County, school board disagree on what Rowan can afford

SALISBURY — County commissioners and the school board took very different perspectives on the next year’s budget in a joint meeting Monday.

Richard Schwartz, attorney for the school board along with Brian Shaw, said the county can afford to meet the school system’s operational and capital requests without raising taxes.


“We’re not here to talk about a tax increase,” he said. “We’re here to talk about funding for the schools.”

But county officials said the school board’s numbers don’t quite represent reality.

County Manager Gary Page said that unless the economy turns around, commissioners will probably have to raise taxes next year even without increasing school funding.

The meeting Monday is part of a process under state law for resolving budget disputes. The school board has said the county’s budget is not adequate to fund local public education.

After both boards presented their budget outlooks, they entered closed session to continue mediation. The next step would be for small “working groups” of representatives from each side to negotiate with each other in mediation sessions.

The school system says it needs $4.7 million in current expense funds and another $3.9 million in capital outlay, for a total increase of $8.6 million.

That capital outlay number has been revised down from $24.4 million, which included money for a new Woodleaf Elementary School and a central administration office building. The new figure includes $500,000 for planning for the new school, along with $472,488 for central office expenses paid when the county had agreed to help borrow $6 million for it.

When county commissioners passed their 2013-14 budget in June, they approved no increase in capital funding and a decrease of $225,000 based on a projected drop in enrollment.

Schwartz said the county has four places it can look for additional money.

The first is its fund balance, which he said was $28.3 million as of June 30, 2012, the most recent audited figure available. That was 22.2 percent of the general fund budget.

The Local Government Commission requires counties to keep a minimum of 8 percent of their budget in a fund balance.

The school system is not required to keep a fund balance, but it is recommended. As of June 30, 2012, it had about $3.5 million — or 2 percent of its total budget — in savings.

To find funding, Schwartz said the county can also look at its own history of underestimating revenue, the possibility of using state education lottery revenue for capital needs instead of debt service, and savings from shrinking school bond debt.

He said the county consistently funds the school system below the state per pupil average.

The school system says it’s asking for the increase because of $2 million in expected state funding cuts, another $5 million in the state’s “flexible reduction,” mandatory increases in retirement plans and insurance for local employees, expiring federal grants and cuts to federally-funded jobs and programs.

Schwartz said the school system’s operational costs will not go down with the loss of 142 students.

With current state budget projections, the school system expects to cut 66 teachers, including 29 non-renewals approved in May. He said it also may have to cut 17 or more teacher assistants.

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After Schwartz’s presentation, County Attorney Jay Dees turned the discussion over to county officials and commissioners.

Page said Rowan County’s current fund balance is actually just $16 million, or 12 percent of its budget. That’s six weeks of expenses, he said.

County Finance Officer Leslie Heidrick added that when the county has a surplus at the end of the year, it uses that to try to offset money taken from the fund balance.

Jim Sides, chairman of the Board of Commissioners, said the school board’s argument should be with the state, not the county. He said state statute directs the legislature to fund the operations of the schools and the county to fund capital needs.

Out of 115 school systems, Sides said, Rowan-Salisbury is the 38th highest in per pupil funding and 17th highest in total local funds. But based on per capita income, he said, Rowan County is 60th in its ability to fund its school system.

“I’d be glad to vote for a tax increase if I felt like that’s what the people of Rowan County wanted,” Commissioner Jim Sides said. “I won’t raise taxes otherwise.”

Vice Chairman Craig Pierce offered up a proposal that he said he’s been working on since December 2012.

The county would borrow $30 million to give to the schools up front for capital needs, including a new elementary school for western Rowan County (Woodleaf and Cleveland).

The remaining money, estimated at $8 million, could be used for any other capital needs except for buying land and constructing new buildings. The school board would begin making payments on the loan when its current bond debt expires, Pierce said.

Commissioner Mike Caskey said he likes Pierce’s idea.

Caskey said one problem with using the county’s fund balance to meet the schools’ needs is that they are recurring expenses that must be paid every year.

He also said the school board has known for years that certain federal funding would be going away, and now it’s asking county taxpayers to pick up the bill.

Chad Mitchell said a per-pupil measure is the worst way to determine funding for the school system.

He said the school should instead get a certain percentage of the county budget. That way, the school system would get a yearly increase most of the time, but funding would decrease if the county has less money.

Mitchell said Pierce’s proposal is a compromise for this year that could keep this dispute from going to court.

Jon Barber said it’s hard to compare Rowan to other counties because of its demographics. About 29 percent of the county’s children live in poverty, and Rowan is ranked as the 68th unhealthiest county in the state, he said.

“Either our elected bodies step up to plate to resolve the problems that face our communities,” Barber said “or we’ll continue to dig ourselves deeper into a hole that we cannot get out of.”

Contact reporter Karissa Minn at 704-797-4222.

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