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HomeMy WebLinkAbout1982-09-02 adj357 September 2, 1982 (Adjourned from September 1, 1982) An adjourned meeting of the Board of Supervisors of Albemarle County, Virginia, was held on September 2, 1982, at 7:30 P.M., Meeting Room 5, County Office Building, Charlottesville, Virginia; said meeting being adjourned from September 1, 1982. Present: Mr. James R. Butler, Mrs. Patricia H. Cooke, Mr. Gerald E. Fisher, Mr. C. Timoth Lindstrom and Miss Ellen V. Nash. Absent: Mr. J. T. Henley, Jr. Officers present: Mr. Guy B. Agnor, Jr., County Executive; Mr. George R. St. John, County Attorney; and Mr. Ray B. Jones, Director of Finance. Also present from the School Board: Mrs. jeSSie Haden, Chairman, Mr. Englar Feggans, Mrs. Sally Thomas, Dr. Charles Tolbert, Dr. James Walker, and Dr. Carlos Gutierrez, School Superintendent. Agenda Item No. 1. Mr. Fisher. The meeting was called to order at 7:38 P.M. by the Chairman, Agenda Item No. 2. Discussion: Consolidation of Special Education Programs. Mr. Fisher said there is a Consolidation Committee (part of the Revenue Sharing Agreement with the City of Charlottesville) composed of Board members, City Council members, and members of the staff studying the question of consolidation of certain City and County functions. He asked Mrs. Haden for a report on this agenda item. Mrs. Haden said the consolidation of special education services of the City and County came about through work of the staff without much input from the School Board itself. Mrs. Haden said that at the time Dr. Gutierrez first began working for the County, they had discussed combining ventures of this type, but at the time, annexation was being discussed, so she had asked that the idea not be pursued. The idea of combining this particular program was culminated because it was felt that such a consolidation would better serve the students. Mrs. Haden said the School Board is interested in saving money, but the primary interest is always to better serve the students. The financial agreement is that the cost will be based on the entire cost of a particular program and then pro-rated out to each child. Mrs. Haden said she feels this is the way to combine services, when the staff sees a need for such. Mr. Fisher asked how many pupils are involved from both localities. Mr. Ray Clark said there are seventeen. Mr. Fisher asked if a special board administers the program. Mr. Clark said the program is administered by the school system in which the program is located. Mr. Clark also noted that a program for emotionally handicapped children is in the final planning stages. There are twelve students from the City and County who will be housed at McIntire; this is an attempt to keep more kids in the community and not send them to State institutions. Dr. Gutierrez said there is also talk going on about a curriculum library, the media center, and a high school alternative education program being housed at the old McIntire School. Mr. Fisher said the County representatives on the Consolidation committee have gotten a strong reading from Council members that Council is interested in a complete consolidation of school systems. The Committee members need to have some reaction from the County School Board members. Mrs. Haden said a better approach may be to consolidate first the programs that will better serve the children and see how those programs work. Speaking personally, she would like to proceed very slowly since she really does not believe a total consolidation of the school systems will help the children. Agenda Item No. 3. Review: Consultant's Report on Operational Review. Mr. Fisher said the primary reason for setting this meeting was to continue the discussion about the deficit in the School Fund. Mr. Fisher said he had received a letter from Mrs. Haden about two weeks ago asking that the Director of Finance evaluate the report the School Board had commissioned from an independent consultant (Albemarle County School Board Special Report on Operational Review, Derieux, Baker, Thompson & Whitt, dated February 12, 1982). The Director of Finance, his staff, and persons from the County's auditing firm of Robinson, Farmer and Cox, did extensive work during these two weeks and have issued a technical report (Report to Board of Supervisors and School Board, County of Albemarle, Virginia, August 31, 1982). Mr. Fisher said that Mr. Agnor had also written a lengthy memorandum (Explanation of School Fund Deficit, September 1, 1982) trying to explain Mr. Jones' report in language everyone can understand. Mr. Fisher then asked Mr. Jones for a verbal report. Mr. Jones said that he and his staff had spent the last ten working days reading the Special Report and then putting together the report mentioned about. Mr. Jones said his report begins with a section setting forth the accounting principles used by the County and State, as well as pertinent sections from the Code of Virginia and the County's Annual Appropriation Ordinance. Mr. Jones summarized as follows: 1) The Special Report does not use a known beginning balance in the School Fund to arrive at its conclusions. Mr. Jones' said he had gone back to June 30, 1976, to start his report at a point when there was a positive beginning balance on a modified accrual basis of accounting. The balance was then brought forward each year using actual revenues and expendi- tures to give a detailed fund balance at the end of each of those five years. The 1981-82 year, just completed, was also added to bring his report up to June 30, 1982. 