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School board may have to cut expenses to pay legal fees

Schwartz & Shaw bills schools $240,000

Burke County School Board Controversy

More articles about the Burke County School Board Controversy

By Steve Welker | The News Herald

Published: November 18, 2009

Updated: 11/19/2009 06:00 am

The Burke County Board of Education may have to cut the schools' already penny-pinched budget to pay its legal bills.
The Nov. 13 invoice from Schwartz & Shaw, the Raleigh law firm hired in May as the school board's special counsel, exceeds $240,000. Most of the money is for services related to the school board's three lawsuits against the Burke County Board of Commissioners.
The invoice covers fees and expenses through Oct. 31. It brings the firm's total bills since the July 1 beginning of the school year to more than $351,000.
The school district's entire 2009-10 budget for administrative functions (also known as the 6900 fund) is $363,800. The school board budgeted $65,000 in that fund for legal expenses.
Even before Schwartz & Shaw's bill arrived, school officials scrutinized the budget for money the board could divert from other accounts.
"(Associate Superintendent) Rick Sherrill and I sat down in anticipation of this legal bill and tried to identify areas in our local current expense budget to trim a little money here, a little money there," Finance Officer Keith Lawson said. "What we came up with, throughout the entire budget, is about $228,000."
"We tried to identify all non-instructional areas. The instructional areas have been impacted enough this year due to the state budget cuts and our local budget's constraints," he said.
The budget for those noninstructional items totals about $4.73 million. The proposed cuts equal about 4.8 percent.
The suggestions include reductions in salaries, bonuses and/or wage supplements for ROTC instructors, bus drivers, principals and assistant principals, department directors and the associate superintendent. A $25,000 cut in workmen's compensation costs could accompany the lower expense for salaries.
The school district is in a multi-year effort to reduce utility expenses. Lawson and Sherrill estimate the school can squeeze another $87,500 (2.6 percent) out of the budget for electricity, natural gas, water, sewer and fuel oil.
It appears no expense was too small for consideration. The tiniest sums on Lawson and Sherrill's list are a pair of $500 expenditures for travel and $1,000 for pest control.
The school board's own expenses are on the list, too – $5,000 less for travel and $3,000 less for other costs.
"Now I want to stress that this is only a suggestion, a possible recommendation from us to the board, of areas from which we could come up with those funds," Lawson said. "It's entirely up to the board of education to approve some or all or to suggest other alternatives."
That board will have a new look when members sit down, probably on Dec. 7 at the next scheduled meeting.
Board Chair Tracy Norman and temporary board member John Aulgur will be gone, replaced by newcomers Catherine Thomas and Susan Stroup. Thomas, a corporate attorney familiar with lawyer's bills, can be expected to have something to say.
The Burke County commissioners may weigh in with opinions, too, although state law prohibits them from making line-item decisions about the school board's spending.
Concerned about that spending in 2008-09 — in particular, efforts to terminate former Superintendent David Burleson's employment — the county commissioners demanded a first-ever function-based budget from the school board. They then withheld $363,800 for the 6900 fund until the school board justified its expenses.
"Keep in mind," Lawson said, "according to the county's budget ordinance, any diversion of funds for a function, plus or minus 10 percent, requires their approval. If the board of education does approve moving money into the 6900 fund, that's also contingent on the county commissioners' approval. It's their option to exercise that oversight and, of course, they have exercised that option."
Adding more than $36,300 to the 6900 budget, let alone $240,000, probably would trip the commissioners' trigger.
Not paying Schwartz & Shaw's bill is not an option.
Lawson said, "Unlike, say, medical fees — as long as folks are paying something, putting forth an effort, they're not subject to collection — we're obligated, absolutely obligated, to pay those legal fees."
No extended repayment schedule would be possible without Schwartz & Shaw's agreement, Lawson believes.
If the school board adopts Sherrill and Lawson's suggestions, the savings still would fall short of the full $240,000.
"That only leaves us about $12,000 short," Lawson said.
The additional money could come from the school's lawsuits against the county commissioners. Lawson said he and County Finance Officer Paul Ijames compared numbers and agree the schools' sum total gain from the judge's decision will be slightly more than $30,800 above what the schools already received while the commissioners doled out money for the 6900 fund.
The commissioners on Tuesday approved $53,000 more for the schools. However, that's about $20,000 less than Lawson intended to ask for the next quarter.
"The only obligation for the quarter that really concerned me comes on the first of January," he said, when the last $25,000 payment on a 7-year-old legal settlement comes due. "Some salary obligations we're legally required to deal with," Lawson continued. "Other than that, everything else we'll have to place on hold. That gets us back to supplies and materials and board stipends."
Board members receive $200 per month for their service; the board chairman receives $250. The stipends come from the 6900 fund.
"No, those have not been paid," Lawson said. "When the new board takes office, we're going to owe some of the old members, including Miss Norman, back pay. But they all have been understanding; they understand we're all in this situation together."