COLUMN: Reasons for the unique challenges facing school finances

Published 12:48 pm Friday, March 22, 2024

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By Robert N. Holt
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The March 13, 2024, edition of The Tidewater News contained several articles related to financial matters at area school divisions. There are many reasons for the unique challenges school finances face; I will just highlight three.

First, school divisions receive funds from local, state, and federal sources. In Franklin, those percentages are 17% local, 41% state, and 42% federal for the 2023-24 fiscal year ending June 30, 2024. Each of those sources has its own method of accounting for and report of the final expenditures. In addition, rules sometimes change mid-year.

Second, all Virginia public schools are on an accrual accounting system rather than a cash method. Often, bills that are paid in July and August are charged back to the previous June 30 fiscal year if they were encumbered in the previous fiscal year. An example of this is teacher pay for those retiring or resigning. Teachers on an academic year contract are paid over twelve months to provide for insurance benefits and a regular monthly check. Those expenses in July and August are charged to the previous fiscal year. This situation also exists when items or services are ordered in the spring but delivered and thus paid after July 1.

Schools cannot always predict what the final balance will be, so they have to be ultra-conservative in expenditures from January through June to be prepared for the hit it will take for unknown July and August charges back to June 30. This is why school divisions like Franklin accumulate “rollover” or “carryover” balances. These are funds that are needed but are “saved” to ensure budgets are not overspent so that they can be returned for the next fiscal year. This is just good financial management and proper stewardship of taxpayer funds. Currently, these funds provide the only source for capital expenditures.

Typically by September 1 each year, the June 30 financial books are closed, then audited, and available for return back in early October. As a result of the action last week, now all 132 school divisions in Virginia have received their “rollover” funds.

Finally, simply put — needs change. S.P. Morton Elementary School was opened in 1965; most of the classrooms there have individual HVAC units. J.P. King Middle School opened a few years later with an older wing of that school built in the late 1950s as part of the former Franklin Elementary School. Franklin High School held its first class in January 1967 and has had several roofs replaced and rewiring done to accommodate the increased need for connectivity. Physical modifications have been necessary to accommodate today’s priority need for security.

Franklin is fortunate to have our current finance director, Ms. Tracy Morrison, and to have had our former finance director, Rachel Trollinger, onboard providing accurate and timely financial information to the board to keep everyone on track.

Robert N. “Bob” Holt, a Franklin native, is chairman of the Franklin City School Board. He is a retired professor of business management and real estate at Southwestern Community College in Sylva, North Carolina. He holds bachelor’s, master’s and doctoral studies degrees from Virginia Tech and was a member of the university’s Corps of Cadets. His email address is