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Letter from Union County Board of Education Chair Richard Yercheck to Union County Board of County Commissioners Chair Frank Aikmus

January 31, 2014

Mr. Frank Aikmus
Union County Board of Commissioners
500 Main Street, Room 921
Monroe, NC 28112

Dear Mr. Aikmus,

The issue of redistricting students from one school zone to another is always difficult, especially in a rapidly growing county. It does not help when misleading financial information is injected into the discussion. Recent comments by and emails from some Union County Commissioners have been cited by some parents who have been told that the Union County Public Schools has ample funds available to address school facility needs without redistricting. Nothing could be further from the truth, and the Union County Public Schools welcomes an opportunity to set the matter straight.

At least one Commissioner has stated that the school system had $18 million in fund balance according to its last audit, with the suggestion that this amount is available for the Board of Education to use it as it pleases. Others are quoted as suggesting the school system has money that could be used for school expansion. Neither assertion is true. In fact, only $745,771 of the school fund balance is unrestricted and not already assigned for other purposes, less than 0.3% of the overall school system budget.

The $18 million figure ($17,970,685 to be exact) was the audited total, as of June 30, 2013, of the fund balances of four separate funds operated by the Union County Public Schools, as dictated by law. The four funds serve different purposes, with different limitations and restrictions. It is not only misleading, but wrong to lump them together and then suggest they are available for general use by the school board. Legally, restrictions apply to each fund.

The first fund, the General Fund (or Local Current Expense Fund), had a fund balance on June 30, 2013, of $5,561,607, of which $1,935,199 is restricted by law from any expenditure whatsoever. Of the remaining $3,626,408 in funds not restricted by law, $2,880,637 was already assigned (designated) for expenditures contained in the Board of Education’s 2013-14 budget. This leaves only $745,771 of unassigned fund balance available for expenditures not yet identified. Sound budgeting practices dictate that the Board of Education retain some available fund balance for liquidity purposes and for emergencies. For a school system as large as Union County Public Schools, an unassigned fund balance of $745,771 is extremely small, amounting to less than 1% of the Local Current Expense Fund and less than 0.3% of the overall school system budget. By comparison, Union County Commissioners’ official policy states that the County shall maintain an available unassigned fund balance of 16%, and Union County’s most recent audit reflected an available unassigned fund balance (in its general fund alone) of $62.3 million or 28.2%, well above the 16% required by County policy. To further the comparison, if the Board of Education were to maintain an available fund balance in its general fund, matching the same 28.2% as the County’s, the Board of Education’s available fund balance would be more than 32 times what it was on June 30, and would exceed $24 million.

The second fund, the Individual Schools Fund, had a fund balance of $4,440,923, all of which is maintained for use at and by the individual schools. Much of this money was raised from athletic events and fundraisers at our 53 schools, the accumulation of a lot of effort by school clubs, teams, students, faculty, parents and volunteers. This is an average of less than $84,000 per school. None of this fund balance is utilized by the school board for general use. It is money that remains in individual school accounts.

The third fund, the Capital Outlay Fund, had a fund balance of $1,627,235, all of which is restricted for capital outlay purposes, such as facility renovations and repair, roofs, furnishings, technology, equipment and vehicles including school buses. Most of this amount is carried over from last year and designated to complete 2012-13 capital outlay projects already planned or in progress. Nearly all of it has been spent, encumbered or earmarked for particular projects, with a small reserve for unforeseen emergencies.
The fourth fund is the Other Special Revenue Fund, restricted by law for special uses such as restricted grants and programs not intended for the general K-12 population. Of the $6,340,920 fund balance that was in this fund, $2,092,079 is restricted by statute or for Instructional Programs, and $4,248,211 is restricted from general use and is assigned for specific, limited programs such as ROTC or the NC Pre-K preschool program. The Board of Education cannot spend these monies simply at its discretion.

In summary, the $18 million combined school system fund balances are not, in fact, combined. They are four separate funds, not available for all uses. The unrestricted unassigned general funds total $745,771, which is a very small reserve for a large school system. The available capital outlay funds are either earmarked to complete specific projects or are needed as a reserve against emergencies.

Some Commissioners have mentioned additional funding, provided only after the lengthy budget trial. While every appropriation is appreciated, the additional $5.3 million provided by the Commissioners after the jury verdict in October is for the unfunded items in the school system’s original capital outlay request. This amount is less than 7% of the $86,184,005 in unmet capital needs determined by the jury, leaving a shortfall of $80,826,146. The Board of Education is now spending the $5.3 million on the needs for which these funds were originally designated in its 2013-14 budget request. If the Commissioners decide to appropriate the additional $9.5 million for roofs without imposing unacceptable terms and conditions, the Board of Education will be obligated to spend those funds for their designated purpose: repairing or replacing specifically identified portions of roofs.

Both the Board of Commissioners and the Board of Education are well aware that neither the school system’s fund balance nor the additional capital outlay funding provided in October, nor the $9.5 million presently being considered by the Board of Commissioners would have any impact whatsoever on school expansions or redistricting. To suggest otherwise is not helpful to an informed public.

Best Regards,

Richard Yercheck
Chairman, Union County Board of Education

cc: Members, Union County Board of Education
Dr. Mary B. Ellis, Superintendent
Members, Union County Board of Commissioners

Written by: Rob Jackson
Posted: Jan 31, 2014 by Rob Jackson

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