A $1.9 million fund balance for Macon County Schools could be whittled down to nearly nothing 16 months from now due to anticipated teacher pay raises and electricity rate hikes, according to a March 14 Board of Education budget workshop presentation.
“It’s not that we’ve been irresponsible…. what’s going on is that we’ve not received the funds from the state and others…. it’s out of our control,” board chair Jim Breedlove said, calling the presentation “sobering news.”
The news on the fund balance projection kicked off the Tuesday morning budget workshop. According to Superintendent Chris Baldwin and Finance Officer Angie Cook, the reasons for the fund balance depletion are spending $560,000 this year to balance this fiscal year’s budget, spending $500,000 to fund programs in 2023-24, plus an estimate of $576,800 needed to cover anticipated salary/benefit increases for faculty in 2023-24, and $120,000 to cover the proposed 15.2% Duke Energy rate hike.
That would bring the fund balance by the end of the 2023-24 fiscal year to $151,691. And that doesn’t include $300,000 in principal requests, which would take the fund balance into the negative.
“It would be fiscally irresponsible to have a fund balance of $151,000 at the end of next year,” Baldwin said, noting that talks with the prior Board of County Commissioners came with the understanding of keeping the fund balance around $1 million.
These numbers were presented for information only. MCS won’t know how much it gets from the state until the end of April or the start of May, Baldwin said, so it can’t present a 2023-24 fiscal year budget until then. The first draft of the Macon County budget is slated to be presented on May 9.
Unlike the county commissioners, school boards are not required to have a fund balance, according to Baldwin. School boards operate on what they’re appropriated by the N.C. Department of Public Instruction through the N.C. General Assembly. Those appropriations are based on enrollment funding models. Additional money comes from annual appropriations from the county.
“What we’re doing is still very conservative, but in order to maintain the level of service to our students, that’s what we have to do,” Breedlove said.
MCS had to cover a 4% faculty raise from the state this year, and Baldwin is anticipating a 3% raise to be passed by the N.C. General Assembly in this year’s budget to go into effect in 2023-24. MCS has a mix of employees paid through state funds and local funds. Salary increases for teachers paid through state funds are covered by the state, but not for teachers paid through local funds.
The $696,800 estimated to be needed for the salary/benefit increase and the Duke Energy rate hike is equal to 12 positions, Baldwin and Cook told the board. Baldwin presented options to the board of asking the county commissioners for that extra funding or cutting positions over the summer. A Reduction In Force (RIF) would require MCS to pay into employee insurance for a year, which Baldwin said MCS did in 2012 but said it cost them in the long run. Baldwin said another reduction option is to not replace employees who quit.
“At 12 positions, it would be very difficult to make up all 12 of those through attrition during the summer,” Baldwin said.
Due to K-3 class size requirements, Baldwin said if there’s any attrition, it’s likely to come from grades 4-12 in core subject areas, which he added would cause a fundamental change in class schedules, plus increased class sizes.
Adding to the news, Cook said the state is projecting an Average Daily Membership decrease of 38 for MCS, meaning they would have two fewer state-funded positions on top of the 12. Baldwin didn’t understand why the anticipated ADM is down considering how Macon’s ADM has grown in the last 10 years.
Board member Stephanie Laseter brought up that this would likely affect multiple school boards across the state. Baldwin said that many of the smallest counties get additional funding from the state’s small school and low-wealth fund and the biggest counties have much bigger tax bases and budgets.
Baldwin suggested writing letters to legislators. Board member Hilary Wilkes said she wanted an “attitude of investment” from the county commissioners.
“Unless our benefactor, the commissioners, invest in education, it’s going to be like this every year,” Wilkes commented.
Wilkes also suggested doing long-range planning for projected growth, reasoning that it wouldn’t look like the school board is just asking for more money every year.
Baldwin said the school board had a similar situation in 2010-11, after federal funding from the recession expired, resulting in attrition through 2015 and MCS never got those positions back.
Commissioner Gary Shields, one of the two liaisons to the school board, said the planned closure of the paper mill in Canton will have ripple effects across Western North Carolina.
Baldwin said last week, he was in a meeting with other school system superintendents and N.C. Superintendent for Public Instruction Catherine Truitt. Baldwin said he felt Truitt was receptive to the need for additional state funding.
Much of the rest of the two-hour meeting was the school board going over the capital outlay request list, which totaled $18.7 million. Baldwin said they will need another budget meeting to hammer out a more focused list in the middle of April. He said the school board will prioritize this summer after receiving the county’s funding.
In current capital outlay project news, there was only one bid to replace the Macon Middle School track, the same bid reported on at the Feb. 15 budget workshop, for $559,000. MCS Personnel Director Todd Gibbs said this is the second RFP period for the track and that it can’t be publicly released until that period ends.
The Highlands soccer field request for proposals only had one bid, which was from Shaw Sports Turf/LaserTurf for $875,658. Since there are fewer than three bids, it must be rebid, which will go through the end of March.
Gibbs also said Harper Construction is working with the engineering firm of Black & Veatch to accept the Nantahala School sewer project.
Baldwin said the conversation he had with Truitt on the sought-after $50 million Needs-Based Public School Capital Fund from the N.C. Department of Public Instruction for the construction of a new Franklin High School was not encouraging. He explained that Macon County’s property tax rate, currently at 40 cents per $100 valuation, one of the lowest rates in the state, plus its low debt services, works against them in the application. Baldwin said he’s submitting a letter to find out where MCS ranked last year when they did not receive the grant. He said they will continually apply for the grant, which would help fund the $100 million plus FHS project, until they get it.