Washington County Budget Committee members were surprised last week when they learned the Board of Education in February instructed Director of Schools Ron Dykes to order six large school buses, two pickup trucks and a van at a cost of $638,000, an amount that now has popped up as an unbudgeted expense.
Though Dykes has said his understanding is that the $1.85 million in bonds approved in September by the County Commission would be used to reimburse the school system’s transportation line item for buses, County Mayor Dan Eldridge and Budget Committee members don’t remember it that way.
The method by which school bus replacement traditionally and legally transpires does allow for bonds to pay for such expenses. But in this case, the check for the buses —- which alone cost about $592,000 — was cut too early. Dykes, who was not immediately available for comment, initiated the purchase in July, just a few weeks too early for the bonds to be used to reimburse the buy, according to the Internal Revenue Service.
The calendar conundrum means the school system apparently is on the hook for that money and may be forced to carry more of a financial burden in the near future than expected.
“These are tax exempt bonds, and there are rigid restrictions,” Eldridge said late Tuesday. “You cannot turn around and reimburse something that’s already been paid for. The IRS has a thing called a ‘Look Back’ which gives you up to 60 days prior to the date on which the County Commission adopted its resolution. That still leaves us 13 days short.
“I mean how many opportunities were there to inform the Budget Committee? It never came up. We didn’t know. That would have absolutely been an easy thing to fix.”
Eldridge said it is now up to the Board of Education to decide how they want to handle the situation.
Budget Committee member Ethan Flynn said Tuesday that when the committee voted on the school system’s budget, the expense for school buses was not included. Now, the school system faces an even tougher financial road because of the apparent gaffe.
“There’s three pieces to this: the school buses, the half million dollars in school projects that were never in their budget and the projected sales tax shortfall,” he said. “This could end up being $2 million to $3 million, because these are costs that must be shared with Johnson City.”
The projected sales tax shortfall alone could leave the school system with a $1 million deficit. The school system also is staring at a series of unbudgeted projects totaling $450,000, such as the new roof for Fall Branch School and other capital projects. The unbudgeted buses alone total about $592,000.
Dykes said early this year that 19 large buses and five small buses would be purchased over the next three years, according to a state-established system of replacement after 16 years of service. In September, county commissioners approved the bond issuance to finance the turnover through three years.
This also means the county is in a position to financially stockpile four years’ worth of buses by spring, but it’s hardly a position they expected to have to fund.