Tuesday, September 06, 2022

Fund Balance For Oconee County Schools Grew To $48 Million in November Before Settling Back To $39 Million Near Year’s End

***Size Of Balance Seems To Exceed Board's Guidelines***

Oconee County Schools had a Fund Balance of more than $20 million every month from the beginning of the last fiscal year in July of 2021 through May of this year, the last month for which Oconee County Schools has been willing to release data.

In May, the Fund Balance was $39.5 million, $1.8 million lower than in April. April was $1.7 million lower than in March. The peak had been $48.4 million in November.

Fund Balances can include both Unassigned and Assigned funds, and when Fiscal Year 2023 began in July of this year, $7.1 million of the Fund Balance was described as assigned, and $25.3 million was described as unassigned.

According to policy adopted by the Oconee County Board of Education in 2015, the Unassigned Fund Balance is recommended to be a minimum of 10 percent, but not more than 15 percent, of the next year’s General Fund expenditures.

Oconee County Schools has refused to release the final Fund Balance figure for June 30, saying it will not be available until March of next year.

If either an estimate based on the May Fund Balance or the estimate of the 2022 Fund Balance in the Fiscal Year 2023 Budget is used, however, the Unassigned Fund Balance is well above the 15 percent figure listed as a recommendation in Board Policy.

That approved Fiscal Year 2023 Budget shows revenue exceeding expenditures by $1.7 million, with the resultant increase in the Fund Balance by that amount.

The decision of the Board to fund that Fiscal Year 2023 Budget with a property tax increase of 4.7 percent–after first proposing an increase of 9.8 percent--is now final, though it could have impact on the Board of Education elections in November.

Board Action

The Board of Education in May approved a tentative budget for Fiscal Year 2023, which began on July 1 of this year, based on a millage rate of 16.25, down from 16.5 in the previous year.

Screen Shot Harlow Before Board 8/1/2022

That millage rate would have generated $91.9 million in revenue, both from local taxes and other sources, and $90.2 in expenditures, or $1.7 million more in revenue than expenditures, according to the budget.

At the last moment, and without any real discussion, the Board decided to drop the proposed millage rate from 16.25 to 15.5.

The millage rate of 16.25 represented a 9.8 percent tax increase in taxes, while the millage rate of 15.5 is a 4.7 percent tax increase, as defined by the Georgia Department of Revenue.

Despite that last minute decision to reduce the millage rate, the Board has not revised it budget, meaning it is still expecting revenue to exceed expenditures, as projected in the budget it passed in June.

This is the case because the budget passed in June was based on an estimated Net Tax Digest of $2.623 billion.

By the time the Board approved the millage rate, however, it knew that the actual Net Tax Digest was $2.818 billion.

Increased Revenue

Based on the final Net Tax Digest of $2.818 billion, Oconee County Schools would have received $45.8 million with the millage rate set at 16.25 and will receive $43.7 million with the millage rate of 15.5 million.

The approved FY 2023 Budget anticipates only $41.3 million in revenue from property taxes.

So even with the lowered millage rate, Oconee County Schools will receive $2.4 million more than budgeted and $4.1 in revenue over expenses.

These estimates of revenue do not take into consideration incomplete collection of taxes, which would reduce those amounts slightly.

In the 2022 Fiscal Year Budget, Oconee County Schools seems to have anticipated receipt of 98.0 percent of the projected taxes. In Fiscal Year 2023 Budget, that figure seems to be 97.0 percent.

These calculations are based on a comparison of the amount shown in the budget as revenue from the property tax ($40,236,393 in Fiscal Year 2022 and $41,334,069 in Fiscal Year 2023) and the simple calculation of the projected revenue each year based on the Tax Digest figures used in the budgets ($41,052,000 and $42,623,750 respectively).

Regardless, in the amendment to the Fiscal Year 2022 Budget, Oconee County Schools reported receiving more than the projected amount of money from property taxes, not less. That had been true in Fiscal Years 2020 and 2021 as well.

Revenue Estimates

I reported in an earlier post that the original millage rate of 16.25 would have produced $4.5 million in revenue more than was budgeted.

The approved millage rate of 15.5 will produce $2.3 million more than budgeted.

The 14.8 millage rate necessary to not have a tax increase would have produced $374,142 more than budgeted.

In each case, I wrote, I was assuming 100 percent tax collection.

