Loudon to move on budget despite funding debate

Funding of schools plan awaits ruling

Hugh G. Willett knoxnews.com

Loudon County commission will vote on the $70 million 2013-2014 county budget Monday despite questions about the transfer of more than $910,000 from reserves to balance the school budget.

Commissioner and budget committee chairman Don Miller said he knows that using the accumulated fund balance for recurring expenses is not a good business practice, he’s just not sure whether or not it’s legal.

“I think we all agree it’s not a good idea to take money from reserves to pay for ongoing expenses,” he said.

The problem is that the commission doesn’t have the power to make specific adjustments to the $36.6 million school budget.

“As a commission we can only vote the budget up or down,” Miller said.

The commission, which has already extended the budget process past the usual June 30 fiscal year end, has requested an opinion from the state attorney general’s office on whether the transfer is legal. The opinion may take several months. In the meantime, the commission feels it can move forward with the budget, he said.

Miller said he has been trying to research the fund transfer issue. Under state law the money from the fund balance can be used “for any educational purpose” and under another opinion from the state Attorney General’s office, the money is supposed to be used for nonrecurring expenses only.

“Although the weight of the evidence may be with the TCA, there is confusion and indeed some conflict within the Attorney General’s Opinion itself,” Miller said.

Tellico Village resident Richard Anklin told the commission this week that he believes the use of reserves is not allowed to fund recurring expenses, including the pay raises scheduled for teachers under the budget submitted by the schools.

According to Anklin, TCA 49-3-352 (c) and the Attorney Generals Opinions (11-73 and 04-098) all state that accumulated fund balance can be used for any educational purposes.

“However, while the analysis, in paragraph (c), states that to be the case in the bold print shown as “emphasis added”, it restates the prior opinion, 04-098, about the use of the accumulated funds with “four rules”. And, it is my contention that rule # 3 addresses what happens to the accumulated fund balance, over 3%, that it can only be budgeted and spent on nonrecurring purposes,” he said.

Anklin said he believes all the expenditures on the current school budget, would be deemed recurring. He said he is concerned that if the upcoming AG opinion conflicts with the transfer, there will be no way to address the issue retroactively.

Miller admits that should the AG opinion go against the transfer, the issue could be difficult to solve.

“I’m not sure exactly what we’ll do if that happens,” he said.