The Transylvania Times -

Budgeting Backwards

 

Last updated 2/17/2021 at 3:29pm



The budgeting process in North Carolina is backwards.

At present, the local school system, city government and county government are drafting their budgets for the next fiscal year, which begins July 1. They are gathering information as to their operational and capital needs, estimating how much it should cost to meet those needs, and the amount, as well as the sources, of revenue to pay those costs.

These entities also receive substantial revenue from the state. This is especially true for the local school system. The vast majority of teachers, administrators and others in the school system, as well as most everyday operations, are paid for by the state.

The problem is the state does not release its budget until well after the school system, city and county have finalized their budgets. Of the three entities, the school system is most affected because it has to approve a budget earlier than the other two entities. That problem is compounded by three other factors: unfunded state mandates, an inability to generate revenue and requiring locally paid positions to match state paid positions.

For example, class sizes in the lower elementary grades in traditional public schools are strictly regulated by the state. The addition of one more student in a single grade could actually require a school to hire another teacher and create another class of students. Yet, the school would only receive additional funding for that one extra student. Due to that single mandate, one student could cost a school $50,000 or more in expenses.

Municipal and county governments also have to comply with unfunded mandates, but at least they have the ability to raise revenue through taxes and can create a large fund balance to address such mandates.

At present, there are 23 teaching positions in Transylvania County that are funded locally. Whenever the state decides to increase teachers’ salaries or contributions to their health insurance and retirement, the state does not pay for the increased cost of those 23 teachers. Those funds have to come from county government.

The problem is that the school system, in particular, has to estimate not only what its needs are going to be but also what revenue it will receive six weeks before the state is supposed to pass its budget. Since the county wants to have the school budget this year by the end of April, the school board will have to approve its budget two months before the state does.

This is comparable to a parent going shopping at the grocery store and having the goods tallied before knowing how much money he or she actually has to spend. And there are few things more embarrassing, that make one look financially incompetent, than to have to put items back on the shelf. For the school system, it’s having to either cut positions and programs or ask the county commissioners for more money at a later date.

Since the state budget is not impacted by local budgets but local budgets are greatly impacted by the state budget, a more rational budget process would be to require a tentative state budget be presented by June 1 and a tentative state budget for schools be presented by May 1. At least then municipalities, counties and school systems would have a clearer picture of the revenues they would receive from the state, which would enable them to more accurately determine the local portion of their overall budget instead of having to guess.

 
 

Powered by ROAR Online Publication Software from Lions Light Corporation
© Copyright 2020

Rendered 03/02/2021 07:16