For the Fiscal Year just ended, Oconee County Schools actually received more than $150,000 over the amount projected based on last year’s Tax Digest.

If, on the other hand, we use the 98 percent compliance figure that Oconee County Schools used two years year in its budget, the proposed 16.25 millage rate would have generated $3.5 million more than budgeted.

The approved 15.5 millage rate will produce $1.5 million more than budgeted.

And the zero tax increase rate of 14.8 would have resulted in receiving $460,022 less than budgeted.

The approved budget, however, has revenue exceeding expenses by $1.7 million, so the no tax millage rate would have meant less money would have been put into the Fund Balance than will be the case with the approved 4.7 percent tax increase.

Final Public Hearing

At the final public hearing on the proposed millage rate of 16.25 on Aug. 1, Board Member Tim Burgess spent 10 minutes arguing the importance of a large Fund Balance for Oconee County Schools.

Click To Enlarge

First, he said that about $7 million of the Fund Balance shown in the Fiscal Year 2023 budget was “set aside” for opening the new Dove Creek Middle School and for renovations at the elementary schools.

He also said that Oconee County Schools needs $6.3 million each month for payroll. These payroll payments come from the Fund Balance, Burgess said.

Burgess did not mention the state revenue in his comments.

Open Records Request

Because of the importance of the size of the Fund Balance in the discussions at the tax hearings on July 26 and Aug. 1, I filed an open records request on Aug. 19 for details of the Fund Balance.

“I am requesting a copy of the electronic or printed document or documents that shows the Oconee County Schools Fund Balance for each month of Fiscal Year 2020-2021 and Fiscal Year 2021-2022,” I wrote.

On Aug. 23, I received a reply from Anisa Sullivan Jimenez, Director of Communications for Oconee County Schools, who also serves as the open records officer for Oconee County Schools.

“We can generate and compile the information from our accounting system for each month through May 2022. June 2022 is not available, as we are still closing out FY 22,” she wrote.

“In order to complete this, the estimate is 1.5 hours x $31.03 (cost of the lowest-paid employee capable of completing the work). Therefore, the total cost is $46.55. Please let me know if you would like to proceed,” the email form Jimenez continued.

In a subsequent email, Jimenez told me that the June 30, 2022, figure will not be available until March of 2023.

I told her to proceed, and she gave me the single sheet report, with the Fund Balance for 23 months, on Aug. 26. She also included the invoice for the $46.55, which I paid on the following day.

Trends In Fund Balance

The Fund Balance does show the dramatic declines in the early part of both of the two fiscal years that Burgess had noted in his comments at the third public hearing on Aug. 1.

Property tax revenue doesn’t start to come in until November, as Burgess noted.

In Fiscal Year 2021, the Fund Balance dropped to 12.9 million in October before going up to $15.7 in November and then $37.4 in December.

In Fiscal Year 2022, the Fund Balance dropped to $20.1 million in October before rebounding to $48.4 in November.

In both years, the Fund Balance declined from the first of the year to fiscal year’s end.

The decline from May to the end of the 2021 Fiscal Year on June 30, 2021, was quite small.

The June 30, 2022, figure is missing from the chart because, Jimenez said, it will not be available until  March of next year.

Earlier Open Records Request

I have been writing about the budget for Oconee County Schools since the Board passed the Fiscal Year 2023 Budget on June 6.

Included in that report on June 14 was a summary of the discussions of the budget on May 2 and May 9 as well as on June 6 when the budget was passed.

Screen Shot Of Burgess, Ransom, Harlow (L-R) 5/2/2022

I reported that revenue in the Fiscal Year 2023 Budget was $91.9 million and spending was $90.2 and that the new budget includes a projected Fund Balance of $32.5 million, up from the originally projected balance of $28.3 in Fiscal Year 2022.

I also reported that Chief Financial Officer Liz Harlow told the Board that she did not have the final figures for the county’s Tax Digest, and, depending on the final figures, she said, the 16.25 millage rate could represent a tax increase for county voters.

Harlow said that she was projecting a growth in the Tax Digest of 7.43 percent to $2.623 billion and that the budget was based on a proposed millage rate of 16.25, down from the 16.5 of a year earlier.

(The tax digest actually grew by 15.4 percent, not 7.43 percent, to $2.818 million.)

