Vice Chairman Questions School Spending: School Board Had $40 Million In Savings When They Asked For $30 Million Loan

Last week, the Chairman of the Johnston County School Board Larry Strickland asked for an apology after County Commissioner Chairman Tony Braswell accused the school board of having the lights on but said no one was at home. Braswell was referring to the alleged mishandling of school system funds that has left Johnston County taxpayers on the hook for $520,000 towards the retirement of Superintendent Dr. Ed Croom on March 1st.

DeVan-Barbour-CommissionerThere has been no apology but there has been a stern response from the Vice Chairman of the Johnston County Board of Commissioners, DeVan Barbour III. On Monday, Barbour said Strickland’s comments claiming county commissioners were on the verge of a property tax increase until the school board returned $20 million was untrue.  

And for the first time, Barbour has revealed the school board had $40 million in the bank in 2009 when they asked commissioners to borrow $30 million to cover construction cost overruns at the Corinth Holders and Cleveland High School campuses.  The school board, Barbour said, had projected the cost of each school to run $30 million each in a bond referendum but ended up at $45 million each.  Barbour said commissioners were unaware the school board had $40 million set aside in a savings account until stumbling across financial documents that forced the school board to admit to the large cash reserve.     

Below is Vice Chairman Barbour’s statement in its entirety:

WTSB published a statement from the Chairman of the Board of Education Thursday that insinuated that if it hadn’t been for a repayment of 20 million dollars from excess reserves from the school system, the county would have been forced to raise taxes to meet its obligations. An increase in the tax rate has never been proposed or even discussed. We accept the responsibility of managing the taxpayers money as our most important obligation.

In 2009, when the recession was hitting hard, the county was anticipating a decrease in revenues. Due to the high level of debt that the county had incurred because of the aggressive school construction initiatives, Chairman Wade Stewart and our finance team met with the Local Government Commission to discuss the possibility of restructuring some of the debt in anticipation of decreased revenues. We were told in that meeting that it wasn’t necessary as long as the School Board was sitting on such a large amount of reserves.

After the meeting, at the direction of the Board of Commissioners, the county finance department began requesting financial information and bank statements from the Board of Education. It became apparent that they had approximately $40 million dollars in reserves. This was alarming because it came on the heels of our having to borrow an additional $30 million to cover the construction of Corinth- Holders and Cleveland High Schools. The Board of Education had estimated the cost to be $30 million each in the Bond Referendum but they actually ended up costing $45 million apiece.

An informal meeting was held between several County Board members and School Board members to discuss these funds. In defense of the Board of Education members, we weren’t sure after the meeting if they were even aware of the amount of funds that they had. It was agreed that they send approximately $5 million a year back to the county. It was done this way because a lump sum repayment would have endangered the qualification of the school system to receive its low-wealth funding from the state. They kept approximately $20 million in reserves for their own needs.

In conclusion, a few things must be mentioned. First and foremost, this huge amount of money did not belong to the Board of Education or the Board of Commissioners, it belongs to the taxpayers of Johnston County. It was serving no purpose sitting idly in a Johnston County Schools account while the taxpayers were paying approximately $33 million dollars a year in debt service for schools.

The claim that this money was needed to avoid a tax rate increase is simply not true. In my 11 years on the Board of Commissioners, a tax increase has been non-negotiable in all of our budget discussions. We have always budgeted to our revenues and maintained strong reserves. In fact, during this time we received credit upgrades from Standard & Poors and Moody’s.

It is important for the citizens of Johnston County to know that the finances of our county are currently, and have always remained in good shape. Annual audits and credit upgrades over the years confirm that fact. We always have, and will continue to be prudent and conservative with the taxpayers money. After all, it is our most important responsibility.

WTSB News has reached out to Commissioner Chairman Braswell for a response, and are awaiting his comments. 

Braswell and Strickland are both running for the NC House District 28 seat being vacated this year by retiring lawmaker J.H. Langdon from McGee’s Crossroads. A third Republican candidate is also running for the seat.