PHS field house CCPS fund balance

A Field House, Fund Balance, & School Entrances

Answers to Frequently Asked Questions

FY19 Budget Post Part 2–Decade of Neglect Update

Read Part 2–Positions & Projects on Hold as CCPS Blindsided by County Executive’s Budget

In my last post, I explained some of the terminology associated with school budgets and discussed the sources of funding for public education. If you haven’t read that post, you might want to take a look at that one before reading this new post. Read it here

How did CCPS end up with an extra $6.4 million to spend?

If your only source of information on education in Cecil County is what you read in uninformed rants online and in the letters to the editor you could get the idea that CCPS was up to something shady. But if you read the actual articles in the paper or *gasp* attend a board of education meeting (here’s a link to the meeting schedule), you’d quickly realize those other less-than-reliable “sources” are telling tall tales.

The real answer to the question about fund balance couldn’t be farther from shady. That $6.4 million is the measurable, tangible result of the school system’s efforts to control costs and generally function as trustworthy stewards of the taxpayers’ investment in public education.

CCPS has saved the county literally millions of dollars in the last decade by developing and maintaining a culture of efficiency and frugality. Cost saving Initiatives like installing multiple large solar energy arrays, switching utilities from oil to natural gas when feasible, and adjusting employee health insurance plans, combined with several winters of weather less severe than 2014’s Polar Vortex, all contributed to the favorable unassigned fund balance CCPS reported at the end of the 2017 fiscal year.

What is fund balance?

Fund balance is a term most of us don’t run into in our daily lives but it’s an important concept to understand when talking about school budgets. My admittedly oversimplified definition of fund balance–it’s the money remaining in the operating budget after all other expenses have been met.

CCPS Board of Education policy requires the school system to maintain a fund balance of not less than 5% of its annual operating budget:

The fund balance of the Board of Education of Cecil County has been accumulated to meet this purpose, to provide stability and flexibility to respond to unexpected adversity and/or opportunities.

The target is to maintain a total fund balance of not less than 5% of annual operating expenditures for the fiscal year.

The Board’s basic goal is to maintain annual expenditure increases at a growth rate, and to limit expenditures to anticipated revenue in order to maintain a balanced budget. The decision to retain a total fund balance of not less than 5% of operating expenditures stems from the following:

-This amount provides the liquidity necessary to accommodate the Board’s uneven cash flow.

-This amount provides the liquidity to respond to contingent liabilities.

Beginning in Fiscal Year 2011, unassigned fund balance shall be any remaining amounts.”

That $6.4 million is from the unassigned balance that remained at the end of FY2017.

Through solid business practices and careful planning, CCPS replenished the fund balance they were forced to dip into when Cecil County reduced its share of the school system’s funding in 2009. From the CCPS annual report for FY2017:

“The General Fund increased $4,331,152 from the previous year to $16,339,378. Several years of reductions in discretionary spending, and deferred purchases and repairs, rising healthcare costs and increased utility costs had caused a need to utilize a larger portion of the fund balance than originally planned in previous years. Portions of the fund balance were recovered in  Fiscal Years 2015, 2016 and 2017. For the first time since fiscal 2013, the target to maintain a total fund balance of not less than 5% of annual operating expenditures for the fiscal year was achieved in fiscal 2016. “

CCPS Fund Balance CAFR FY17

This screenshot from the CCPS Annual Report for FY17 gives you a better perspective on the county’s funding of the school system vs. the net change in the CCPS fund balance. For good measure, the green line shows CCPS spending.

CCPS funding from Cecil County vs Fund Balance

Why did CCPS decide to use fund balance to pay for the field house at Perryville High School rather than putting it through the county’s capital improvement plan (CIP)?

They tried (and tried…and tried) to get the county to pay for the project. It’s been included in the school system’s capital request for at least the last four years. In fact, when I started advocating for the school system 4 years ago, I was told the school system includes the field house in every year’s budget request because, in the past, some county officials claimed that they didn’t know about the project or forgot about the project from year to year. Even when there has been no chance in hell that the project would be funded, it was listed in the budget request as a sign that CCPS hadn’t “forgotten” about the project and wasn’t letting the county forget it either.