2) The Special Report used transfer of funds as sources of revenue. Mr. Jones said that appropriations from a fund balance do not increase the revenues of that fund, only make funds available for expenditure. 3) The Special Report is based purely upon the cash basis of accounting which does not recognize the general ledger in determining the actual School Fund balance. 4) In some years, it appears that budget working papers were used to reference revenues and appropriations, instead of the actual adopted Appropriation Ordinance. September 2, 1982 (Adjourned from September 1, 1982) 358 Mr. Jones said that staff review of the Special Report detected so many discrepancies in concept, omissions and incorrectness in figures that i~ was impossible to reconcile the Report to the audited financial statements of the County, or determine the condit~ion of the School Fund balance. The Report failed to recognize entries in the general ledger which record the amounts due to the General Fund from the School Fund and which are shown on the Combined Balance Sheet of the Annual Audit. Mr. Jones said that he and the people working on this report had reached the following conclusions: 1) There has definitely been a deficit in the School Fund for the past six years. 2) The largest contributions to the deficit occurred in the years FY 77-78, FY 79-80 and FY 80-81. ,~ 3) State revenues were overprojected in each of the fiscal years mentioned. 4) On a modified accrual basis of accounting, there were significant overexpenditures of appropriations in FY 77-78, FY 78-79, FY 79-80 and FY 80-81. 5) State revenue estimates did not reflect declines in school enrollment. 6) The accrual of payables and receivables in these fiscal years made a. significant impact on the deficit. It was found that accounts payables, excluding salaries payable, exceeded the receivables by a ratio of approximately two to one. The large amount of payables coming in July and August applicable to the prior fiscal year indicate a large amount of buying at school closing time. Mr. Jones concluded his presentation by reading the last section of his report entitled "Remedial Actions": Prior to receipt of the School Board's Special Report there were numerous corrective actions taken to enhance financial management and Controls. These corrective actions were implemented in payroll and purchasing procedures. PAYROLL: In the fall of 1980, the paychecks were printed in order of depart- ment and location. A printout of the payroll to verify and sign was provided each department head and each location supervisor every payday. These signed printouts are returned to the Payroll Division of Finance. Prior to the change, approximately 1,000 paychecks were mailed or picked up by employees with no confirmations. In April, 1982, the payroll was converted from an outside service bureau to the County's in-house data processing system. Every employee was assigned a single employee number matched with his/her Social Security number. Only one paycheck is being issued to each employee. This allows better control over supplemental pay such as educational stipends, overtime pay, etc. Prior to this change to a single paycheck and confirmation monthly by department heads and location supervisors, there were duplicate payments made for supplemental pay, multiple paychecks were issued to singular employees, and several paychecks were issued after termination of employment. These two changes met with considerable objections by supervisors, employees, and principals in the school system. Currently, there is being developed a standard payroll data input form that will be more compatible to the Data Processing System. This data form is being reviewed by a DP committee and will not only provide for correct payroll input, but provide a more complete personnel records system. The personnel records system will provide for immediate a~cess by payroll and personnel employees on a computer terminal of all information on each individual employee. The input of data for payroll in General Government has been standardized for seven years as to format. The data flows to the Payroll Division after being approved by the Department Head and County Executive with all information complete and verified to procedure developed in the Department of Education since 1979. Some improvement has been made in the professional employees payroll data input however, the nonprofessional payroll data input is not standarized nor does it provide complete data as of this date. The standard payroll input form currently under consideration should go a long way toward providing sound financial control on the payroll. In addition to the above, it is anticipated that once the accounting ledgers are converted to the computer system, the entire annual contract of professionals will be encumbered in the first month of the contract year. The salaries will then be liquidated each month against the encumbrance in the proper appropriation code. This procedure will allow for better financial analysis and monitoring during the year. It must be recognized that the payroll, inclusive of salaries and fringe benefit costs, consists of approximately 75 percent of the entire annual expenditures of the County. PURCHASING: The central purchasing system has been circumvented in the past. This situation was recognized by the Finance Director, Purchasing Agent, and employees in the Accounts