Remarks at Arlington County School Board Meeting on January 18, 2018.
Welcome members of the School Board, the Superintendent and APS Staff. Thank you for the opportunity to speak. The Superintendent’s FY17 Closeout Presentation indicates the availability of $18.1 million to spend, consisting of budget savings and increased tax revenue from the County. Of these funds, the Superintendent proposes to allocate the majority–$11.8 million–to reserve accounts, including:
- $6 million to the Compensation Reserve,
- $3.8 million to the Capital Reserve, and
- $2 million to the Debt Service Reserve.
These funds will be added to existing reserve accounts, which–as indicated by the sum of reserve items listed in Resolution 4 before you tonight–total $83.7 million. They will thus bring APS reserve accounts to $95.5 million or 15.5 percent of the adopted FY18 budget of $613.6 million. This is excessive.
Why are the majority of APS budget closeout funds squirreled away in contingency accounts, when there are other much better uses of funds?
The Superintendent predicts a FY19 budget shortfall of $21.4 million.
Why aren’t the savings realized in FY17 utilized to close the FY19 gap? Why is $6 million earmarked for a compensation reserve, when $12.1 million is needed for increased compensation in 2019? Why is $2 million earmarked for a debt service reserve when $5.8 million more is needed for debt service right now? In short why is so much money being move off the books, when it could be allocated to current critical needs?
I know that it’s prudent to maintain reserves as a cushion against future contingencies, and I appreciate the need to maintain a capital reserve when major construction is in progress as now. But the FY17 Final Fiscal Status Report indicates that neither the compensation reserve nor the debt service reserve were drawn upon last year. In fact the source of most expenditure savings–$8.7 million–was realized from unspent salaries and benefits. The debt service account also realized savings of one half million dollars. So why the need to pad these reserve accounts now?
This is not an idle question insofar as the APS budget shortfall will likely be used to justify another tax increase, as it did last year. APS ought to justify padding its reserve accounts with closeout funds, and County Board ought to determine whether the justification provided warrants an increase in taxes.