QBE Funding

I reported that the Fiscal Year 2023 budget is 4.0 percent higher than the Fiscal Year 2022 budget and includes, for the first time since before the pandemic, full state funding of the Quality Basic Education (QBE) formula.

Screen Shot Board 8/8/2022 Meeting
Bagley, Parrish, Branch, Argo, Burgess, 
Zoe Gattie, Executive Assistant To Branch (L-R)

Because I was interested in that funding of the QBE, and because what was released to the public after these meetings was labeled budget summaries, I filed an open records request on June 15 for detailed budgets for Fiscal Year 2023 and Fiscal Year 2022.

On June 20, Jimenez wrote me and said “There is no documentation per se regarding your requested items, but we can calculate your requests for a cost of $312.50 (5 hours x $62.50 hourly rate for lowest-paid employee capable of doing the work).”

I declined, but on July 25 I did get a copy of the May Budget Report for Fiscal Year 2022, which is a detailed budget for that year, up to the end of that month.

At the Aug. 8 meeting of the Board, Harlow provided the first budget report for the Fiscal Year 2023.

That contains the detailed budget I was seeking.

Budget Reports

Each month, Harlow as Chief Financial Officer releases a document to the Board called a Year-To-Date Budget Report.

That document then appears on the Simbli page of Oconee County Schools, which is the repository for Agendas, Minutes, and documents presented to the Board of Education.

The May 2022 Budget Report, for example, is HERE.

No June 2022 Budget Report has yet been posted.

I downloaded each of the reports for the last 11 months, ending with the May 2022 report, to examine how revenue was recorded over the first 11 months of Fiscal Year 2022.

State Funding

In Fiscal Year, 49.0 percent of the revenue OCS was budgeted to receive was from local sources, and the remaining 51.0 percent was from the state.

Click To Enlarge

(In Fiscal Year 2023, with the full funding of QBE, the state percentage grew to 52.8 percent.)

An analysis of the revenue streams for Fiscal Year 2022 shows that one of the main reasons that the Fund Balance does not shrink each month by the $6.3 million that Harlow told Burgess Oconee County Schools spends each month for payroll is that much of that is covered by state funding.

State funding adds roughly $3.7 million each month to the budget of Oconee County Schools.

The increase in funding in April and May is the result of State Categorical Grants recorded in those two months.

Budget Amendments

Although Harlow has not yet given her Budget Report for June of 2022, it is possible to glean the major features of that report from the Budget Amendment for Fiscal Year 2022 approved by the Board at its meeting on July 18.

With that amendment, the Board approved a budget that added more than $7.1 million in unanticipated revenue, raising the Fiscal Year Budget Revenue from $86.4 million to $93.6

Expenditures went from $86.7 million to $93.0 million.

Oconee County Schools collected $204,000 more in Ad Valorem Tax, $770 more in Intangible and Transfer Taxes, and $1,450,000 more in Title Tax than it had budgeted for last year.

Based on that report, the Total Local Tax Revenue at the end of the year was $44.1 million.

It also obtained $1,165,000 more in QBE Earnings Salary, $91,000 more in QBE Earnings Operations, and $1,745,000 more in State Categorical Grants than it had expected when it approved its Fiscal Year 2022 Budget.

Based on that report, the Total State Revenue at the end of the year was $46.6 million.

In the Budget Amendment for the year earlier, Fiscal Year 2021, Oconee County Schools added $5.8 million in revenue but no increase in spending, creating a $2.0 million gap with revenue over spending.

Cash Balance Reports

A second document that Harlow delivers each month is the Cash Balance Report, which shows the revenue in six different accounts held by Oconee County Schools.

Click To Enlarge

The June 2022 Cash Balance Report, for example, is HERE.

Three of those accounts changed very little over the year, the Bond Sinking Fund, the Agency Fund, and the Capital Projects Fund.

The General Fund and the 2017 Education Local Option Sales Tax Fund and 2021 Education Local Option Sales Tax Fund did vary.

The General Fund balance follows the pattern of the revenue streams and the Fund Balance.

At no point during the 2022 Fiscal Year did the General Fund balance fall below $24 million. It rose to its high point in December, when it held $54.1 million.

ELOST Accounts

Oconee County Schools still has two bond payments to make from the 2017 ELOST account, for a total of $6.240, meaning the current balance is more than $5 million in the clear.

That 2017 ELOST runs through the end of this year.

Voters approved ELOST 2021 in March of that year, but no collections on the tax will begin until January of 2023.

