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More questions for trustees / November 15, 2012
Dear Viewpoint:

These were remarks I presented to Halifax County School trustees on Monday evaening.

Thank you for responding to my questions. During your last regular meeting and your “Work Session” it was obvious from your remarks that many of you wanted to be responsive and you found a way to do it. I hope and trust this is the beginning of a new more productive and positive relationship and partnership with your constituents. I now ask that you establish a policy and process to be this responsive and open on an on-going basis.

And thank you for your service. Thanks for the time and effort you devote to serving as School Board members. I recognize that it’s not always easy and requires sacrifice on your part. You are appreciated.

Regarding the responses provided by Dr. Herndon in her letter dated October 30th, I’m disappointed and very concerned.

1. With what you know now, did LORP save the Halifax School system money?

Your answer: NO. There were no individual answers from each School Board member as I had requested. You then show the pay out for LORP as $1.85 million and the LORP days saved $115,000 leaving an “ACTUAL” cost of LORP at $1.74 million.

While these facts may be accurate, they remain incomplete and misleading. They show the cash flow of LORP within the current Budget but they don’t reflect the entire scope and effects of the LORP program.

The Rest of the Story: HCPS established and implemented the LORP program to incentivize the most senior (most expensive) employees to retire early to SAVE on personnel expenses. These expense SAVINGS would then be used to help balance the Budget. Following are the approximate actual figures from 2012 alone for the 2012-13 Budget:

LORP Retirees for 2012 (Only)-26

Average Compensation Per Retiree X $51,299.00

Total Salaries = $1,333,786.00

Virginia Retirement System (VRS) (16.34%)+ $217,940.00

State Group Life Insurance (1.19%)+ 15,872.00

Social Security (FICA) (7.65%) + 102,034.63

Gross LORP SAVINGS = $1,669,633.31

Total Annual LORP Payments (26 X $10,259.89) - $266,757.20

Virginia Retirement System (VRS) (0.00%) -0.00

State Group Life Insurance (0.00%)-0.00

Social Security (FICA) (7.65%)- 20,406.93

NET 2012 LORP SAVINGS = $1,382,469.19

Health insurance costs would be the same for these people, retired or not, and therefore does not impact the total.

It is interesting to note that the VRS/Group Life/FICA savings alone ($315,437.70) are more than adequate to fully fund these Retiree’s LORP pay ($266,757.20).

Some of these savings may be used to hire additional (cheaper?) personnel however they would have to be “new hires” to count against the savings as “transfers” do not create an additional expense.

These approximately $1.4 million of LORP SAVINGS were used to balance the 2012-13 HCPS Budget. Without these 26 people accepting the LORP incentive to retire early resulting in these LORP SAVINGS, this $1.4 million would have to be cut from elsewhere almost undoubtedly resulting in significant layoffs. And similar LORP SAVINGS were used by the HCPS School Board to balance the Budget every year since 2006.

What would the Budget shortfall have been if these people had not accepted the LORP Early Retirement incentive?

What would it have been in each of the previous LORP years? If these figures are incorrect, what are the correct figures?

LORP did save money, a lot of money, that enabled HCPS to balance their budgets.

2. What was the reason(s) LORP was terminated?

The stated payout from July 2012 to June 2019 ($8,933,226) seems to assume that all LORP participants would use their entire 7 years of eligibility which is not the case. And this money was certainly not being “taken away from the needs of students …” nor was it an “end of career benefit.” The money paid to the LORP participants was to fulfill a commitment made by the HCPS School Board to compensate them for accepting early retirement with the accompanying loss of additional VRS and Social Security payments.

While I agree that people will retire without incentives, they certainly will not retire early without them. NONE of the LORP Retirees I spoke with would have retired when they did without the LORP incentive. Just ask them, I did.

3. Terminating LORP supposedly saved $1.4 million. Where did that money go?

4. $360,000 was allocated to rehire the school LAN managers that wasn’t included in the budget. Where did that money come from?

It is obvious from your response that the LORP money was used for hiring many people and creating positions not included in the Budget, for insurance costs, and for vacation/sick days.

Why have a Budget if you’re not going to use it for its intended purpose - a management tool to measure, track and control financial resources, and as a guideline for action?

Weren’t the additional insurance costs covered by “found money” and a “supplemental county appropriation?”

Aren’t funds to cover all vacation/sick day costs accrued on a daily/weekly/monthly basis to ensure the funds are available when needed? If not, why not?

5. $1.1 million in “unanticipated expense” for health insurance. “Found money”

6. Is there anything being done to determine if there are other unallocated monies in the budget or school system to be “found?”

7. It appears the budget is being largely ignored. Certainly many expenditures are not in line with it. What are both the school administration’s and School Board’s responsibilities with regards to operating within the approved budget?

Your responses seem to suggest that a “shoot from the hip” approach is being used by the Board and administration regarding the budget and expenditures. You’re apparently creating positions and hiring administrative, instructional, and support personnel that are not provided for nor funded in the budget. You talk about a “flawed budget,” “fluid categories,” “salary savings” (LORP?), “excess revenues from the county board of supervisors,” “reallocation,” “supplemental appropriations,” and “excess actual revenues.” These seem to suggest fiscal and management problems.

And where are all these budget variances shown on the monthly financial statements and budget comparisons produced monthly for School Board review and approval? The copies of these documents I’ve obtained under FOIA certainly don’t show them. And I don’t see any “Personnel Expense” budget/expenditure breakdown on them. Am I missing something?

Questions: Isn’t it appropriate to modify and fund all budget variances BEFORE making expenditures and/or taking actions?

What are both the school administration’s and School Board’s responsibilities with regards to operating within the approved budget?

When can we citizens and taxpayers of Halifax County expect to see a properly modified HCPS budget?

Dave Strom, South Boston

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