, specifically our schools, would be much better served if he were to devote full time to that campaign.
Once a teacher and a public school administrator, how quickly he has forgotten how we always seem to be able to respond to shrinking revenues driven by ambitious politicians at every level of government.
Leave now, Mr. Craig, but please know that every teacher/dedicated educator in the state of Maryland will remember, not your years as an educator, but your years as an ambitious politician. We will remember such statements as this and a myriad of others you have made when we vote in 2014.
In plain sight says
If you want to see what pettiness and game playing comes out of the CE’s office, you need look no further than the video of the BOE meeting that this article references. Watch the public comment portion and look over the right shoulder of the speakers. There sits the CE’s Chief Letter Reader and Chief of Staff. Many times their reactions to comments are childish, disrespectful, moronic, and not worthy of the public trust. To get a full dose of their stupidity and complete oblivion to the camera skip to Mr. Burbey’s comments. Bobbing like tweedledum and tweedledee back there, are the two pathetic examples of who we trust with the financial well being of our community. Sad.
Before David Craig’s administration, the Chief of Staff position DID NOT EVEN EXIST. EVERY year the Chief of Staff’s 6 figure salary would make up for the monies trying to be saved by consolidated bus routes or pay for play. Thanks Dave for giving your buddy a fat check (and no doubt a nice retirement check as well) while you starve our schools and pretend like you give a crap.
mike jones says
Ding Dong the wicked witch lame duck davey is gone !!!!
We can thank a no-transparent goverment; no one in power watching and the failure of ones that claim to represent us… protecting us. The money is gone regardless of party affiliation, that never matter and we all no that. It has happened before in Baltimore; Maryland and other parts of the country. The fact that reporting & auditing seem to be something not done in this administration is the real problem. Like someone said last night…. NO accountability.