Oconee County Schools sold just less than $43 million in bonds against future ELOST revenue, and $41.6 million of those funds remain in the account.

The largest project to be covered by ELOST 2021 is the new Dove Creek Middle School, currently being constructed next door to the Dove Creek Elementary School on Hog Mountain Road in the far west of the county.

The most recent cost estimate for that school is $39.6 million, with a completion date of July of 2023.

The next most costly project is the administrative building planned for now vacant land on North Main Street in Watkinsville, at a cost of $12.8 million. Completion is scheduled for July of 2024.

Board Policy

Following Burgess’ argument about the importance of the Fund Balance in the Fiscal Year 2023 Budget, I began searching for guidance on how school districts manage them.

I found a recommended policy statement on the Georgia Department of Education web site.

I then found that the Oconee County Board of Education had adopted a version of that sample policy on June 13, 2011, and had revised it on June 8, 2015.

Fund balance is defined as “a measurement of available financial resources and is the difference between total assets and total liabilities in each fund.”

The policy states that “Unrestricted--Assigned Fund Balances are determined by the Chief Financial Officer and will include amounts that reflect the Board’s intent to be used for specific purposes, but are neither restricted nor committed.”

These, based on Harlow’s answer to Burgess at the Aug. 1 tax hearing, are what are labeled as “Unencumbered Expenditures” in the Fiscal Year 2023 Budget.

The policy states that “Unrestricted - Unassigned Fund Balances “is the amount that is considered available for consumption or not restricted in any manner.”

This is labeled as the “Estimated Fund Balance” in the Oconee County Schools Fiscal Year 2023 Budget.

The Board policy states that “The end-of-year Unassigned Fund Balance is recommended to be a minimum of 10 percent, but not more than 15 percent, of next year’s budgetary general fund expenditures.”

Calculations I

I calculated the end-of-year Unassigned Fund Balance in two ways, as I wrote at the beginning of this story.

First, I used the May Fund Balance figure I obtained from my open records request and that is shown in the first chart in this report ($39.5 million).

Given the trend in recent months, I subtracted $2 million from the May figure, leaving $37.5 million. Next, I subtracted the $7.1 million in assigned funds, as identified by Harlow and Burgess, leaving $30.4 million as the Unassigned Fund Balance.

I then divided that amount by the $90.2 million Total Anticipated Expenditures from the Fiscal Year 2023 Budget.

The product is 33.7 percent, well above the 15 percent recommended figure in the Board policy for the relationship between Unassigned Fund Balance and “budgetary general fund expenditures.”

Calculations II

The Fiscal Year 2023 Budget estimated that Fund Balance at the end of Fiscal Year 2022 as $30, 731,000, considerably lower than the May 2022 figure of $39,502,297.

Screen Shot Of The Vote To Approve Budget 6/6/2022
Bagley, Parrish (Hidden), Branch, Argo
Burgess, Ransom (L-R)

I subtracted the $7,122,200 in Assigned Fund Balance (labeled Unencumbered Expenditures) from the budget estimate of $30,731,000 to get the estimate of the Unassigned Fund Balance of $23,608,800.

The outcome of that calculation is 26.2 percent, meaning that the Unassigned Fund Balance is 26.2 percent of the budgeted expenditures.

Again, this is much higher than the 15 percent recommended as the relationship between Unassigned Fund Balance and “next year’s budgetary general fund expenditures.”

The public won’t know until March of next year what the actual figure will be.


I emailed Burgess on Aug. 30 and asked him about the Board Policy on Fund Balance.

I mistakenly used the Estimated Fund Balance for June of 2023 rather than the Estimated Fund Balance for June of 2022 in my question.

But I did not hear from Burgess regardless.

And when I sent him two additional requests from two different email addresses, I also did not get an acknowledgment or reply.

November Elections

In November, Incumbent Republican Amy Parrish is being challenged by Independent Ryan Repetske for Post 2 on the Board of Education.

Hendrix 7/25/2022

Independent Melissa Eagling and Republican Ryan Hammock are competing for the open Post 3. Bagley, who currently holds that Post, is stepping down.

So far, Oconee County Republican Party Chair Kathy Hurley has focused attention on whether the Independents are actually Democrats (the Independents say they are not), and on problems with rejected named on the petition drive, rather than the Board's decision to raise taxes.

