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Unexpected costs hit Halifax County schools

Halifax County Public School board members were informed Thursday evening at a school board work session of extra costs the school system is now facing despite balancing the budget in March. 

According to Superintendent Dr. Merle Herndon, several unexpected costs have surfaced for the 2012-2013 school year.

Broken down, additional expenses include the following:

$367,640 paid to rehire the LAN managers whose jobs school board members originally eliminated in an effort to balance the budget;

 $200,000 for K-12 Virtual Schools ($14,550); attorney fees associated with landfill-gas energy project negotiatons ($4,861); and leave payout for July-August 2011-12 ($174,763).

 $1,100,000 in a possible health insurance increase which will be voted on at the Sept. 10 board meeting.

During the meeting Thursday evening which was held for informational purposes only, Superintendent Herndon discussed and informed the public on why the school board eliminated the Local
Option Retirement Plan and capped the vacation, sick and personal leave payout. Also discussed was the 5.1 percent increase proposed in the health insurance premium for school system employees that is renewable Oct. 1.

Referring to school board members’ recent elimination of the Local Option Retirement Plan, Herndon said research on the program and the leave policy was conducted by the Virginia Association of School Superintendents that included 59 cities and counties responding to a two-question survey. 

“Fifty-nine divisions responded, and 47 had no Local Option Retirement Plan or Early Retirement Incentive Program. There was a note there that a number of the divisions had ERIP but discontinued the programs.”

However, 12 of the divisions had some form of the program in place. Some 45 divisions reported they had caps with 12 or fewer divisions having no caps.

Several concerns were raised, but the biggest decision for local school board members was the health insurance renewal and whether or not the board would be able to fully fund, pay half or whether the employees would have to pay the entire cost, she said.

During the superintendent’s presentation, ED-8 trustee Walter Potts expressed concern over whether the $367,640 used to rehire the LAN managers could “throw it (the budget) off balance.”

Herndon said when Prismatic performed its efficiency study, “misinformation” led to the removal of the LAN manager positions that were not included in the current year’s budget. 

“The principals were begging us please put the LAN managers back,” said Herndon.

In an effort to further explain why the school board chose to eliminate the Local Option Retirement Plan in July, Herndon presented a PowerPoint presentation including the plan’s costs.

“Why do we keep projecting into 2019?” asked Potts after viewing the presentation.

“That was just part of the calculation to see the total costs of LORP from the inception until the end,” said Herndon.

However, Potts said the program is based on its year-to-year approval, and the retirement program’s purpose was to alleviate the shortfall of income that was not provided this year by the state and the board of supervisors.

According to Potts, from 2008 until the current year the school system has saved a total of $8 million and been able to balance the school budget using the savings from those people retiring with the LORP benefit.

“No that is not true,” Herndon quickly replied.

“So we did not save any money by using LORP?” asked Potts.

“I can’t speak for the past.  I can speak for the figures that show what the LORP program costs,” Herndon said, adding, “You cannot equate that just because there was a LORP program that people retired just because of LORP.” 

According to Herndon, the LORP pay-out for the 2011-2012 school year totaled $1,433,610.66.

Potts countered the $1.4 million was the amount it cost the school system to get the savings from those teachers’ salaries who retired.

“That’s what we were told,” said ED-1 trustee Phyllis Smith.

“So you’re saying what we were told was wrong?” questioned Potts. “Either it was right or wrong.” 

“I have numbers, I do not have access to the previous budget or how they were figured,” said Herndon.

After the superintendent emphasized the board had not made any money or saved money but had lost money instead from the LORP program, Potts said, “That means that somebody is saying that the budget was not squared off for the last four or five years since 2008. That’s what it’s implying whether you say it or not.”

The superintendent replied to Potts’ remarks, “I can only help be a part of a solution, and I tried to give you the information that I have to move forward. I can’t keep looking back. It’s my job to move forward and to look forward for the education of the students.”

“I understand that,” Potts said. “That’s why I’m looking forward too, but in order to move forward, you have to learn from your past…in order to do that we have to make sure we have accurate information to move forward.”

The ED-8 school board member suggested the school board bring in someone to take a look at the budget to assure it was balanced.

“There will be an audit in September of last year’s budget,” replied Herndon.

Changing the subject, Herndon focused on the issue she said was of pressing importance Thursday evening.

“We have a big decision to make. Can we pay for this insurance at 100 percent for our employees, do we have to pass it on to the employees or do we split it. That’s the bottom line,” she said.

ED-4 trustee Cheryl Terry suggested to all board members they bring any budget documents given to them in March, adding no one is accusing anyone of anything and if there was a problem, “perhaps it was an oversight.”

“As board members we can only go by the information that is presented to us. We have to put trust in the people who bring the information to us. We have no access, no more access than you all do to the information about our school system,” ED-3 trustee Kimberly Farson told the approximately 30 persons attending Thursday evening’s hour-long meeting.

“There have been questions that have been asked for years by board members that didn’t get answers…we adopted a budget in March that we were told was balanced. We have to go by the figures we’re presented,” added Farson. “I feel like this board…has been left in the dark for many years.” 

ED-7 trustee R. K. “Dick” Stoneman said he gave an honest opinion to his constituents “at that time” of the LORP program and apologized to those he had previously told the program was solid. 

He told those attending the meeting he had only acted on the information given to him.

“It was totally disregarded. Why weren’t these bills paid?” asked ED-6 trustee Fay Satterfield reminding members that no end of the year meeting was ever held to close out bills in June despite board members’ requests. 

Smith thanked Director of Finance Jay Camp and Superintendent Herndon for their presentation.

“I’ve asked lots and lots of questions since January of Mr. Stapleton and Mr. Covington and other people who are involved in our district, and I didn’t feel that I was getting all the answers that I was seeking,” said Smith. “But for the first time, I’m seeing figures that make sense. Unfortunately they make sense in the wrong direction.

Email requested by The Gazette-Virginian through a Freedom of Information Act reveals Smith did request LORP information on Jan. 16 from former Chief Financial Officer Bill Covington, and on Jan. 17 he provided the information she requested.

“I hope this helps. Contact me again if you have further questions,” Covington’s email to Smith concludes.

“If we had known what we knew in July, if we knew that before you guys retired, it would have never happened,” she said to those in the audience, many of whom retired at the end of June with promises of LORP benefits, only to be denied those benefits less than one month later.