County commissioners caution BOE on spending
Jeremy Nash
At least two county commissioners have concerns with how the Loudon County Board of Education is drawing down its fund balance, and worries are it could become a problem within the next couple years.

Following commission’s approval of county Fund 141 on June 2, which included $919,000 in amendments on top of a draw down of $957,000, the school board has netted a $1.8 million decrease in reserves for the current year.

Commissioner Don Miller said he believes the school board’s rate of deficit spending is “not sustainable,” using some monies for recurring expenditures.

“This is something an issue we talked about last year with the school board,” Miller said. “In fact we even got an attorney general’s opinion as to whether or not they could do this and the attorney general — this is a year ago I’m talking about now — the attorney general said ‘Yeah, it’s within their authority to do it, but it’s not a good business practice,’ and the state comptroller’s office said the same thing.”

Next year’s proposed budget could draw down fund balance by $1.4 million. Miller said that would mean the fund balance has been drawn down over $3 million over a two-year period, and would drop from $7.4 million to about $4 million over the same time frame. Miller said the BOE could be headed toward a “financial train wreck” soon, and county commission would have to devise a plan to make up the difference.

“You’re going to have a large property tax increase, or you’re going to have to make some major cuts in the — I’m talking about the school board — you’re going to have to make some major cuts in school expenditures, neither of which are very appealing,” Miller said.

Miller estimates the fund balance could reach about $2.5 million by June 30, 2016, if the school board keeps at the current rate of deficit spending. Total school expenditures have increased “significantly faster” than inflation and population growth over the past two to three years. Expenditures have grown about 56 percent dating back to 2005, according to Miller.

Loudon County Director of Schools Jason Vance said he understood Miller’s concerns, but felt the board was in a “solid position” with the fund balance. Board members have requested $300,000 for Greenback and Loudon High school fieldhouses, $30,000 for the LHS football field crowning, $90,000 for lockers at North Middle and Philadelphia Elementary schools and $500,000 for maintenance items. Vance said the board also requested an additional $900,000 for this year’s operating budget.

“As I mentioned earlier, we believe we will be around $4 million after the budget is passed,” Vance said. “It would be my hope that the county commission would consider future investments into the school system. I believe the board has done a nice job with the past budget. They have maintained a solid academic program without new monies for operating expenses for the past four years.”

Vance said the board has been able to increase reserves from about $3 million to about $7 million during four years in part due to offering retirement incentives and making necessary cuts to teachers and assistants.

School board member Jeremy Buckles said commission had asked the BOE to reduce its fund balance before.

“Of course we have done some other things, approved some other items as well that are one-time expenses to use our monies from our fund balance for that we feel are appropriate and necessary for the education of students in Loudon County,” Buckles said. “And we think that using that fund balance money for that will be appropriate.

“It’s not causing us any fiscal concerns or issues at this time and probably shouldn’t at all, at least for the next several years as long as we continue to look down the road ensuring that our operating budget and our recurring expenses are within our budgetary limits and trying to be very responsible with the monies that we do have budgeted and being cautious to not allow our fund balance to dip too far,” he added.

Commissioner Bob Franke agreed with Miller that the BOE needs to be cautious with expenditures and said the BOE would need to “work together to work through it.”

“I mean the money’s got to come from somewhere, and if they’re using it for continuing expenses, once that reserve is cut down to the point where there’s not enough left and still meet the minimum requirement, you’ve got to get the money from somewhere if it’s continuing expenses,” Franke said. “That’s just not a smart way to do it. They’re just going to have to make some tough decisions here in the future if they draw that down on by using recurring expenses to draw it down.”

Salary increases and some maintenance items can be considered recurring expenditures, Miller said.

Board members plan to give school staff a 2 percent raise next year.