Payable Division two years ago. It was pointed out in the management letter of the County Auditors, as well as the Special Re~0rt. Corrective actions have been taken within the past year. They are as follows: (1) The Purchasing Agent has been relieved of responsibilities for building and grounds functions and assigned only to purchasing duties. (2) The Purchasing Manual has been revised to meet the requirements of the current State Code. (3) The direct purchase amount has been increased form $25 to $50. (4) Ail local vendors on the County vendor list have been notified that the County accepts no liability of payment for purchases in excess of $50 withoUt a purchase order. (5) Each department has submitted a list of employees authorized to submit purchase requisitions to the Purchasing Division. (6) The departments were required to provide an up-dated listing to the Accounting Division of employees authorized to approve payments. (7) Once the accounting ledgers are on the computer system, the computer will be programmed to refuse to write a check if the payment of same will result in an overexpenditure of the appropriation. Currently, this is not possible due to the limitations of the equipment. The one single problem encountered in making changes was the attitudinal problem. This was found to be especially true in the Department of Education. Once this problem is eliminated, the solution to the problems will be accomplished with greater ease, and much better financial control and management will be forthcoming. The School Fund should be considered within the total controls of the budgetary process. This control can be defined as the ability to project revenue estimates and expenditures within a changing environment. This response shows the cause and origin of the current School Fund balance and in no way indicates dollars are missing on a cash or modified accrual basis of accounting. Finally, it must be recognized by both the Board of Supervisors and the School Board that this condition has existed over a period of the last five years and should be addressed with a definite solution in mind. Mr. Agnor refered to his memorandum of September 1, 1982, and explained that the School Fund exists as an accounting control. On it are recorded revenues and expenditures designated for school operations. It has a constant balance which should be a positive number. When expenditures exceed revenues, plus the beginning balance, a negative balance results and a deficit exists as it has in the School Fund for several years in spite of the efforts of the Special Report to prove that there is no deficit. Mr. Agnor said that during the fiscal year, as the School Fund baZance approaches zero, the Director of Finance transfers from the General Fund the amount of local funds authorized by the Board of Supervisors in the Appropriation Ordinance. Usually transfers occur at the rate of one-twelfth of local funds per month, but the Director of Finance can transfer greater or lesser amounts in order to keep the School Fund balance a positive number. Revenues from the State and from Federal sources are credited directly to the Fund as they are received, and those revenues added to the local revenues, plus any balance that existed at the beginning of the fiscal year comprise the School Fund assests. During the fiscal year, State and Federal revenues are examined in monthly reports to determine if the amounts estimated in the budget will be received. These monthly reports are maintained on a cash basis as opposed to an accrual basis. The Department of Education prepares estimates of all revenues they expect to receive, other than local revenues, as part of their responsibility in preparing the annual school budget. These revenue estimates are incorporated into the Appropriation Ordinance. Federal revenues have been omitted in the budget preparation process, and are treated as self- sustaining funds. Mr. Agnor said that during the fiscal year, the Director of Finance will inform the School Superintendent (this past year the Assistant Superintendent for Finance) that State and/or Federal revenues are not being received at the rate expected, thus resulting in local funds being transferred more quickly than anticipated. Since the Director of Finance can transfer only a certain amount of local funds, as the end of the year approaches and the amount of local funds transferred is near the authorized limit, this remedy can be exhausted. Corrective action is required during the year by those who manage the department budget. If revenues indicate a short-fall, the flexibility of budget management requires reductions in expenditures. The budget manager should look first for line items where appropriations may exceed the need and seek a transfer of the excess appropriation to another line item. If no such transfer can be made, then a supplemental appropriation should be sought. Mr. Agnor said as the end of the fiscal year approaches, the Director of Finance requests all department heads to make an estimate of expenses and revenues to complete the fiscal year including both those that will occur on a cash basis and those on an accrual basis. The accrual system, known as the modified accrual system, considers all revenues which will be received for the fiscal year regardless of whether they are received by June 30; likewise, for expenditures. If the projected expenses of the fund (liabilities) exceed the projected revenues (assets), a deficit exists. When that occurs, the