Harford County's public school system may not have enough financial reserves to handle a major emergency, the system's top finance official said Monday.
A projected year-end surplus of $3.2 million could change to the negative once the bills come in for snow removal and facility repairs following snow and ice storms in January and February, Jim Jewell, assistant superintendent for business services, told members of the Board of Education Monday.
Jewell also warned the school system would have to seek an allocation from the county government if the fund balance were to run out.
Jewell gave a report on the finances for the second quarter of the fiscal year that ended Dec. 31, which does not include expenses from several snow and ice storms that occurred in the ensuing five and a half weeks. A major snowstorm is also forecast to hit Harford Wednesday evening.
The second report forecasts the school system will finish the 2013-2014 fiscal year with a $3.2 million unassigned fund balance.
"This is based on known facts through Dec. 31, 2013," he told school board members. "There have been a lot of weather-related instances . . . the projections are not going to be as nice when it comes to the March report, when we get all those cost figures in."
Board member Robert Frisch asked Jewell what would happen if "there were some kind of catastrophic issue that happened at a school and we were to completely deplete our fund balance."
"I would be sitting down with the superintendent and make an emergency recommendation to you all that we immediately go to the county government and request a piece of their fund balance to cover that catastrophe," Jewell responded.
"So we really don't have any opportunity within our own budget to call any more [funds] to meet any shortfall?" Frisch asked.
"We don't have a backstop," Jewell replied.
The fund balance is the collection of surplus funds left over after government entities' expenses have been met for the year and can be assigned to cover unexpected or emergency costs, similar to a savings account.
As an example, board members unanimously approved Monday a "supplemental appropriation" of $206,500 for upgrades to software used for operations in the school system's printing shop, management of student records and activities for the finance, human resources and procurement departments.
Jewell stressed the upgrades are routine and necessary to ensure continued maintenance. He said they had to be taken care of quickly, and officials could not wait to fund them through the FY2015 budget, which school officials are currently putting together.
Jewell said the projected $3.2 million surplus is about 1 percent of the $424.7 million approved operating budget for FY2014.
Board member James Thornton noted the fund balance available "will be, more than likely, substantially lower" than what Jewell projected when the fiscal year finally ends June 30.
According to a copy of the second-quarter financial report, the $3.2 million figure is .768 percent of the operating budget.
Assigned costs from fund balance include allocations for the FY2015 budget, health care, fuel and OPEB, which stands for other post-employment benefits for retirees.
Jewell said a less than 1 percent fund balance is "cutting it pretty close," noting the recommended fund balance for entities such as Harford County Public Schools is 5 percent.
"We will never get there," he added.
Jewell said he would be "happy" if the school system finished the fiscal year with a 2 percent fund balance.
A 2 percent fund balance would account for $8.4 million of the approved FY2014 budget.
"When you start getting down below 1 percent it cuts it close if you have some major problems," Jewell said.Copyright © 2014, The Baltimore Sun