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Cecil County Public Schools Chief Financial Officer Sandy Jack assured board members that reducing the minimum fund balance was not a cause for concern at an Oct. 14 meeting.

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ELKTON — The Cecil County Public Schools (CCPS) Board of Education approved a reduction of the district’s minimum fund balance from five percent of operating expenditures to two percent in an Oct. 14 meeting.

Chief Financial Officer Sandy Jack explained that the current fund balance is $9.7 million. The district has a rough monthly budget of $16.2 million, combining county and state funding. For Jack, lowering the minimum fund balance from five percent to two percent does not cause concerns about an interruption to payroll or other expenses.

Frances Bowman, a Perryville mother of two CCPS graduates, submitted a public comment urging board members to vote against the reduction. The board and the superintendent, she argued, share responsibility to ensure that the district secures funding for its annual budget.

“By authorizing the school system to routinely operate with a fund balance of two percent, the board is abdicating some of that responsibility and jeopardizing the financial and operational stability of Cecil County Public Schools,” she wrote in a message to the district.

She added that the school could not rely on the county for support in the event of an emergency interruption of cash flow, and that revising the policy amid the COVID-19 pandemic was especially misguided.

“Such a change would authorize the school system to operate in a manner that most of us would consider paycheck to paycheck, with no cushion to absorb unbudgeted expenses,” she wrote.

The district’s budget for the upcoming fiscal year stands at almost $218 million, a figure approved by the board last month. A five percent fund balance would constitute nearly $11 million, while a two percent balance would be just $4.4 million. However, the fund balance fluctuates, and in some years exceeds the minimum requirement.

A number of board members expressed some hesitation before voting on the policy change.

James Fazzino, who represents Elkton, asked administrators to clarify whether the reduction would affect the district’s responsiveness to unanticipated expenses like emergency maintenance work.

The district can hold planned projects if unexpected issues arise, said Superintendent Jeff Lawson, and already has a budget set aside for unscheduled repairs. Lawson stressed that the district would not dip into the fund balance except in unprecedented circumstances.

For example, a boiler blowing out at a school building could rack up a price tag of $250,000.

“Then we would look to the fund balance or look to another revenue source for something that catastrophic,” Lawson said.

Fazzino doubled down, asking Lawson, “Taking the fund balance from five percent to two percent does not jeopardize our ability to be responsive to critical needs?”

“I would agree with that,” Lawson answered.

Reducing the minimum fund balance from five percent to two percent would not necessarily take effect immediately, but rather eases constraints on the school’s budget.

To address concerns that the fund balance might run on too tight a margin, Board Vice President Diana Hawley proposed adding language acknowledging five percent as a preferred, but not mandated, minimum.

“The board has always strived for this five percent,” she said. “One way to incorporate that would be to just add a simple clause in here that basically says ‘with a goal of five percent,’ so that it covers our desire to maintain that higher fund balance, but still allows us to go to the two percent in an emergency.”

Adopting the amendment proposed by Hawley, the board voted to approve the measure reducing the minimum fund balance from five percent to two percent.

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