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Commissioners Issue Statement To Address Recent Public Claims

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Sep. 9, 2010

The Garrett County Board of Commissioners and county administrator Monty Pagenhardt released a statement yesterday in response to recent statements and opinions pertaining to Garrett County government financial policies and practices. The statement, in part, follows:
“The board of county commissioners appreciates the opinion of any person and believes it is important that no matter what one’s view of the issues may be, complete and accurate information is essential to a meaningful understanding and discussion,” Pagenhardt wrote.

The first issue raised in the statement has to do with the funding of the Garrett County Board of Education. The budgeted appropriation to the education board by the commissioners for Fiscal Years (FY) 2009, 2010, and 2011 was $23,159,000, Pagenhardt reported.

“There has been commentary that the appropriation of county funding for FY 2011 has caused the loss of 10 board of education employees, which is not correct,” the statement says. “An equitable funding level by the county for FY 2011 as compared to past years would allow for the same number of employees.

“It should be pointed out that state funding to the board of education was reduced from $23,629,775 in FY 2010 to $22,484,300 this year — a reduction of $1,145,475. The county also saw reductions in state revenue in the amount of over $4.7 million in FY 2010 and over $5.9 million the last three fiscal years. Therefore, the county did not have the financial resources to allocate additional funds to the board of education.

“However, the county has provided funding to the education board at a level equal to that of past years when funding to other departments has been reduced,” the statement continues. “In addition, the county has allowed the board of education to retain carry-over funds for the past four fiscal years. This action is contradictory to the adopted financial agreement between the county and the board of education, which states ‘…the board of county commissioners will appropriate funding in order to guarantee and maintain a fund balance for the board of education equal to $500,000. Likewise, the board of education will refund any county appropriated money in excess of $500,000 to the board of county commissioners.’

“The commissioners agreed to amend this financial agreement to allow the board of education to retain unspent county appropriations as a way to allow the board of education to compensate for the loss in state revenue,” the statement reads.

The commissioners’ document explains that there are five “formula levels” of funding to the Garrett County Public School System.

1.State Share of Basic Aid, which is based on a formula that includes the “wealth” of a county. The Wealth Factor is based on a county’s assessable base to include personal property, as well as real property, and net taxable income in that county.

2.Requested funding is forwarded to the county for review as part of the comprehensive budget process.

3.Approved appropriation based on an extensive evaluation of estimated revenue sources.

4.Maintenance of Effort Formula is based on prior-year funding and student enrollment.

“This educational statute was approved and put in place for very logical and rational reasons,” the statement says. “The Garrett County Public School System is experiencing a definite decline in student enrollment, yet the board of county commissioners has not based funding on this calculation, which would be less than approved funding.”

5.Actual expenses. “It should be noted that actual county appropriations to the board of education over the past four years amounted to $86,585,223.70, as compared to $88,299,160 originally appropriated, leaving $1,713,936.30 of county appropriated funding that was unspent by the board of education.

“Upon request from the board of education, the county approved a portion of this unspent funding to be redirected and allocated toward other programs and projects within the board of education,” the statement continues.

“There were no county government positions eliminated for FY 2011,” the statement reads. “There are six employees on long-term disability pending retirement and 16 persons who retired on July 1, 2010. The statement that positions were eliminated is not accurate.

“Employees who retire are not unemployed, and the announcement that positions were eliminated has a connotation of a lay-off or furlough, which is again not correct.

“The total cost of the 22 county government positions that have not been replaced is $1.388 million. If the county were to supplement the loss of state funding ($1.145 million) to the board of education, plus employ replacements for the 22 vacant county government positions ($1.388 million), the total cost would be $2.5 million, an amount that is not achievable,” the statement reads.

The statement says that in addition, the cost of employee salary increases was evaluated. Because of the associated total cost, there were no salary increases approved for FY 2011.

“This decision applied to all county government employees (classified service, union, contractual, and part time), the board of education, and Garrett College.

“An integral part of the budget process is to analyze the controls established to make sure that the county’s operating expenditures do not exceed operating revenues. This provides assurance that county government remains solvent without operating with a structural deficit. The majority of designated/carryover funds has not been directed for operating purposes but for investment in capital projects,” the statement continues.

Over the past 10 years, according to the statement, the commissioner board has directed approximately $23 million toward capital projects and capital outlay solely for education, to include over $18 million for the Garrett County Public School System.

“In 1996 when reserves were not adequate, the county bonded $4 million for the construction of Yough Glades School and to upgrade Wilson Road,” the statement reads. “Over the 20-year life of this bond, the county will pay $2.7 million in interest. Had the county continued with this practice and bonded the $23 million over a 20-year period, the County would have paid $11 million in interest alone. This $23 million does not include all other capital investments funded by the county over the past 10 years.

“Fortunately, because of healthy reserves, the county’s philosophy has been to pay for all or as much as is financially feasible of these capital investments with reserve funding. This has proven to be a prudent business plan. Bonding or short-term financial processes for capital investments are always a consideration during the annual budgetary process.”

The statement notes that a number of planned capital projects have been eliminated, modified, placed on hold, or deferred because of unaffordable cost estimates. These include the Wisp Adventure Road, a new County Detention Center, Public Works Administration Building, the Community Athletic Recreation Center, the Exhibit/Trade Center, and renovations to a number of public school system buildings and facilities.

“Any interested person is encouraged to review the county’s financial audits, bond rating reports, and other available documentation,” the statement says, “and compare this financial documentation to that of other local governmental jurisdictions. This review would demonstrate that practices of prudent financial management has placed Garr
ett County government in a very solvent position for the future.”

Read the full article here.

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