Cecil County Council Rejects Last Minute Schools Demand for $1 Million Budget Boost; McCarthy Budget Headed to OK

June 5, 2018

The Cecil County Council unanimously resisted demands from the county schools for a last-minute nearly $1 million boost in its budget on Tuesday morning (6/5/2018), setting the stage for the intact adoption Tuesday night of the Fiscal 2019 budget proposed by County Executive Alan McCarthy.

In a letter from Dr. D’Ette Devine, the Cecil County Public Schools (CCCPS) Superintendent, sent to the County Council on Monday (6/4/2018), less than a day before the final Council review of the new budget, CCPS asked for a budget increase to give the schools an extra $955,000 above the county executive’s budget proposal. The letter said the schools needed the extra money “in order for the Board [of Education] to approve a balanced budget and fund negotiated agreements” with teachers, supervisory personnel and other employees.

The letter said the schools could divert money from the “small capital improvement” budget, which is supposed to pay for school routine maintenance and repair needs, to operating fund accounts to cover part of the costs of pay boosts and cost-of-living increases negotiated with employees, on top of the extra funds CCPS was requesting from the County Council.

But the Council rejected that appeal, unanimously refusing even to consider a budget amendment. The Council refused to act after County Attorney Jason Allison pointed out that granting the CCPS’ request would force the Council to raise county property taxes, cut other county programs, or raid “unassigned fund balance” accounts, which are designed to cover potential emergencies such as weather disasters, in order to produce the legally required balanced county budget Allison said it could take a several cents increase in the property tax rate to grant the CCPS request.

Council members unilaterally indicated that such a tax boost was just not in the cards.

McCarthy’s new budget for Fiscal 2019, which begins on 7/1/2018, would freeze current property tax rates and continues his firmly-stated policy since his election to produce balanced budgets, equating spending with revenues and not draining “unassigned fund balance” reserve funds, unlike his predecessor as county executive, Tari Moore, who consistently raided the reserve funds to boost spending.

In the new budget year, the largest county-funded program, Cecil County Public Schools (CCPS), sought a 5.2 percent increase, or $4.2 million more, in county appropriations for school operations. But McCarthy’s budget trims that request to a 1.5 percent rise, with an increase of $1.2 million, including budget transfer funds. McCarthy pointed out that his schools budget proposal of $82.4 million in county funds was still $1.8 million above the state-mandated “maintenance of effort” level of local aid.

That “MOE” mandate means that for every year that the schools get an increased allocation from the county, that level becomes the new “base” of funding that must be replicated in subsequent years. So, the current Fiscal 2018 county allocation to the schools was a $1.1 million boost over the previous year, and the new budget would add another $1.2 million over that.

So the last-minute request from CCPS for nearly $1 million more in the new budget drew concerns from Council members that the boost would commit the county to yet another $1 million “MOE” baseline for additional spending in next year’s budget—or a nearly $3.3 million boost over the FY 2017 budget year– that would be the minimum baseline for even higher spending in next year’s FY 2020 budget.

Tom Kappra, the CCPS Chief Financial Officer, appeared before the Council Tuesday morning to plead the schools’ case, saying the money boost was needed to meet already negotiated pay boosts totaling $2.4 million with school employees. He disputed the county attorney’s interpretation of the law governing budget accounting procedures and said that the schools accounted for spending obligations differently from the County government’s procedures. He said that funds could be shifted from small capital improvements to operating funds without triggering property tax increases.

But Allison responded that the schools should have included language, as the county government does in its collective bargaining agreements with Sheriff’s deputies and emergency services workers, that pay boosts were contingent upon necessary appropriations being provided in the county budget.

Bowlsbey questioned how the schools could have negotiated pay and benefit boosts without being certain the needed money would be available: “How can you negotiate when you don’t have the money?” She also observed, “It’s kind of putting the cart before the horse.”

Kappra said the schools had been “operating under the assumption” that the county would provide the necessary funds to cover the negotiated pay and benefits agreements.

Councilor George Patchell (R-4) said the Council was “not going to increase the tax rate” for property owners and had to abide by the county attorney’s viewpoint. That “handcuffs the council,” he said.

County Administrator Al Wein told the Council that the County Executive would be willing to discuss with CCPS officials possible solutions to meet their needs to pay for negotiated pay raises for employees later in the budget year, depending on future economic conditions in the county’s finances.

“That’s the best you can offer,” Allison observed.

Councilor Dan Schneckenurger (R- 3) observed that he was sympathetic to the schools’ issues but questioned the timing so late in the budget process. He also questioned how the schools decided to allocate $2 million in reserve funds to a new Perryville High School field house.

Kappra responded with a discussion of what he said were misunderstandings of the CCPS “unassigned fund balance” accounts that were the product of cost savings on construction and other projects and said the savings should be used for other construction projects, such as the field house, but not ongoing personnel costs such as the negotiated salary boosts.

[CORRECTION: This report referred to Tom Kappra as the CCPS “finance director.” It has been corrected to his official title of “Chief Financial Officer.”]

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