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Washington Co. budget director faults economist's analysis

Bob Pellicoro, who wrote the report for the Washington County Teachers Association, said he stands by the report

September 09, 2010|By JULIE E. GREENE

Officials undecided on how to distribute $179 million from federal Education Jobs bill

A Rockville, Md., economist's analysis of Washington County's budget -- conducted for the teachers union in the midst of renegotiations for their final contract year -- is "misleading" and contains some inaccurate information, Washington County Budget and Finance Director Debra Murray said this week.

Bob Pellicoro, who wrote the report for the Washington County Teachers Association, said he stands by the report he wrote and takes issue with a county policy that dictates how much cash reserves the county should maintain.

The Feb. 25, 2010, report -- completed for the WCTA by the Rockville firm of R.J. Pellicoro Associates and provided by the union's chief negotiator, T. Scott Miller -- indicates the county has more money available than it has said it does.

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Miller has said the union wants some of that money to pay for ongoing personnel costs being discussed in contract negotiations with Washington County Public Schools.

Pellicoro described himself as an economist who has been analyzing the fiscal situations of counties in Maryland and Northern Virginia for about 30 years, mainly for local teachers unions. He said he provides reports and appears as an expert witness, but said he is not a lobbyist.

WCTA and school system officials are at an impasse in negotiations over the final year of a three-year contract that was reopened for certain issues, such as salary increases.

The main remaining sticking point is health care costs, although the union's latest offer states it wants most of any federal stimulus money the Board of Education might receive to pay for step increases, tuition reimbursement and salary increases for teachers.

School board officials have said such continuous personnel costs should not be paid for with one-time revenues, such as the stimulus money or the $11.2 million in its general fund balance. To absorb a greater share of health care costs or provide pay increases, the school system probably would have to lay off employees, school board President Wayne Ridenour said Tuesday.

Asked Tuesday how the school system would fund ongoing costs, such as those relating to employees, Miller said the school could ask the Washington County Commissioners for the money and provided the Pellicoro report.

Miller said Thursday he probably didn't articulate his meaning well Tuesday.

His preference is for the school system to come up with the funding to restore, for this fiscal year, health care cost levels for teachers back to their June 2010 levels, he said. The school system's fund balance would be the first source and, if not that, then the county's fund balance, he said.

Then, the school system and unions should work together to go to the County Commissioners to ask for long-term funding sources for contract expenses.

Union and school system officials have October deadlines to begin negotiations on the next WCTA contract and to negotiate issues, including pay scale, for the final year of the Washington County Educational Support Personnel's contract, which runs through June 30, 2012, according to Miller and the contracts.

The school system should have been more aggressive last spring in asking for more money from the county, Miller said.

"We're not going after the commissioners saying, 'You fix our long-term funds by exhausting a one-time cash reserve,'" Miller said Thursday.

The Pellicoro budget review, to which Miller referred Tuesday, forecast the county would have a $38.5 million unreserved general fund balance for the last fiscal year that ended June 30 and a $54.5 million balance for the fiscal year that ends June 30, 2011.

Murray, the county's budget and finance director, said last year's actual financial numbers were still being finalized and this year's numbers are estimates, but said the figures in the Pellicoro report are inaccurate.

She said she anticipates the fund balance for the last fiscal year will be about $36.8 million.

Of the projected amount in the fund balance -- which is money that has accumulated over several years, increasing or decreasing depending on whether the county ends its fiscal year with a surplus or deficit -- $36 million is to be held in cash reserves to meet county policy, Murray said.

Murray said Pellicoro's projected $54.5 million balance for the current fiscal year that ends June 30, 2011, is high. She said the fund balance for the 2011 fiscal year is expected to be $33 million to $36 million, with all but approximately $800,000 going into cash reserves.

Cash reserves



Murray said county policy calls for an amount equal to 17 percent of general fund revenues to be held in cash reserves. She said the reserves are used to make sure cash flow is maintained, to deal with any catastrophic events, or for one-time expenditures. The cash reserves would be enough to pay the county's operating and maintenance costs, including county employees' salaries, for two months, she said.

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