But there’s always someone who seems surprised when the topic comes up.

Anyway, when the new building at Perryville High School opened in 1977 a field house wasn’t included in the project. I’m not sure if that was due to a lack of funding or if field houses just weren’t considered common and necessary at the time. Regardless, in the last 40 years, field houses were built at all the other high schools in the county but Perryville never got one.

So, after 40 years of waiting and with no sign Cecil County would ever pay for the field house, CCPS decided to fund the project itself, using the money it had saved from cost-cutting measures over the last few years.

Maybe the county will fund the field house in future capital budgets?

For more than a decade, Cecil County has had a lousy track record for funding small capital projects for CCPS and, despite the best efforts of the maintenance staff, some of the damage caused by this neglect is visible in our schools.

As I told the council when I spoke in support of the budget amendment that addressed the appropriation of the fund balance, the most the county has funded for the CCPS small capital request in the last four fiscal years is $1.6 million and $800,000 of each year’s funding was the payment of a multi year contract that the county was obligated to pay.

With that kind of history, you can see why I told the council I had little hope of the county ever coming up with $2 million for the field house project.

CCPS small capital funding trend

How is CCPS spending the rest of the fund balance?

Because the accumulation of unassigned fund balance doesn’t represent ongoing sustained funding, it wouldn’t be prudent to spend the money on recurring expenses like salary increases or new positions. If the money was spent on pay raises this year, what would happen in the next fiscal year when that funding wasn’t available? If the county opted not to fund the increased salary expense, employees would then have to take a pay cut and no one wants to do that.

Sound financial management means the fund balance should be spent on projects and one-time expenses. Following those guidelines, most of the projects that will be covered with this money have appeared as part of the CCPS budget requests for one or more recent years–but not funded by the county.

  • Security camera upgrades at all 5 high schools and the School of Technology
  • Upgraded entrances at Kenmore Elementary School, Elkton Middle, Perryville High, and Rising Sun High
  • New phone system (to replace a system that is so antiquated that replacement parts are no longer available on eBay)
  • Upgraded parking loop at North East Elementary

CCPS Fund Balance Appropriation

To put it in simply: CCPS plans to use the savings from its operating budget to cover capital projects that would otherwise have to be funded by the county.

We should be thanking CCPS for taking care of these projects because the county had no plan to fund them in the near (or distant) future.

CCPS FY18 capital budget vs funding

What about the security of school entrances?

When CCPS went to the council in February to support their request to spend the fund balance, they assured the council that all school buildings are secure–every school is locked and visitors must be buzzed into the building.

With that said, as part of the school system’s safe schools initiative that has been in place for several years CCPS identified school buildings that didn’t meet newer recommendations for secure entrances–namely entrances with locked vestibules to funnel visitors into the main office

“Reconfigure main entrance design so that there is a secondary set of secure doors and all traffic is funneled into the main office before they can gain access into the school. To heightened the security further, make the initial exterior door buzzer controlled with a camera and intercom, thereby requiring visitors to be buzzed in the first door, funneled through a second door (which could also be buzzer controlled, if appropriate), and only then provided access into the main building.”

The schools identified are generally older and have not undergone a major renovation nor are they expected to undergo such a renovation in the foreseeable future. The need to fund projects explicitly for entrance upgrades is another symptom of the county’s decade of neglect. In the years before that decade multiple schools were renovated each year and features like upgraded entrances would have been a part of those projects. When the funding for major renovations dried up, so to did the opportunity to upgrade the entrances.

Moral of the Story? Choose your sources of information wisely

Not everything you read online is true.

Education is a large portion of the Cecil County budget so it’s understandable that the department is thoroughly scrutinized by both the county administration and the public. However, the scrutiny from the public often morphs into a handful of vocal yet uninformed residents hurling accusations intent on misinforming anyone who will listen.

Choose your sources of information wisely.