Agenda - 04-27-2010 - Attachment 1

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In the last Manager's meeting with the superintendents, the Manager indicated that if schools were to receive 48.1% of next year's budget, this would result in the loss of another $1.3 million • in local funds. If this were to occur, the total reduction that we would need to make in our state and local budget would amount to $4.6 million. The Manager raised the question of the school districts using capital funds for operational costs next year. Last year, our Board of Education did not want to pursue this course because of the limited funding that we currently receive for capital needs. Outside of our operational budget, the district receives two sources of funding to help maintain our existing facilities and fund our technology infrastructure. These two sources are the recurring capital budget and the capital investment plan (CIP). Our recurring capital budget is the primary source of funding for ongoing maintenance needs such as HVAC, electrical, and plumbing repairs. It is also the main source of funding for ground repairs, including ensuring our playground structures meet safety code compliance and repairs to ball fields. The recurring capital budget also assists schools with a small amount of funding to replace damaged furniture or to purchase new furniture as enrollment grows. The CIP helps provide funding for larger non-recurring projects such as roofing projects, HVAC equipment replacements, and other major maintenance projects. The Board of Education has historically prioritized health and safety projects first. Typically, funding is exhausted before we complete our list of recommended health and safety improvements. Annually, we receive cash flow estimates from the Orange County Budget Office based on projections in Pay-As-You-Go and Lottery funds. Based on the newest set of projections, available cash for capital projects over the next ten years has been reduced by $3.5 million from last year's plan. The reduction is a result of decreased levels in Pay-As-You-Go funds. It should • be noted that this year's CIP decrease of over $3.5 million follows last year's reduction of over $6.5 million. This equates to over $10 million being reduced from our ten-year CIP. As a result, current and future building maintenance projects, infrastructure improvement projects, and technology projects have all had to be significantly reduced." Using capital funds to fund the operating budget is a shortsighted, partial solution. If the downturn in revenues were projected to last only another year, it might be something to consider. However, most financial experts project a very slow recovery in the state and the nation. In addition, in 2011-12 our district will face a loss of more than $5 million in federal stimulus and stabilization funds. This drop in federal funding is what public officials across the state refer to as "the cliff." The best way to prepare for this precipitous drop in funding is to go into the next year with sound funding for education. We know that you will be faced with very difficult choices as you prepare a balanced budget for next year. The quality of education in Orange County has been a major point of pride for its residents and an economic engine for growth and development in the County. We ask that as County Commissioners you do all within your power to provide the funding necessary to maintain the quality of education that the young people of this County deserve. Lincoln Center, 750 S. P~lerritt Mill Road ®Chapel Hill, NC 27518-2878 • (919) 987-8211 s ~Nww.chccs.kl2.nc.us • 2