News from the Board of Supervisors
On June 27, 2022 the Board of Supervisors changed its initial preliminary proposed annual budget which includes a budget for the school system to $17,100,000. Initially, the proposed budget ($18,100,000 total) included an increase of approximately $2,500,000 more the previous FY 2020-2021 year’s budget. The final $1,000,000 was proposed by Ernie Reed, (Central District) and was supported by Thomas Harvey (North District) and Robert Barton (South District). At the June 27, 2022 meeting Thomas Harvey changed his vote and the lesser amount was appropriated.
According to Shannon T. Irvin, Assistant Superintendent for Administration for the Nelson County Public Schools, the proposed increased budget of $2,500,000, would have allowed the school board to provide “all employees ….at least a 5% increase in salary; minimum wage for all workers set at $17 per hour; [a] $1000 bonus for full-time employees to be paid in December 2022; [a]1/2 % increase between steps on the Bus Driver, Support Staff, & Teacher
Scales, improvements to the Teacher Scale for veteran employees to hopefully reach 25th in the state through Step 30, and several Admin reclassifications. In addition to salary, the budget includes payment of the 10.5% increase in Group Health Insurance premiums and reinstates the payment of partial tuition reimbursement for those taking college classes. The budget also allows for the coverage of increased operational costs and ongoing contractual obligations.” The increases in salary available to the school system based on the increase of lessor amount of $1,500,000 are not yet available.
The Board heard comment from several members of the public both for and against the $2,500,000 previously approved by the Board and from Sheriff David Hill and Candice McGarry, Acting County Administrator. Sheriff Hill pointed out that he has only 11 deputies and has six vacancies in his department, two of which are School Resource Officers. While the state funded starting salaries for local law enforcement paid for by the state are being increased to $42,000, Amherst pays $45,600 as its starting salary, Lynchburg pays $50,000 with a hiring bonus of $5,000 and Albemarle pays $45,524. Nelson County’s salaries are not competitive and it is difficult to hire qualified candidates and to retain them.
Candice McGarry went through the budget and showed that the “surplus” revenue being used to fund the additional $1,000,000 for the school system would be derived by
“Added $1M to transfer to school operations for a total of $2.5 Million and reduced recurring contingency by $999,619 leaving $0 and added $381 to Real Estate tax revenue to cover the balance of the $1M transfer to school operations.”
As part of a detailed memo to the board, Ms. McGarry expressed concern that school personnel would be paid substantially more than other county employees if the proposed hourly minimum wage of $17.00 for school employees was implemented and there would be $0 in recurring contingency to address additional recurring expenses in current or future fiscal years. Board members J. David Parr (West District) and Jesse Rutherford (North District) echoed these sentiments. A copy of Ms. McGarry’s memorandum is set out in full below. Supervisors Ernie Reed and Robert Barton continued their support for the $2,500,000 budget increase and felt that the needed funds could be found in existing revenues. Ernie Reed stated that
“the additional $1m for schools need not come from recurring revenue although that is what the board had previously decided. It could have been allocated from the county's $9m of ‘unassigned funds’ (a one-time transfer of funds that would not affect the other budget line item as this is not a budgeted item so it does not appear in the budget) or from a $1m reduction to the $6.3m "debt service" line item of the budget.”
Jesse Rutherford requested that more members of the public attend the board’s meetings or at least review the minutes of the meetings so that the public becomes fully informed about the county’s finances. This request is in the best interests of all residents of the county.
June 23, 2022
To: Board of Supervisors
From: C. McGarry
Re: FY23 Budget
FY23 Budget Adjustments Made as of 6/14/22 for Proposed Adoption/Appropriation of the FY23 Budget:
Reduced proposed Transient Occupancy Tax revenue by $1,150,131
Added $2.6 Million in bond proceeds and $2.6 Million in property acquisition expense
Added $132,000 to the Solid Waste expenditure budget for increase in hauling costs and reduced recurring contingency by same amount
Reduced transfer to debt service reserve expense by $1.4 Million, leaving $610,000 to be transferred
Added $1M to transfer to school operations for a total of $2.5 Million and reduced recurring contingency by $999,619 leaving $0 and added $381 to Real Estate tax revenue to cover the balance of the $1M transfer to school operations
School Division reported uses of the $2.5 Million in new local funding (S. Irvin 6/22 email):
At least a 5% increase in salary for all employees (recurring)
$17/hr minimum wage set for all workers (recurring)
$1,000 bonus for full-time employees in December 2022 (non-recurring ARP funds)
.5% increase between steps and 2.5% increase between grades for bus drivers, support staff, and teacher scales (recurring)
Improvements to Teacher scale for veteran employees through step 30 (recurring)
Administrative position re-classifications (recurring)
Employer payment of the 10.5% increase in group health insurance premiums (possibly recurring)
Re-instatement of partial tuition reimbursements for college courses (possibly recurring)
Increased operational costs and contractual obligations (recurring)
Purchase of gym chairs and hurdles for athletics department (non-recurring) – 6/23 NC Times
Prior to the Board’s consideration of adopting and appropriating the FY23 budget, I respectfully ask the Board to consider the following regarding the provision of $2.5M in new local School Funding and retaining $0 in recurring contingency:
The School Division would be funded over the State required FY23 local share of $8,944,871 by more than double at $18,136,687; $9,191,816 over the State requirement. The total operational budget (excluding the School Construction funds, ARPA funding, and school debt) of $30,435,184 yields a per pupil expenditure of $20,932. With declining enrollment and performance metrics, we are at the point of diminishing marginal returns; where the greater funding provided is generating equal or lesser performance outcomes.
