Halifax schools owe state more than $840,000

Halifax County schools, already struggling to meet its monthly financial obligations, learned last week it must pay more than $840,000 to the North Carolina Department of Education.

And soon.

The disclosure came during a Halifax County board of education meeting last week, and resulted in the board’s decision to fire financial officer James Sweet, who came on board with the school system in the summer of 2005.

It was after he took the post, during the 2005-2006 and the 2006-2007 school years, that the school system apparently spent $800,000 more in state money than it should have, resulting in the school system’s debt to the state.

Paul LeSieur, director of school business services for the North Carolina Department of Education, met with the Halifax board last week. During that meeting, he chastised the board for allowing this to happen, and for not probing deeper into the financial operations of the school system, particularly in light of the fact that legally required audits for those two school years have not yet been done.

On Monday of this week, he explained that it is not all that unusual for a school system to overspend state money a bit in a given month.

However, most school systems have an accounting system in place that catches such overspending, and they pay that back from local or federal money.

“Based on general statutes, they are required to pay it back within five days of their overspending,” he said. If not, the school system is assessed a 1 percent per month penalty of any outstanding money.

He explained the state does not cut off funding when a school system has overspent simply because it doesn’t want the school system payroll checks and other checks to bounce.

While the state is not going to cut off any funding for the current year, LeSieur said he will be drafting a letter to the Halifax school board this week, demanding payment. What comes next is still up in the air, because he said this has never happened in North Carolina.

“Not this type of situation. This is a first. We have school systems who overspend, but they pay it back, at least within the fiscal year in which they overspent the project.”

He said the school system’s only recourse, as far as he can tell, is to go to the Halifax County Board of Commissioners and ask for the money.

That is exactly what school administrators plan to do, according to Keith Hoggard, a spokesman for the school system.

School Superintendent Geraldine Middleton has already been forced to ask the commissioners for extra money. Last month she asked for nearly $400,000, but told the commissioners that was merely an advance on money it had already budgeted for the year.

She and other school officials explained at that time the school budget was not adequate to meet all funding because when the budget was prepared, it had not accounted for likely increases in the cost of fuel and energy, as well as increased personnel cost.

Middleton, who assumed the superintendent’s post in July, months after the budget was prepared by school staff and adopted by the school board, discovered this, and found the school system would not be able to meet the October payroll and pay all of its bills without the advance.

After Middleton outlined how she would save money over the rest of the year by eliminating more than 20 non-teaching positions and cutting back on the time hourly employees can work, the commissioners voted to advance $250,000 to the school system.

Now, the commissioners can look to be hit with this new request.

“Right now, the thinking is we’re going to go to the county commissioners,” Hoggard said. “The thinking, right now, is to go and ask for a supplemental appropriation.”

That, according to Commissioner Chairman James Pierce, might not sit well with the board, but he doesn’t know that it matters what the commission wants to do.

“I don’t know that we have a choice,” he said. “The county school system has only one source of local revenue, us. If they have to pay it back, I don’t know that we have any other choice. Our attorney is researching what our options are.”

If the commissioners do give the money to the Halifax school system, it might put them in a tight spot with two other school districts they fund -– Weldon and the Roanoke Rapids Graded School District.

That is because, according to Pierce’s understanding of state law, whatever money they give to one of the school districts, they have to match, on a per diem basis, to the other school districts.

“That’s one thing our attorney will be researching for us, if we have to go about repaying these funds, if we also have to give more money …” to the other districts.

LeSieur, of the state department of education, said he believes the commissioners may very well have to give extra money to the other school districts.

That means the eventual cost to the county could be significantly greater than $840,000.

Pierce said ultimately county residents will end up footing the bill for the mistakes the school officials made.

“We don’t have that budgeted, for sure. That money will have to come out of the fund balance,” he said. “If we have to make that up, it eventually will have to come out of the taxpayer’s pockets.”