Members of the Horry County school board discussed setting aside more money to cover cash flow needs on Saturday at their annual retreat, along with concerns about future work force issues as senior employees near retirement age.
Financial talks centered on the district’s fund balance and deciding how much money to keep in reserve. Vice Chairman Neil James said Horry County Schools has been blessed, having about $70 million in its reserves, immediately available to finance the district’s ongoing operations.
“I want us to all realize we’re in great shape,” James told the board. “We have some mandates in place, and we’re exceeding those mandates.”
From those reserves, the district now sets aside an amount equal to 10 percent of the prior year’s expenditures, about $31 million. That designated fund balance is used to pay the bills until tax revenue is collected at the end of the year. That percentage is required to maintain the district’s bond rating, but it would cover the district’s about $26 million monthly cash flow needs for only about a month. About $33 million of the reserves would be left in undesignated funds that could be spent in other areas.
James raised the possibility of instead setting aside 16.67 percent of the prior year’s expenses. The larger percentage is recommended by the Government Finance Officers Association and would cover two months of district expenses if needed.
Board members will wait on a recommendation from Jeff Riddle, the district’s chief financial officer, who James said would probably lean toward the 15 percent to 16 percent range. Chairman Joe DeFeo said the designated funds cannot be touched once they are set aside and suggested that board members also consider setting aside a second, but smaller, pot of funds that can be tapped in an emergency.
Available undesignated funds then could be spent on schools and programs, said James, who said while the board wants to be conservative, it also doesn’t want to hoard money and cut back too far on things that are needed.
Harvey Eisner agreed, saying it isn’t fair to taxpayers or students to have such a large sum of money and not use it for its intended purpose. New board member Jeffrey Garland emphasized that undesignated funds should only be used for one-time expenses.
The board also looked at staffing, which a few years down the road could dip significantly as a result of changes to the Teacher and Employee Retirement Incentive, or TERI, program.
TERI allowed workers to retire and continue working for up to five years, receiving a paycheck and a retirement check at the same time, but it is going to be phased out gradually until it ends June 30, 2018. For employees who joined the program after Jan. 1 of this year, there is a salary cap of $10,000 in one year, so those who would return to work at their same job would have to forfeit their retirement checks once they earned that amount.
“So if you entered retirement after Jan. 1,” James said, “you’re probably not going to come back.”
District numbers show there are 227 teachers who are on the TERI program or have completed it and been hired back as at-will employees, and 439 employees systemwide are in the program. Of 2,200 teaching and nonteaching professionals, 352 others have more than 27 years of experience, so about 26 percent of employees in those categories could be leaving by July 1, 2018.
In addition, 351 from the support staff are at the 27-year level, could go on TERI in July and be required to leave in 2018. There also is another group of employees over 55 who haven’t made 27 years but are still looking to retire.
One of the most striking figures was that 19 principals have completed or are on the TERI plan, and James said the district should make sure there are multiple people prepared for those opportunities, as well as for those in other administrative areas where employees will be leaving.
Horry County Schools Superintendent Cindy Elsberry said the district is doing several things to ensure strong leaders will be available throughout the system, including hiring more young, promising talent and providing more cross-training opportunities. She said 19 district educators are set to finish administration internships in May that will lead to their master’s degrees in educational leadership through Coastal Carolina University, and the district is recruiting others to join that program. Three Assistant Principal Academy groups also are being held for aspiring principals.
“There will be a lot of knowledge leaving in the next five or six years,” said James, who suggested a staffing update for the board this summer. “We may need to give her some latitude for adequate staffing. I think this is a unique situation that we need to be aware of, but it won’t exist in a few years.”