Director of Finance knows that final checks for the fiscal year cannot be disbursed because funds have been exhausted. This has happened in four of the past six years in the School Fund. The Special Report claims that there has not been a deficit, apparently assuming that when Federal and/or State revenues fall short of estimates, the short-fall is offset by supplemental appropriations of local funds. This practice is prohibited in the County's Appropriation Ordinance, and has been for many years. Mr. Agnor said that in order to take corrective action on the deficit in the School Fund, requests were made by the Director of Finance to the Board of Supervisors for transfers from other funds. These requests occurred at the end of the fiscal year when effective corrective action was not taken during the fiscal year by the department head. If the Director of Finance did not receive such authority, disbursements would have to stop. If disbursements did not stop, the Director of Finance would cause an exception to be noted in the annual audit report. Such an exception can make the annual audit unacceptable to the State Auditor of Public Accounts and cast a mark on the County's credit rating for poor management. The Board of Supervisors has approved these transfers in order to avoid such consequences. September 2, 1982 (Adjourned from September 1, 1982) Mr. Agnor said that criticism has been leveled at the Director of Finance for bypassing the School Board in making such requests, but it is the responsibility of the School adminis- tration to apprise the School Board of its financial condition. In answer to a question about why corrective action was not taken more effectively during the year before it became a crisis at the end of the year, there has been an attitude prevailing for many years in the school system that the Board of Supervisors has the responsibility and authority to provide the resources and the Education Department devotes itself to providing the education program. This attitude ignores departmental budget management, and displays a lack of concern for the financial health of the County government. Mr. Agnor said the deficit has occurred repeatedly for several reasons. One is that during budget preparation each year the next year's school enrollment has been overestimated. Second, Federal programs and revenues are separated from budget preparation, but the expenses and revenues are integrated into the operational system where it is difficult to match the period of expenses (September-June) with the Federal fiscal year for reimbursement (October- September). Third, finance control during the year is on a cash basis and unless the budget manager knows what the accrued liabilities are, those accrued liabilities can devastate a budget in the final weeks of the fiscal year. The surge of purchases in May and June in the school system should not be allowed, or should be better controlled. Also, a majority of teaching salaries are paid on a twelve-month basis, creating incurred liabilities from September to June for disbursements made from September through August. Also, there have been stipends disbursed at the end of the year without recognition of their accrual during the year. Mr. Agnor said in conclusion that it is his opinion that the staff knows what the problem is and what corrective measures are needed. County departments are being provided new informational tools by the new in-house data processing equipment, but to effectively use these new tools it will require time, cooperation between de-partments, and School Board support in changing management controls. Dr. Charles Tolbert sai'd he agrees that the figures presented in Mr. Jones' report relative to the amount of the deficit are close to correct. In reference to the special corrective action taken by tlhe Board of Supervisors at the end of the fiscal years mentioned, he asked how notice of that action was forwarded to the School Board. Mr. Agnor noted that there were copies of the "ac!tion" letters included in the report, and these letters were forwarded from the Clerk of the Board of Supervisors to the department head. Dr. Tolbert asked if the monthly expenditure and revenue report also shows the beginning balance in the School Fund. Mr. Agnor saidl that particular report does not recognize a beginning balance. Dr. Tolbert said it appears that a School Board member looking at a monthly report would have no way of knowing there~ was a deficit balance to take into consideration. Mr. Agnor said the deficit in the Scholol Fund balance shows only in the Annual Audit Report. Dr. Tolbert asked if on the basis of all of the reports, Mr. Agnor felt there was any evidence of missing money or culpable behavior oln the part of anyone in the County government. Mr. Agnor said no; there have been certain icircumventions of the purchasing procedure; there have been employees who received pay i,ncreases which were not due them and these were not reported; there have been people who rleceived paychecks when they were no longer employees; but he did not believe there has been a.ny misuse of funds on the part of employees. Dr. Tolbert asked Mr. Agnor if he felt the $1 million plus deficit is due to a general mismanagement of the budget in general terms or ilf it is due to several specific items occuring throughout the year. Mr. Agnor said he felt it has been a combination of both; some costs did skyrocket. Dr. Tolbert said there is full documentation to show that "Fixed