Pamela Lohr Hendrix, treasurer of the Party, however, was the leader of the opposition to the proposed drop in the millage rate of 16.5 to only 16.25.

She put up a large number of signs outside the building where the Board was holdings its tax hearings protesting the increase and spoke against the tax increase at two of the three public hearings on the tax increase.

Mark Arnold, vice chair of the Republican Executive Committee for Membership, Finance and Programming, spoke out against the budget surplus at the Town Hall Meeting of the Oconee County Commissioners on Aug. 23.

Arnold mistook the surplus as part of the county budget rather than the School Board Budget, but people in the audience understood and corrected him.

Candidates On Tax Increase

Repetske, Eagling, and Hammock did not speak at any of the hearings on the tax increase.

I also have not seen any statements from any of the candidates about the tax increases.

Parrish addressed those who spoke at the final hearing on the increase and admonished those citizens, saying they were not the majority of voters in the county.

Parrish said she had learned from the controversy over the Board’s COVID-19 policy that the Board should “do what the majority of our community wants. Not just the loudest.”

The Oconee County Republican Party will hold a candidate forum for all four of the School Board candidates on Sept. 26 at the Civic Center on Hog Mountain Road, west of Butler's Crossing.

Time Line

I have created the following Time Line for Board action regarding the Fiscal Year 2023 Budget.

May 2

Chief Financial Officer Harlow presents tentative Fiscal Year 2023 Budget to the Board.

Budget released to the public. (Board Member Tim Burgess said the Board had been going over the budget for six to eight weeks prior to its being presented to the public at this meeting.)

May 9

Chief Financial Officer Harlow presents tentative budget to the Board a second time.

May 16 and 23

Budget Hearings held. Jeff Hood was the only citizen who spoke (May 16). He approved of the budget.

June 6

Board approves Fiscal Year 2023 Budget with millage rate tentatively set at 16.25, down from 16.50 the previous year. The Net Digest used was $2.623 billion.

Chief Financial Officer Harlow tells the Board the Digest the Digest number is an estimate and the millage rate of 16.25 may result in a tax increase. There is no discussion of this part of Harlow’s report.

June 7

Oconee County Schools issues a press release saying “ The Oconee County Board of Education recently gave final approval to a fiscal year 2023 budget of $90,172,517. The budget includes a total millage rate of 16.25 mills, a decrease of .25 mills and the lowest rate this century.”

July 14

A Notice Of Property Tax Increase appears on the bottom of Page B3 of The Oconee Enterprise indicating that the Board of Education tentatively has adopted a millage rate that will increase taxes by 9.8 percent.

Calculation of that 9.8 percent increase is based on a report from Oconee County Tax Commissioner Riddle on the final 2022 Net Tax Digest.

The percent tax increase represents the change from a millage rate of 14.8, which is the zero tax increase rate, to 16.25, which is the rate proposed by the Board.

The Notice informs of the public of hearings on the tax increase for July 25 and Aug. 1.

July 21

A Notice of Current 2022 Property Tax Digest and 5 Year History of Levy appears on page A5 of The Oconee Enterprise reporting the final Net Tax Digest of $2,818,122,370.

The advertisement also shows an increase in the actual tax collected in 2022 versus those collected in 2021 as a 13.67 percent increase.

The advertisement also listed the Board meeting on Aug. 1, when the decision on the millage rate is to be made.

July 25

Board Members Kim Argo (Chair), Wayne Bagley, and Michael Ransom hold first hearing, where three people speak, one strongly opposed to the tax increase.

Board Members Argo, Tim Burgess, and Ransom hold second hearing, where 12 people speak, all but one opposed to the tax increase.

Aug. 1

Argo, Burgess, Parrish, Ransom, and Bagley (arriving late) hold the final public hearing, where 16 people speak, all but one opposed to the tax.

At the end of the regular Board meeting following the hearing, Superintendent Jason Branch asks for approval of the budget with the millage rate of 16.25.

After Burgess and Bagley argue in favor of the proposed budget and millage rate, Bagley suddenly proposes that the rate be dropped to 15.5 mills. The Board adopts that rate unanimously with little discussion.

Aug. 8

Board meets but does not revisit the Fiscal Year 2023 Budget.

Aug. 11

Director of Communications for Oconee County Schools Anisa Sullivan Jimenez confirms that the Board does not intend to alter the Fiscal Year 2023 Budget.

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