Wake County school system on using rainy-day fund to avoid layoffs this year

Is the Wake County school system only postponing the layoffs of hundreds of teachers and other school employees for one more year?

As noted in today's article, Superintendent Tony Tata's proposal to use $29 million out of the $34.6 million in the undesignated fund balance effectively replaces the $28 million in one-time federal dollars that saved more than 500 teaching jobs this school year.

If the school board goes with Tata's recommendation, they'll be able to keep those positions funded for the 2012-13 school year. But it's iffy at best that the money can be found again for the 2013-14 school year.

The school district will be able to replenish some of the undesignated fund balance, which acts as a rainy-day fund, but likely not all of the money next year. It took Wake three years to build up the fund balance to reach the point where so much could be used this year.

What it would likely boil down to next year is whether the school district could come up with enough additional money from the county, state or federal government to cover the jobs. But unless the economy significantly improves, it would mean asking for a tax increase, something that's not as likely from the county commissioners or General Assembly.

Another wild card is that the school district may ask for a bond issue in 2013. Historically, the school board has limited its requested operating budget increase from the county in years when the bond referendum will be on the ballot.

County Commissioner Joe Bryan said he'd weigh any requested increase in funding in 2013 for the operating budget off the potential financial impact of the bond issue on taxpayers.

“You can’t make the decision in a vacuum,” Bryan said. “You have to look at it with a holistic approach.”

The school system could hedge its bets this year by cutting back on the use of fund balance and laying off some employees. But school board vice chairman Keith Sutton said he'd have a hard time telling employees he's supporting laying them off, potentially costing them their homes, while sitting on such a large fund balance.

Sutton gave the analogy of a homeowner who has to decide whether to pay the light bill or not touch savings.

School board member Christine Kushner said the use of the fund balance to cover the jobs for the 2012-13 school year "sound strategy." But she said she'd also want to discuss at today's budget work session what the long-term ramifications are of using so much of the fund balance.

Board member John Tedesco said the use of the fund balance shows the continuing commitment of the past few years to not lay off teachers.

Board members and school administrators say it's not ideal to use up so much of the fund balance in one shot. But Tata said he's hopeful that the funding situation will be brighter next year.

"If we can keep our people and keep our class sizes where they are, we’ll be maintaining things while we wait until the economy recovers,” Tata said.