Ocracoke Observer staff report

Since July 1, the Hyde County commissioners and the Hyde County Board of Education have been involved in a mediation process regarding county’s appropriation for school services which were cut by $400,000 for the county’s FY 2022-2023 budget that went into effect on July 1.

See Mediation underway in budget dispute between the Hyde County Board of Education and Hyde County Commissioners.

Two public meeting were held and can be viewed on the Hyde County Public Information Facebook page.

In the second meeting on July 24, the mediator, Benjamin G. Alford, declared an impasse. On July 28, the Hyde County Board of Commissioners held a special meeting, also viewable on the Facebook page, and voted 3-2 to appropriate an additional $412,000 to the $1.3 million the Hyde County schools’ appropriation, restoring the $1.712 million that was originally requested by the Board of Education.

The additional appropriation will be taken from the county’s fund balance and will not incur a tax increase.

However, the school board is continuing its request for $1,787,162, which is an additional $75,161.85 and which is what they say they are due according to state statute.

It is not clear how the request for the additional money will be resolved. Hyde County Public Information Officer Donnie Shumate said in an email that nothing has been scheduled until at least the next commissioners meeting Sept. 7.

Board of Education Chair Angie Todd wrote the letter to Earl Pugh Jr., chair of the commissioners, which the Ocracoke Observer received on Aug. 2. Attachments were not sent.

The Ocracoke Observer asked the Board of Commissioners for a response, which was received on Aug. 10. Both letters are printed below.   

From the Hyde County Board of Education
Dear Mr. Pugh:
I am writing on behalf of the Hyde County Board of Education. We appreciate the Board of Commissioners’ vote on July 28 to appropriate $1,712,000 to the Board of Education, and we are very pleased that you were able to approve the $412,000 increase from the County’s existing fund balance, without cutting services and without a further tax increase.  This will also prevent us from losing our State Small Schools funding of $1,820,000.  However, we are entitled to $1,787,161.85 under N.C. Gen. Stat. §115C-431, and the Board of Education needs and is requesting this amount.

​Under §115C-431(b), the mediator has the authority to declare an impasse and end mediation if the two boards cannot resolve their dispute. On July 24, Judge Alford, our mediator, declared an impasse. (Please see his confirming email, attached.)  We were all present when that happened.  Once an impasse is declared, the statutory formula under §115C-431(b1) must be applied. The law states that “[t]he board of county commissioners shall appropriate to the local current expense fund the sum from subdivision (3) of this subsection, rounded to the nearest penny, to the local board of education for the budget year in dispute.” [Emphasis added]  I have attached a copy of our calculations under the formula. The Board of Education will need the full $1,787,161.85, to which it is statutorily entitled, following the impasse declared on July 24. Our finance officer will be sending a purchase order for July and August of 2022, for one-twelfth of this amount for each month. 

​I do not want you to think we are requesting this money simply because we can. A lot of hard work and deliberation surrounds this decision. Prior to, throughout, and since the mediation process, numerous circumstances have changed. I hope you will more fully understand the school board’s position after considering these factors.

In Fiscal Year 2021-2022 (FY 22), the Board of Education needed and spent all of the $1,700,000 in local current expense funding appropriated by the Board of Commissioners. This money was utilized towards our goal of providing a better education to students, with not a penny left over.  We requested a $12,000.00 increase in May to offset the $12,000 cost the school system will incur from the change in waste disposal charges in FY 23.

​The Board of Education’s anticipated costs have significantly increased since our request in May. At the time of our request, we did not know what the state’s “hold harmless” would be, and it has been eliminated. The elimination of the hold harmless means we are no longer being funded by the state at our previously higher pupil levels.  Beyond that, Hyde County Schools will need to pay an additional $107,290.03 in local funds this year (FY 23) just to match the mandated state salary and benefits increases. This cost is on top of $26,544.63 the school system paid last year and will need to pay again this year for state mandated personnel cost increases added in FY 22.  Inflation is soaring, with the most recent national calculation an annualized 9.1%. Combined with supply chain issues, this means almost every vendor we contract with has increased or soon will be increasing its prices. And, as with the County, we have had to incur significant legal fees in the budget dispute process.  All of these factors have led to increased costs which Hyde County Schools did not anticipate when it made its initial $1,712,000 request in May.  These cost increases are significant, they are real, and they far exceed the additional funding to which we are now entitled.

​Dr. Melanie Shaver began as the new Superintendent of Hyde County Schools on July 1, 2022. Neither Mr. Blackstock, as Interim Superintendent, nor Dr. Shaver was as involved in the entire budgeting process as an incumbent superintendent might have been. Dr. Shaver has exciting and creative ideas for how Hyde County Schools can provide the best education and the best educational experiences for students, but accepting flat funding for the fourth year in a row would hamstring our schools. Dr. Shaver, our dedicated teachers and staff, and the children of Hyde County deserve the necessary funding to allow Hyde County Schools to grow, not just remain stagnant. I know you appreciate that.

​We expect the county to meet its statutory obligation and appropriate the full $1,787,161.85 mandated under the funding formula required by law.  The additional $75,161.85 is needed and represents only a very small increase over the flat funding over the past several years.  We have considerable additional costs and unmet needs, especially with regard to recruitment and retention of personnel (particularly bus drivers, teacher assistants and teachers), SRO, school safety, restoring athletic supplements, mental health needs, early childhood support, and so much more. 

I hope our boards can continue to work together to provide a sound education for the children of Hyde County and to adequately support the needs of our schools.

