With some reluctance, Wake County school board members signaled Tuesday their willingness to spend most of the district’s savings to avoid laying off teachers and other employees this year.
No vote was taken Tuesday, but board members said they’re inclined, grudgingly in some cases, to use the savings now and worry about how they’ll come with the funding in 2013 later.
Superintendent Tony Tata has proposed using $28.8 million of the $33.9 million rainy-day fund to help replace the loss of federal funding that’s now paying for hundreds of jobs.
“This is untenable,” said school board member Chris Malone. “We can’t continue to use the reserves for recurring expenses.”
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But Malone added he’ll vote with “resigned acceptance” to use the savings. He warned they may only be postponing when the cuts will be made unless some permanent source of money is found.
A public hearing on the budget will be held April 10. The district’s administrators have asked the board to adopt the budget by early May so it can be presented to the county commissioners.
David Neter, the school district’s chief business officer, told the board that they’re in “survival mode” and using the savings would allow Wake to “kick the can” for another year. Neter said they’ve cut so much in non-personnel costs in recent years that not using the savings to replace the federal dollars would cost jobs.
“Any significant additional cuts will hit people and people in the schools, Central Services as well,” Neter said. “As we look at it, I guess we could say we’re buying ourselves more time.”
Citing the economic conditions, the state and county have limited how much funding they’ve provided the school system the past few years. Wake has benefited the past three years from federal stimulus dollars that have paid for hundreds of positions.
This school year, Wake is using $28 million in one-time federal dollars to pay for more than 500 teachers and a number of other employees.
Knowing that stimulus dollars would eventually dry up, school leaders cut costs over the past three years to build the undesignated fund balance, colloquially called the rainy-day fund.
Tata is recommending using more than 80 percent of the fund. It’s part of a $1.25 billion proposed operating budget for the coming fiscal year. Tata also wants to ask county commissioners to give $8.8 million more after several years of relatively flat funding.
Several board members asked what would happen in 2013 to the savings account if they used the $28.8 million to balance the budget this year.
In the short-term, Neter said administrators think they can rebuild the savings account to $25.7 million in 2013. He said they had some unexpected savings such as not having to use the $7 million they had budgeted in case the state made school districts pay for workers compensation.
But Neter told the board that it’s not typical to have so much savings each year that can be used to balance the budget.
“Long-term health, for the health of the school system, we do need to get away from using a significant amount of the fund balance toward recurring expenditures,” Neter said. “That is not fiscally ideal … but we’re not going through ideal times.”
Board member Susan Evans said she felt better about using so much of the rainy-day fund after hearing Neter’s presentation.
“Next year at this time, we’ll still have some revenue available,” Evans said. “We won’t exhaust it this year.”
But school board member Jim Martin said he’s concerned about the long-term use of the fund balance to pay for recurring expenses. He said the school system needs more of a long-term perspective for budgeting.
Tata said they are thinking long term, pointing to how his budget proposal includes a pay raise for teachers and a one-time $500 bonus for other employees.
“Investing in people, to me, gets to sustainability in the long term,” he said.