Charges" was $500,000+ over the estimate in one year, anld there is no way to deal easily with an overrun of that size. Mr. Agnor agreed. Dr. Gutierrez said therle is a statement made in Mr. Jones' report about a reluctance to make changes in procedures. He would like to reiterate that his administration is anxious to make changes and will cooperate in doing whatever is necessary to bring about fiscal responsibility. Mr. Jones s~aid at the time that a change was made in the way paychecks were distributed, there was a greiat deal of reluctance, but the proble~m is not as great today as it was in the past. Mr. Agnor said that sevleral years ago it was decided that there should be a vehicle maintenance facility constru~cted. Mr. Jones was requested to set up an accounting system. He took members of the Plann. ing staff and School staff to other localities to see systems already in operation. He de~eloped a plan known as an "enterprise" fund and a proposed management group. The plan ~as not adopted, and the management group was rejected. This is unfortunate. Mr. Fisher said he had studied the report today and it appears that the School system has been watching expenditures. Although individual years exceeded appropriations, averaged out over the six-year periodl, the expenditures were not that much over appropriations, so from that standpoint, it was~ a pretty good job of managing expenditures. However, when you look at the revenues coming into the system, that is where the problem shows up. Almost $1.16 million of State moniels and $1.1 million of Federal monies did not materialize. Local funds were increased by $400,000 over the original estimate, but that amount did not offset the loss of State and Federal monies, leaving a deficit of $1.6 million in revenues. Mr. Fisher said that for a number of years during budget work sessions, he would mention that school population was declining, but each year the estimate for state revenues was based on the same number of pupils. To him, this appears to be the biggest problem during this six-year period. Dr. Gutierrez said that he has received figures today that indicate that for the current year there are 243 pupils less than estimated for the current budget revenues. It was felt that using a figure of 9,100 was a conservative figure based on information from the County Planning Department and a survey of building permits. It is hoped that some of this difference will be made up after Labor Day. A problem arises because school staff is hired and contracts issued to them before the tenth day enrollment figures are known. The only real flexibility in reducing expenditures is in staffing and the staff is already under contract .~ ~y~ ~j~¢~ ~ 6Y~/~a~'~L~ ~ ~ ~ ~t~ dur~'On~ ~ ~/~/ 361 September 2, 1982 (Adjourned from September 1, 1982) Mr. Fisher said the total deficit for the six-year period is only about one percent of the appropriated amount, but the deficit is there and it is real. If a way cannot be found to wipe that out, then every year it will continue to be a problem. Someone must look to the future to see what kind of management changes can be made to be sure this does not continue to happen. Mr. Lindstrom said it has been two years since the Board was alerted to the fact that the School Fund had a deficit of $800,000+. It is his perception that no one person or one body is at fault. Declining enrollments and sharp increases in prices for things over which the County has no control seem to have created the problem. Should the tenth day enrollment figure be low, Mr. Lindstrom said he cannot imagine that the only way to deal with this problem is to let teachers go. He also did not know how the School system could absorb the amount being discussed in Just one year. Mrs. Haden said that Mr. Hanna, from the firm of Derieux, Baker, Thompson & Whitt, who had prepared the Special Report was present. She asked him if he would like to make a response. Mr. Hanna said he had just received Mr. Jones' report and had not had time to study same. Mr. Fisher said he was not asking Mr. Hanna to do any more work on the report as he felt that the County staff report was far superior in trying to figure out how to deal with the problem. Mr. Fisher said that there is a short-fall in funds which is already subtracted from the amount of local revenues due the School Fund, which means that that amount is not available to the schools for operations during this current fiscal year. He feels that now is the time to try and manage what will happen in the School Fund this year. Dr. Walker said he disagrees with the statement in Mr. Agnor's memo to the effect that "acknowledgment of the problem has been practically nonexistent in the school system." Dr. Walker said that it totally incorrect. During the '78-79 fiscal year, he went to Mr. Jones on several occasions and said the figures don't balance, but was assured that everything was all right. He was completely surprised when it was reported in the newspapers that the Board of Supervisors said the School Board was in debt for over $1 million. Dr. Walker said in his personal review of the Board of Supervisors' minutes, he found that this debt was not mentioned until 1980. Dr. Walker said he believes the biggest problem lies in communications between the Board of Supervisors and the School Board. There has been a failure to get the types of figures needed by the School Board. Dr. Walker said he also cannot conceive of anyway for the School Board to take a portion of