This level of local funding plus school debt of $1,979,212 is equivalent to 99.5% of the total budgeted Real Estate Tax revenue of $20,224,832 or $64.6 cents out of each $65 cents budgeted.
With the majority of the new local School funds used for salary related increases, this significantly compounds the cost of the 5% salary increase approved in the State’s budget for FY24; where will that funding come from? A phased approach to resolving the School’s compensation issues should have been proposed for consideration.
How will the Board address salary increases either via COLA or pay study adjustments for County employees in FY24?
How will the Board address equity issues between the minimum wage for School Division staff and County Staff if the School Division’s is set at $17/hr.?
How will the Board approach the School Division’s use of any balance of funds at the end of FY23? These funds should be reported to the Board and specific requests for its use should be made by the School Division for Board approval before they are obligated or spent. In FY22, $500,000+ in
anticipated unobligated funds were spent on baseball and softball field lights without prior advisement or approval by the Board. The lights were not included anywhere in the School Division’s CIP plan dated March 14, 2022. These funds could have been designated to address the $810,000 in Recurring CIP or the $7.1 Million in immediate concerns shown in that document.
The School Division will receive $1,235,686 in School Construction funding from the State in FY23. These funds should be required to be used in addressing the estimated $4.7 Million cost of the High School roof and brick envelope repairs shown as immediate concerns in the School CIP plan dated March 14, 2022.
The School Division is requesting that a balance of $6,125,719 in Covid-19 funding be appropriated for FY23 when these funds were planned to be spread over FY21, FY22, and FY23 to address learning loss per Dr. Eagle’s memo dated 10/27/21. The School Division should explain how these funds will now all be used in one fiscal year. It is imperative that this funding not be used for recurring staffing costs that have the potential to be requested beyond the prescribed timeframe of the initial funding.
How will the School Division address enrollment loss and diminished facility needs going forward? It is unlikely that legislative decisions made by the Board will impact factors that increase enrollment significantly in the short term (5-10 years).
With $0 recurring contingency, how will the Board sustain increases in economy driven County operational expenditures such as fuel and utility costs, Regional Jail operational and debt service costs, solid waste hauling etc. given likely declines in economy driven revenues such as: Local Sales Tax, Recordation Taxes, Transient Occupancy and Meals Tax, and Building Permits? Using fund balance to cover recurring costs is not a recommended practice.
How will the Board address current critical Deputy and Dispatch vacancy rates which are at 24% (6 out of 25) and 42% (5 out of 12) respectively?
How will the Board address costs of the new drug court once any grant funding received is exhausted?
How will the Board address operational costs associated with any new capital projects completed in the near future?
Consideration of future revenue enhancements will likely be necessary.
Nevertheless, I am hopeful that improved and consistent communication between County Staff and School Division Staff throughout the year will provide for greater understanding and consensus on how to meet the needs of both entities in ensuing fiscal years.
Attachments: -FY23 GF Synopsis as of 6/14/22 funding
-Draft FY23 Budget Adoption and Appropriation Resolutions as of 6/14/22 funding
-S. Irvin Email 6/22/22 on use of new local funding of $2.5M
-2022-2023 School Division Capital Improvement Plan dated 3/14/22
-School Division letter to S. Carter regarding Covid-19 Stimulus Funding dated 10/27/21
-County Staff Summary of FY23 School Division Requested Appropriation of Covid-19
Stimulus Funding dated 5/5/2022
-School Division Operational Synopsis dated 6/16/22
-DOE FY23 & FY24 State & Local Funding Calculation Templates as of 6/6/22