Tough decisions loom as Harford school system plans FY2020 budget

Harford County Public Schools new superintendent acknowledges the school system is facing difficult decisions in the next few months when it comes to its budget.

With a projected fund balance of only $4 million to carry over into this fiscal year, the school system must find a way to fund the $11 million of last year’s surplus used to balance this year’s budget and set aside money to cover rising health care costs as it figures out its priorities for the next fiscal year and plans its budget, Superintendent Dr. Sean Bulson said at the most recent Harford Board of Education meeting on Sept. 24.

“We can still figure out our priorities,” Bulson said. “But anything we add we’re going to have to do with off-setting cuts. That’s the hardest part of this job.”

From his first days in education, he said, the hardest decisions he’s had to make is what not to cut, because everyone wants to do so much.

As he finishes his third month as the leader of the school system, Bulson is continuing his Listen and Learn tour to collect input from the community about they want their school system to look like.

“One of the most important reasons we need people to come is because this board needs to understand the beliefs held by the community about their schools and how we want our schools to look,” Bulson said. “We have some very difficult decisions to make.”

In her quarterly financial report, Assistant Superintendent for Business Services Deborah Judd painted a rather dire picture of the school system’s budget, particularly when it comes to rising health care costs.

“We are in a very dangerous situation,” Judd told board of education members.

The school system has spent 98.98 percent of its budget this year — “that doesn’t leave a whole lot of extra,” she said. The projected surplus for the FY18 budget, which ended June 30, is about $4 million, she said, though that won’t be final until auditors complete their review of the school system’s financials.

Personnel costs

Since Fiscal Year 2011 in Harford County, recurring revenues have increased by $46 million, “nearly all of that from our local [county] contributions,” Bulson said. State and federal contributions have remained flat.

Since that “high water mark” in FY2011, Harford County Public Schools has cut 456 full-time equivalent positions, while its personnel costs have gone up by $53 million, he said.

The rising costs come from a combination of increasing health care costs, a $9 million recurring expense passed on by the state to fund teachers’ pensions and salary increase of $14 million, Bulson said.

Health care claims have been coming in higher than the premium payments, Judd said.

In FY17, the school system had to pay $1.8 million to cover the cost of higher claims, and is expected to have to pay nearly $4 million to cover those claims this year, she said.

For FY17 and FY18, the overruns will be covered by the Rate Stabilization Fund, but those payments would nearly deplete the fund, leaving the school system scrambling to get back to the required balance in the rate stabilization fund and determine how it will cover another $4 million overrun projected for FY19, which started July 1.

“This is simply not good news,” Judd said. “We don’t have budgeted in our operating budget any money to pay that call, so this comes down to a one-time expenditure where we would have to use the fund balance.”

About $1.2 million portion of the $3.8 million will come from the assigned fund balance (dedicated for such incidents) but the rest will have to come the unassigned fund balance, leaving the school system with a total surplus of $1.5 million.

Salaries have increased by $14 million since 2011, Bulson said. Part of that is trying to catch up with raises that were agreed upon but never provided, as well as competition with other districts, “to be able to compete with our hiring.”

Capital budget

The school board also approved its capital budget for Fiscal Year 2020, which it will submit to the state in October. It will be sent in January to the county executive, who will in turn submit it to the Harford County for adoption.

The total FY 2020 Capital Improvement Program is $74,441,123 — $12,099,000 in state contributions and $62,342,123 in local contributions, Patti Jo Beard, executive director facilities management of planning and construction, told board members.

The school system’s top priority is special education facilities improvements — expanding the STRIVE program for students with autism at William S. James Elementary School and C. Milton Wright High School, Missy Valentino, facilities planner of planning and construction, told the board.

Major projects in FY2020 include the final year of funding for the new Havre de Grace Middle and High replacement and planning for the limited renovation at Joppatowne High School, Valentino said.

The five state priorities include roof replacements at Aberdeen Middle and Hickory Elementary, HVAC replacement at Roye-Williams Elementary and George D. Lisby Elementary School at Hillsdale and replacement of the central plant and fire alarm system at North Bend Elementary School, she said.

Cost-saving measures

By the next school board meeting, scheduled for Oct. 8, Bulson said he hopes to announce some measures the administration is putting in place to address the current year funds as well as how to balance the budget into the next fiscal year.

He has met with the leadership of all five bargaining units of the school system, because there would be “no productive outcome without real engagement” from all of its associations.

Bulson sees a lot of good in Harford’s school system, he said, examples of which were obvious Monday when Sheldon Bair and Stephen Hagenbuch in the Harford County Public Schools Educator Hall of Fame.

The arts program in Harford County Public Schools is fantastic, he said, one that is worth protecting and sustaining.

“If I had to guess, it’s among the many things valued here and recognizing the legacy of Mr. Bair is evident of what I see,” Bulson said.

He pointed out a “simple” comment by Hagenbuch: “I just need to thank the teachers.”

“We don’t do that enough. We could do it multiple times a day every day and it still wouldn’t be enough,” Bulson said. “I’m very impressed by what I see when I get out into the schools, and we will pull through these challenges.”

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