the debt out of each year's operating budget. Dr. Walker referred to Mr. Jones' report, page 16, and said that the Board of Supervisors must have done something to cover the noted $556,381 deficit for FY 77-78. Mr. Jones said that there was one year in which a transfer of funds was made from the School Construction Fund to the School Operating Fund. Mr. Jones said in making transfers in prior years, he has thought only in terms of making cash available for necessary expenses and salaries payable at that time. There is a need to separate accounting procedures on a cash basis and those on an accrual basis. Mr. Jones said that in this day and time, the best reflection of true financial condition has to be the accrual basis. Mr. Lindstrom asked how the $556,381 mentioned by Dr. Walker was handled. Mr. Agnor said this figure showed up after the auditors had accrued all expenses for that year. The County was operating on a cash basis at the time, so the figure did not show on the County's general ledger. Dr. Tolbert asked if the School Board was notified when the deficit did show up. Mr. Agnor said it was shown in the Annual Audit Report. Dr. Tolbert asked if a special letter was sent to the School Board. Mr. Agnor said no; the Board of Supervisors did not know about the deficit even though it clearly showed in the Audit, but since the funds had not actually been spent, there was a balance in the School Fund. Dr. Walker said that statement creates the problem for him. Neither the Board of Supervisors, nor the School Board, had any idea the schools were operating in a deficit condition because the figures did not show the deficit until 1980. Mr. Agnor said that was true, except for the one year mentioned by Mr. Jones when a transfer was made from the School Construction Fund. Dr. Walker said the deficit of $835,483 for FY 79-80 was greater than the amount overspent in that particular year, so there must have been an amount carried forward from earlier years. Dr. Walker said the problem may lie entirely in the accounting system, and if that is the case, then the two boards have got to learn how to correct the problems. If it is a problem of mismanagement, that is one thing, but he does not think there could be mismanagement in the amount of $1.2 million. The School Board did not know until~1980 that the School Board was not managing funds the way it should. It is ridiculous to think the School Board should have to make up some deficit because of a change in bookkeeping methods from a cash basis to a modified accrual basis. Dr. Walker also asked if it is legal to borrow on next year's budget to pay last year's debts. Mr. St. John said that "borrowing" is not exactly what happened. The School Fund received an appropriation from the General Fund with the expectation that the General Fund would be replenished from the next year's appropriation, and that is not the same as an indebtedness or a burden on the County's taxing power in the future. Dr. Walker said he felt it was a farce to sit here and think the School Board would be able to pay back a portion of the debt each year out of operating funds, when a majority of the problem was caused by bookkeeping alone. Mr. Fisher felt that statement was incorrect. He said that each year there was an overestimate of the number of pupils who would be in the school system so that State revenues were short, but yet the full amount of money expected to be received was spent. Mr. Fisher said that is not a bookkeeping problem. Dr, Walker said it depends on how you look at the question. It was stated in a memo from Mr. Jones to the Board in 1980 that the deficit was not a budget deficit, but a fund deficit. Dr. Walker said he does not think that until very recently many of the people involved in this question knew the difference between a fund deficit and a regular deficit. Mr. L±ndstrom said the problem is fairly obvious. Procedures and safeguards aside, something has to be done. He did not know whose fault it was that 200 or 300 students did not show up. He said that if the tenth day enrollment had been known, expenditures could have been reduced, or the local share of revenues increased, but he feels that even if the problem had been known early in the year, the Board of Supervisors would still have had to come up with the money to fund the School Department. Mr. Lindstrom said that speaking just for himself, he feels that the County has been able to avoid a tax increase the past few years because it has been able to make these advances to the School Fund. Although he knows that no one wants a tax increase, he did not see how the School Board can make up the money. September 2, 1982 (Adjourned from September 1, 1982) Mr. St. John said that nothing the Board of Supervisors has done in the past to make up this deficit at the end of the year is illegal. Under State Code it is illegal for the School Board or any official in charge of money to incur indebtedness above what the Board of Supervisors has appropriated for that purpose. When that occurs there is an illegality, but the illegality is removed if the Board of Supervisors remedies the situation by appro- priating money to cover the deficit. Mr. Agnor said the School Fund is an accounting control and when the accounting procedure~ were on a cash basis, there was no problem. But when several hundred school people switched from ten-month payment to twelve-month payment of their salaries and the County switched to an accrual basis for accounting, then