As many are aware, the City Council is in the process of determining the allocation of approximately $2.8 million of FY12 revenues in excess of the amount originally projected.
The Council has approved, in the First Reading of the Budget Amendment Ordinance, allocation of the entire available amount to lower an already approved FY2013 Capital Improvement Program borrowing program.
The School Division’s request is to allow $500,000 of their allocation to be used for the purchase of mobile devices and laptops that they believe to be essential.
Given the pace of technological change, these devices would be considered an operating cost, not a reduction in debt requirements, which would represent a cost increase of 1 1/2 in borrowing costs (excluding interest charges) with yearly increases in operating budget requirements and, therefore, pressure on the tax rate going forward.
As regards to the financial impacts of the two proposals, there does not seem to be a great deal of disagreement; rather the issue for the School Division is their view that the Council is exceeding its authority by allocating the School Division surplus. It is the School’s position that if the Council does not like the School’s expenditure plan its only option is to reduce funding.
Fundamentally the conversation between the School Division and the City Council is solely limited to money. On a personal note I basically (though not entirely) agree with that approach since elected bodies that govern jurisdictions are not usually educators or have a specific expertise in that field and may make poor decisions.
If money is the only area of discussion permitted, let us talk about money. I believe that the School Division has more than enough money, from existing resources, to pay for the mobile devices and laptops that are so urgently needed.
It was never really clear to me how the School Division, which is perpetually short of funds, was able to find over $300,000 to pay for six months of teacher salary increases in the ongoing FY 2011 budget without any noticeable impact on its educational program. Equally unclear was the School Division’s ability to fund technology upgrades in the ongoing FY 2012 Budget especially since that expense was originally planned for the FY 2013 Budget. My curiosity was piqued.
To satisfy my curiosity, I reviewed 11 years of the City’s Comprehensive Annual Financial Report (CAFR) from FY 2001 to FY 2011 the last year of audited reports. The “pot” of money turns out to be the School Division’s “Fund Balance.”
In beginning FY 2001 the School Fund Balance was just under $1 million; in FY 2011 it was just over $2.5 million and is projected to be almost $2.9 million in FY 2012. The Fund Balance increased in 8 of the 11 years reviewed. There are no specific expenses assigned to the unused Fund Balance.
It is interesting to note that in FY 2010, the year of the 17 cent tax increase, a reduction of City Staff of 17 full time employee equivalents, a funding reduction of the Library that almost lost its accreditation, and the elimination of the City’s Capital Improvement Program the School’s operating surplus was almost $600,000. The ending FY 2010 Fund Balance was $2.5 million. The City’s Capital budget cut left over $4 million of already approved projects stranded, including $1 million for storm water management.
In fairness to the Schools that was the year of the State mandated retirement funding holiday which was clearly a component of the surplus. Nonetheless the Schools were aware of the tax holiday a full month before the City finalized its budget.
In FY2011 the Schools, after the inclusion of the salary increase for teachers, recorded an Operating Surplus of $326,647.
The calculation of the School’s Fund Balance and the actual level of the “carry-forward” are not easy to understand. It is clear, however that the School Division has sufficient existing resources to cover the $500,000 expense for mobile devices and laptops.
To put in layman terms by requesting the $500,000 the School Division is asking taxpayers to pay twice for the same purchase; once in the form of tax dollars used to create its Fund Balance and a second time by asking for new funds for its operating budget.
Discussions of financial terms and practices have been known to numb. A more fundamental issue is how the School Division and City can develop a sustainable financial plan that adds value to the taxpayers and the school children. Not only for the students in the mid to upper grades but also for the younger ones that have just started in Mt. Daniel or will soon to on their way into the classroom. For that plan to be developed there needs to be transparency and cooperation.
Ira Kaylin is a member of the Falls Church City Council.