Sincerely,
Angie Todd, Chairman Hyde County Board of Education

Re: Response to media requests for comment on Hyde County Board of Education Letter Emailed on August 7, 2022 to Hyde County Concerning School Funding

Hyde County holds multiple budget workshops starting in May each year as a part of its annual budgeting process. NCGS § 115C-429 requires the Hyde County Board of Education (HCBOE) to “… submit the entire budget as approved by the board of education to the board of county commissioners not later than May 15…” HCBOE failed to submit its entire budget to the Hyde County Board of Commissioners (HCBOC) by May 15, 2022. Despite failing to meet that statutory obligation, HCBOE requested $1.712 million for fiscal year 2022/2023 during a joint meeting of the two boards held on May 2, 2022. Hyde County informed HCBOE that the upcoming year as well as the following year would be difficult budget years and asked for assistance in finding any cost savings or reductions within the HCBOE request and budget.

HCBOC held a series of budget workshops with the HCBOE, all Hyde County departments, and outside agencies during the week of May 9, 2022. During the budget workshop with the HCBOE, HCBOC again requested HCBOE work together in identifying any cost savings or reductions within the HCBOE request that might be available considering the limited revenues Hyde County would receive in the upcoming fiscal year. After receiving no response from HCBOE, Hyde County completed its own research in an effort to find responsible as well as reasonable ways to reduce HCBOE’s request using the data available.

A third joint meeting was held between the boards on June 6th. At which time, HCBOC proposed an appropriation of $1.3 million. This proposal was based upon an analysis of the limited financial data made available by HCBOE and other sources. When HCBOC presented this proposal to HCBOE, HCBOE representatives gave HCBOC the distinct impression that this appropriation was sufficient to support a system of free public schools in Hyde County. A public hearing was held that evening on June 6th. During the public hearing, there was no public comment with regard to and there was no objection from HCBOE. In reliance upon these proceedings, the HCBOC budget, including the $1.3 million appropriation to HCBOE, was voted on and approved on June 27 by HCBOC. There was no communication whatsoever from HCBOE to HCBOC between June 6 and June 27 concerning the appropriation.

On July 1 the HCBOE, through its attorney, notified Hyde County that the $1.3 million appropriation to HCBOE was being disputed. This notification triggered a statutorily required process that began and concluded with a series of public joint meetings between both boards beginning on July 4 and ending on July 24. NCGS § 115C-431 requires the following”… At the joint meeting, the entire school budget shall be considered carefully and judiciously, and the two boards shall make a good-faith attempt to resolve the differences that have arisen between them.” Despite repeated requests, HCBOE did not make, and still has not made, their entire school budget available to HCBOC. Instead of acting in good-faith, in their initial presentation, HCBOE presented a calculation using a statutory formula, which statutory formula is supposed to be resorted to only after good-faith attempts toward a resolution by both boards are exhausted. When asked what differences have arisen since June 6th between the boards, HCBOE responded by saying simply – administrative changes. During the public joint meetings, HCBOC offered several compromises including 1) an increased appropriation of $1.4 million for 2022/2023, an appropriation of $1.5 million for 2023/2024, and an appropriation of $1.7 million for 2024/2025 and, later, 2) that HCBOE meet HCBOC in the middle and agree to an appropriation of $1.556 million for 2022/2023. HCBOE’s attorney declined those offers. HCBOE refused to work in any meaningful way toward any type of compromise, did not offer a single compromise, and did not provide specific or sufficient detail regarding the shortages and/or reductions that might be required with an appropriation of $1.3 million. HCBOE steadfastly insisted that the statutory formula be utilized. Following the conclusion of the public joint meetings, HCBOC met on July 27 and approved HCBOE’s full original budget request of $1.712 million in an act of good-faith with the hope that the two boards would put their differences aside and recommence working together collaboratively in future years for the betterment of the schools.

Through an email on Sunday, August 7, 2022, HCBOE requested HCBOC appropriate an additional $75,161.85 (over and above the $1.712 million originally requested and subsequently appropriated) utilizing the statutory formula, which statutory formula begins with the assumption that the appropriation for the prior year (2021/2022) was 100% accurate as well as not excessive and uses the “… second quarter Employment Cost Index for elementary and secondary school workers as reported by the Federal Bureau of Labor Statistics,” which index is not remotely applicable to Hyde County. While HCBOE has emphasized and it is true that school funding from HCBOC has remained flat for a number of years, the amount appropriated by HCBOC to HCBOE was exactly what HCBOE requested during those years despite the fact that enrollment decreased dramatically during that time without a corresponding decrease in funding from HCBOC. HCBOC is deeply regretful that HCBOE is trying to demand even more funding than HCBOE originally requested, especially after HCBOC fulfilled HCBOE’s original request for funding in the full amount in good faith. It is unfortunate that HCBOE has not acted in good-faith throughout this process and is now demanding county taxpayers pay more than HCBOE originally requested because they think they can obtain it by using the statutory formula, not because they need it or have shown they need it.

Hyde County schools already receives more per child than almost any other school district in the state, in excess of $32,000 per student. The local county appropriation is roughly $3,142 per student. In 2021, only seven counties in the state spent more per student. The school system has a total budget of over $15 million for 461 students, which is on par with what the entire county operates on for roughly 4500 citizens. In light of these facts, we do not understand how the increased appropriation is not sufficient funding for the school system. Without a line-by-line, entire school budget for the current fiscal year, we cannot identify areas where savings might be available or where overspending may be occurring.

Until HCBOC has the opportunity to convene and give further direction, if any, Hyde County disputes the additional $75,161.85 asserted by HCBOE and reserves the right to reduce future payments until this matter is resolved with finality in good-faith.