the problem became apparent when the deficit continued growing each year. Mr. Agnor said he was referring to school administration and not the School Board when he said there had not been a recognition of the problem. He sat in on many meetings with School administration at which the fund balance problem was discussed. The response was always that there were reimbursable funds which had not been applied for, but that would be remedied so there was no problem. Mr. Agnor said that Mr. Jones had informed him several years ago that the School Fund was getting into trouble fast on the accrual basis of accounting. It was at this time that Mr. Jones went to the Board of Supervisors with a request for a transfer. Mr. Agnor said he still contends that part of the problem came about by school administration refusing to recognize the problem. Last year it did not take Dr. Bill Barton long to recognize the problem after he began work as the Assistant Superintendent for Finance. Dr. Tolbert said he had gone through County appropriation documents and arrived at a figure close to the one presented by Mr. Jones so he feels the Fund deficit is near the 'i~ $~ million figure and the problem did start back in the 1970's. Dr. Tolbert said he is~ ~ willing to work diligently to clear up this problem, but it cannot be done suddenly. He asked if ~there would be any way to amortize the debt. Mr. Agnor agreed that the debt cannot be cleared up in one year, and felt that it should no longer be called a transfer, but an appropriation. Dr. Gutierrez said that Mr. Jones had mentioned four sources of revenue in his report, but there should be five. The school system does not receive credit for the interest earned on monies transferred into the School Fund. Mr. Jones said that the interest earned on investments is just one component of overall County budget revenues. Mr. Lindstrom said he felt Dr. Walker had asked the only relevant question and he felt Mr. Agnor and Dr. GUt±errez should advise the Board on how to deal with the deficit. Mrs. Haden thanked Mr. Agnor and Mr. Jones for the work that went into this answer to her request. She said the School Board will continue to monitor this problem and will work with the principals to try to arrive at the correct appropriation figures for the budget. Mrs. Haden said that usually the school budget is completed before the final figures for revenues are received from Richmond. Dr. Walker noted that in 1980, the State of Virginia sent the Albemarle County School Board a notice, after the books were closed for the year, saying that the School Board would only receive 94 percent of what had been anticipated in revenues. He asked how that can be controlled. Mrs. Sally Thomas said she also appreciated the hard work.that had gone into this report. She said it has not been mentioned that some of the School Board members had already discovered some of the .same problems with the figures in the Special Report. She said when there are changes made in procedures, the School Board needs to know the reasons and not be expected to just "read between the lines." At this point, the discussion ended. 10:15 P.M. The Board recessed at 9:55 P.M. and reconvened at Agenda Item No. 4. Discussion: Capital ImprOvement Programming, Planning and Financing. Mr. Agnor said when he and Dr. Gutierrez were directed to sit down and put together agenda items for discussion tonight, he suggested that anl item be included for funding of capital projects as well as operations. The Board has still not acted on the Capital Improvements Program for this fiscal year, but has asked that any school project that could be deferred, be so deferred until the school redistricting stud~ is completed. Mr. Fisher asked what has happened so far on ~he redistricting study. Dr. Gutierrez said he has invited nominations of about 50 peopleI for a committee. When the committee is appointed, he will ask them to bring back their report by January, 1983. That would then allow the spring months to receive final comments with the hope of finalizing the plan bY the end of the school year. There have been some area, but the school is definitely in need of reno study reveals, there will still need to be a schoo controversial item, the School Board moved this pr for capital improvements. There was no further discussion of this agend Agenda Item No. 5. Others Matters Not on the that the Board go into executive session with the Motion to this effect was offered by Mrs. Cooke, s following recorded vote: AYES: NAYS: ABSENT: Mr. Butler, Mrs. Cooke, Mr. Fisher, Mr. Lin None. Mr. Henley. concerns mentioned about the Broadus Wood ration, and no matter what the redistricting 1 in the area. Because it was a non- oject to the top of their priority list item. Agenda. At 10:22 P.M., Mrs, Haden requeste< School Board to discuss personnel matters. sconded by Mr. Lindstrom, and carried by the dstrom and Miss Nash. At 10:37 P.M., the Board reconvened into open session. September 2, 1982 (Adjmurned from September 1, 1982) Agenda Item No. 6. Motion was offered by Mr. Lindstrom to adjourn this meeting until September 15, 1982, at 9:00 A.M. The motion was seconded by Mrs. Cooke and carried by the following recorded vote: AYES: NAYS: ABSENT: Mr. Butler, Mrs. Cooke, Mr. Fisher, Mr. Lindstrom and Miss Nash. None. Mr. Henley. NOTE: The regular meeting of the Board of Supervisors of Albemarle County, Virginia scheduled for September 8, 1982 was cancelled by vote of the Board taken on August 11, 1982.