Agenda 12-14-21; 8-h - Fiscal Year 2021-22 Budget Amendment #5-A

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8 Unassigned Fund Balance The FY2020-21 Budget implemented a number of expenditure austerity measures intended to maintain fiscal flexibility. The Budget included a hiring freeze, did not provide a wage adjustment for employees, suspended employee performance rewards, and suspended all conference,training, and travel expenses. These intentional austerity measures, along with other restrained spending in departments, resulted in actual expenditures that were under the budgeted amounts. This means that the $8.2 million fund balance appropriation used to balance the FY2020-21 budget was not required. Of that $8.2 million appropriation,$1.9 million was used to balance the FY2021-22 Budget,$2.3 million was applied to achieve the sixteen percent unassigned fund balance target based on increased budgeted expenditures, and the remaining$4 million is available for one time expenditure. Framework for Investments Based on the factors cited above,this proposed framework for investment includes a total of$3.38 million in recurring expenses and $8.61 million in non-recurring expenses. o Opportunity Gap Reduction and Student Mental Health Support Fund-$1.5 million Both school districts highlighted two priorities in their expansion budget requests for FY2021-22, closing the racial and ethnic opportunity gap and addressing the mental health of students. In response to that request, this proposal creates an Opportunity Gap Reduction and Mental Health Support fund that would be exclusively dedicated to those priorities. The resources contained in this fund would be allocated, as required, by average daily membership. Based average daily membership reported in October 2021, Chapel Hill Carrboro City Schools would receive$868,500,and Orange County Schools would receive$631,500. This fund would exist outside of the districts'current expense budgets to emphasize this investment as it relates to the Board's goal of promoting equity and social justice in the community. The fund is anticipated to be a recurring expense. As proposed, each District would propose a spending plan each year with key performance indicators which could not supplant current spending. The districts would have the flexibility to determine the amount of funds used to address each priority area. o Employee Wage Adjustment-$1.9 million Orange County employees have not received an across the board wage adjustment for two years. Employees did receive a one-time pandemic relief payment of$900 per employee, but this payment was not applied to base wages. Employees in surrounding jurisdictions received wage increases between two percent (2%) to five percent (5%) this fiscal year. The second proposed recurring investment is in Orange County employees with a 3.0% wage adjustment that will be retroactive to July 1, 2021. o Outside Agency Base Budget Funding-$1.7 million The FY2021-22 Budget recommended funding the entire Outside Agency budget using American Rescue Plan Act (ARPA) funds. However,the new reporting requirements associated with the use of ARPA funds would require outside agencies of all sizes to track expenses and submit reports on a level that they have not been required to do before and many may not have the administrative capacity to complete. If one of these sub-recipients were to fail to produce the required documentation,the County's overall compliance could be jeopardized. Therefore, this plan replaces ARPA funds with general fund 3