While Harford County Public Schools' operating funds are currently in balance, school officials are concerned that might not be the case in the coming years as the school system's unbudgeted fund balance dips to dangerously low levels.
Jim Jewell, assistant superintendent of business services for HCPS, told members of the Harford County Board of Education during its business meeting earlier this week that about $1.8 million in fund balance would be available as of June 30, 2014, the end of the upcoming fiscal year.
Jewell told board members $1.09 million of that unassigned fund balance would be transferred to the Other Post-Employment Benefits Trust for school employees, for Medicare Part D subsidies, leaving school officials with $740,134 to put toward any needs not funded by county, state or federal revenues in the 2015 fiscal year.
"Towards the end of FY 2014, HCPS reaches a funding cliff where expenditures will outpace revenues," Jewell wrote in a memo given to board members Monday.
In late January, the school board approved proposed $442.8 million operating budget for the 2013-2014 fiscal year, which begins July 1. The budget is $15.1 million higher than the current year's school budget and relies on the county government for most of the additional money. The requested county share of the budget must still be agreed to by County Executive David Craig and the county council and in recent years, such requests for increases have been reduced sharply by Craig.
School officials say they are already facing a decline in state funding next year.
The HCPS fund balance – essentially an unbudgeted surplus from savings in prior years' operations – stood at $16.07 million on July 1, 2012, when the current fiscal year began.
Jewell told board members this week $10.5 million of the 2012 fund balance had been put toward expenses in the 2013 fiscal year, and $5.6 million would be assigned to expenses in the 2014 fiscal year, the latter the budget just approved.
Together, those allocations added up to $16.16 million, $89,490 more than the entire 2012 fund balance. Teri Kranefeld, manager of communications for HCPS, said Thursday the additional money will come from the projected fund balance of $1.9 million for the end of the current (2013) fiscal year.
"Bottom line, we've gone from $16 million [in 2012] down to 740,000 [in 2014], is all that's left, is all that's available for emergencies or future [needs]," Jewell told board members. "We're starting to run out of money."
"With the current resources that we have, we cannot sustain the current budget expenditures in the future without an infusion of state or county funds," he added, using the fiscal cliff analogy.
The school board members did not take action during the meeting regarding Jewell's presentation on the fund balance; however, board member Robert Frisch said he is concerned members of the public are not fully aware of the potentially difficult financial situation the school system faces
Frisch noted Harford County has gone through two property tax reassessment cycles since the economic downturn of five years ago. Property values have dropped, "which results in decreased taxes that come into the county, which we rely on to fund our operation here," he said.
Frisch told Jewell he thought his use of the word "cliff" was appropriate.
"We can't rely on fund balance anymore. We are fast approaching a situation where we have to make some really, really tough, tough decisions – that includes programs, whether that be academic or extra-curricular, staffing positions," Frisch warned.
Frisch urged county residents to pay closer attention to school budget issues because they could soon have a direct impact on them.
"I thoroughly enjoyed the amount of public input and interest when we got to redistricting [in 2011]," he said. "I think we should have that when we talk about a lot of issues facing our school system."