Nelson County Board reviews fund accounting, grant reliance and payroll exposure

Nelson County school finance staff on Feb. 4 told the Board of Education that the district uses fund-based accounting that restricts how several large revenue streams can be spent and that roughly 16% of district payroll is funded through grants, about 9% of which is federal.

The briefing, led by finance presenters identified in the meeting as Miss Rogers and Jessica Shearhorn, laid out the district’s main funds and examples of what each can pay for. Shearhorn said, “we use fund accounting and that means everything is restricted, basically,” and explained that the general fund (fund 1) is the district’s primary, least-restrictive operating account while grant revenue (fund 2) is “the most restricted.”

The presentation stressed that student activity funds (funds 21/25) are tightly constrained by the Redbook rules and must be used for the student purpose for which they were raised. Shearhorn said fundraising proceeds “have to be very specific” — for example, for uniforms — and cannot be repurposed without a new, specific approval.

The district maintains separate proprietary funds for food service (fund 51) and childcare (fund 52), and a capital outlay fund funded by the state’s capital outlay formula. Miss Rogers described capital outlay as a state-determined allocation that “can only be used for approved projects and expenses.” Staff and an outside advisor explained that the capital outlay amount is calculated from average daily attendance and state formula rules.

On grants, the board was given an overview of major programs that support mental-health staffing, after-school 21st Century programs at Nelson County High and Thomas Nelson, reading intervention, preschool partnerships and a $10 million award targeted to career and technical education and a help center. Shearhorn told the board that grant-funded payroll represents “about 16%” of payroll and that “about 9% of that would be federal funds.”

Board members pressed staff on sustainability: whether positions now funded by grants — such as the mental-health director — can be carried in the general fund once grants end. Staff said the district is “actively talking with that team and planning for different scenarios,” and that grant cycles vary (some are competitive, others formula-driven).

Staff described their oversight workflow: a requisition and approval process routed through programmatic touch points, a finance coding review, and regular reporting to federal or state grant officers. Shearhorn and the finance director said they meet frequently to review programmatic and financial forms; federal grants require quarterly reports and annual audits that “look at every single dime,” staff said.

The presentation also explained how the district’s working budget is presented: the tentative/working budget approved in September does not include “on behalf” state payments or some transfers, which are recorded later as both revenue and expenses. Staff emphasized that legally the district budgets to zero (revenues equal expenses) but aims to end the year with a positive fund balance.

Board members asked how to be better prepared for future finance conversations; staff pointed to the monthly treasurer’s report, access to warrants showing every check written, and the ability to run custom reports from the district’s Munis system.

The discussion closed with board members noting the importance of sustaining classroom staffing and teacher pay and mentioning potential policy discussions about paid maternity leave and recruitment/retention investments that could be considered in future budgets.