(A) FY2018 Financial Report

(B) Budget Adjustment and Appropriation of Debt Service Savings to Schools' Capital Projects Fund:

The Schools’ Finance staff recently approached County Finance staff to alert us that based on their earlier start time for the school year, they may need to start a few FY 2020 capital projects in the Spring of 2019 in order to get the projects finished ahead of school opening in August 2019 for the 2019 – 2020 school year.  They indicated they will likely need approximately $2.0 million fronted to them from their FY 2020 Capital Projects Fund budget to accomplish these projects in a timely manner. 

Fortunately, due to an atypical turn of events, this need can be met through reallocation of local funds within the Schools’ existing FY 2019 Budget.  Typically, when we issue bonds, we have a principal and an interest payment in the first fiscal year following issuance.  However, the 2018 bonds were established in such a way to include only an interest payment in FY 2019, with the first principal payment due in July (FY 2020).  This causes there to be $2.6 million in excess funding budgeted for Schools’ debt service in FY 2019.

Finance staff recommends reallocation of the Schools’ one-time $2.6 million debt service savings from the School Operating Fund to the School Capital Projects Fund.  This recommendation resolves an unexpected situation by allowing for:

• $2.6 million to be on hand to meet the $2.0 million the Schools’ staff is anticipating needing for projects at the end of FY 2019;
• the Schools’ FY 2020 CIP to be reduced by $2.6 million compared to what otherwise would have been budgeted in FY 2020; and
• $2.6 million in Schools’ capital projects to be funded with cash instead of through borrowed funds. 

We have spoken with Schools’ staff on this matter, and they are in agreement with this approach.  They have requested that the Board of Supervisors take action on this matter ahead of the School Board making changes to the Schools’ budget.

(C) Schools FY2018 Carryover Request:

Based on the FY 2018 CAFR audit results, the Schools’ budgeted but unexpended local transfer is $3,877,402 (see the details below by category) as of June 30, 2018.  This local amount remains because $1.4 million in State revenues and $294,639 in other revenues were received in excess of the initial budget projections.  Each month, State and other revenues are applied to Schools’ expenditures first, and then a transfer of local funding is made to balance revenue and expenditures for the month.  What remains available at year’s end is local funding. 

Table 1

The carryover amount represents 1.4% of the total School Operating Fund revenues collected from all sources and is primarily due to lapse funding from changeover in staff.  On October 8, 2018, the School Board approved the one-time FY 2018 carryover funds to be used for various purchases (see Table 3). Thus, the School Board is requesting that the Board of Supervisors approves the attached budget amendment and appropriation to carryover the $3,877,402 in unexpended FY 2018 local funding into the categories shown below. 

Table 2

Majority of the carryover funds will be directed toward enhancing student academic success and outcomes.

Table 3

A public hearing is not necessary, since the total of the recommended carryover request is below the legal requirement for a public hearing. 

Mary Sorrell, Finance Director; Beckie Forry, Controller; Bonnie Jewell, Budget Manager;

LaShahn Gaines, Schools' Chief Financial Officer

(A) Information

(B) If denied, though excess funding will exist in the debt service category within the School Operating Fund, adequate funding will not exist in the School Capital Projects Fund to align with anticipated cash flow needs of the Schools’ projects and projects will need to be delayed until funding is available in FY 2020.

(C) Denial of funding for the needs listed could have a negative impact on the delivery of instruction to students.