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Committee Delays Action On Local Dispute Resolution Bill; Amendment Pending To Change LEA Budget Requirements

The Joint Legislative Program Evaluation Oversight Committee on Monday delayed action on a bill that would change how local school boards and county commissioners settle funding disputes, after an amendment emerged that would require N.C. school districts to provide more budget details on how they spend local dollars.
The draft bill, prior to it being amended, would create a working group to look at the fund balance of the local boards of education and substitute a default funding mechanism for the current funding dispute resolution process. The committee is considering sending this bill forward for action by the 2018 General Assembly in response to a report on the current process and recommendations for changes proposed by the Legislature’s Program Evaluation Division (PED). Both the N.C. Association of County Commissioners and the N.C. School Boards Association spoke at the committee’s discussion of this issue on March 26 and expressed general support for shifting to a default mechanism to settle funding disputes at the local level, although the NCSBA spokesman urged caution against any effort to limit the ability of school districts to maintain fund balances that are needed to address unplanned spending needs that occur mid-year.
When the committee met again on Monday to review the draft legislation, Sen. Chuck Edwards, R-Henderson, submitted an amendment that he said would help increase transparency and accountability in funding local school districts. The amendment would have the new working group being established under the bill consider revenues and expenses that "ultimately have to be looked at to determine what a balance would be, among other things," Edwards said.
The amendment would make changes to the new working group’s responsibilities and impose new limits on the budget authority of local school boards as follows:
1. Adding responsibilities for the working group to determine: the process for establishing the size of fund balances, including the need to review and understand with clarity and transparency the revenues and expenses of local school administrative units.
2. Amending laws regarding the uniform budget format for school districts to include information regarding program report codes, object codes, and personnel and operating expenses of individual schools.
3. Amending laws to require that the superintendent prepare a budget for the ensuing year before the close of each year for consideration by the board of education that describes projected expenditures by program report code and object code.
4. Amending laws to allow boards of county commissioners to allocate appropriations by program report code and to require their approval for certain increases or decreases thereto.
5. Requiring audit contracts to include that the auditor shall prepare a report embodying a comparison of budgeted and actual expenditures by program report code and object code.
6. Requiring that the audit report on the school district’s accounts be submitted to the county commissioners within 30 days after the close of the fiscal year.
7. Requiring the school district to report within 60 days of the close of the fiscal year the results of the audit to the State Board of Education, including the comparison of budgeted and actual expenditures by program report code and object code. The Department of Public Instruction must then post this information on its website, categorized by local school administrative unit.
8. Making these changes to local school district budget requirements effective with budget ordinances adopted after June 30, 2019.
While Rep. Nelson Dollar, R-Wake, said he "understood the spirit" of the amendment, he thought it would take the bill in a different direction than the PED report originally intended. Rep. Pat B. Hurley (R-Randolph) asked for more time to consider the amendment and said it would be helpful to have more committee members present before putting the amendment to a vote. Given this discussion, the committee ultimately decided to delay action on both the bill and the amendment until its May 14 meeting. At that time, the legislation could be authorized for introduction in the 2018 short session that begins May 16.