St. Mary's commissioners approve school districtshift of stimulus and restricted funds amid warnings of a $3—$4 million FY11 shortfall

The St. Mary's County Board of County Commissioners on Sept. 1 approved a set of categorical transfers and restricted-fund adjustments requested by St. Mary's County Public Schools to reclassify federal and state stimulus stabilization money following new Maryland State Department of Education guidance.

Superintendent Michael Margarano and finance officer James ("Mister") Norris told commissioners MSDE directed that a portion of previously budgeted “stabilization” dollars be treated as restricted grants rather than general fund items. Norris said the reclassification follows state guidance and clarified eligible uses, including salaries, textbooks, technology and supports for at-risk, limited-English and special-education students. "Stabilization funds may be used to support both current expenses and other expenses such as capital expenditures," Norris said, reading MSDE guidance into the record.

Why it matters: District leaders told the board most of the categories moved are recurring expenses. Margarano and Norris said if the state funding is not available in FY2011, the school system could begin the next fiscal year roughly $3 million to $4 million below the current operating budget, a gap that will require local adjustments or program cuts.

The district said the amounts moving into restricted status include about $3.1 million in stabilization funds for the two-year period those monies cover; district staff also described separate restricted packages: Title I funding (about $1.9 million) and special education funds (roughly $3.5—$3.6 million). Margarano stressed the district used Title I and special-ed one-time purchases (computers, smart boards, training) to limit recurring obligations, but said the stabilization dollars represent recurring needs that will have to be addressed in future budgets. "If those dollars aren't added to schools this year, we are already starting our budget off, basically, $3,000,000 to $4,000,000 less than what it currently is right now," Margarano said.

Commissioners pressed for more documentation and faster sharing of state guidance. Norris said he attended an April 16, 2009 MSDE meeting and supplied copies to county staff; commissioners asked that any future MSDE guidance be circulated immediately to the county chief financial staff so local budget work can proceed in tandem with the school system.

The board voted to approve the FY2010 categorical transfer requests and restricted-fund adjustments as presented by the Board of Education. The motion to approve was moved in open session and carried with the board saying "Aye." Commissioner Jarbo moved the motion; Commissioner DeMent seconded it.

District officials identified a specific cut: the State School Improvement Grant for Spring Ridge (about $32,000) had been eliminated at the state level, removing funds previously used for targeted professional development and consulting at that school. Margarano highlighted that as a concrete example of how smaller line-item eliminations add up.

The board and school leaders agreed to continue close, near-daily communication while the county prepares a special budget work session to address state cuts and prepare for FY2011 budgeting.

The commissioners approved the consent motion to sign the supporting letter to the Board of Education and to document the transfers in county records.

Motions and vote: Motion to approve FY2010 categorical transfers and restricted fund adjustments moved by Commissioner Jarbo, seconded by Commissioner DeMent; vote: aye (motion carried).

Sources and attribution: Superintendent Michael Margarano; James Norris, St. Mary's County Public Schools (finance staff); commissioners present included Jack Russell (commission president), Thomas A. Mattingly Sr., Kenneth DeMent, Lawrence Jarbo (Jarboe), Daniel H. Railey.

Ending: District leaders asked for county support as state-level funding remains uncertain. Commissioners scheduled a special budget work session to review the state cuts and requested that MSDE guidance be shared promptly with county staff to help plan FY2011.