Highland Schools Report $1 Million Matching Grant Spending Shortfall

The Commonwealth of Virginia is demanding Highland County pay back $1 million due to a schools spending shortfall in local matching expenditures in fiscal year 2024.

During the April 10^th regular meeting of the Highland County School Board, Schools Superintendent Dr. Drew Maerz outlined the fiscal dilemma they faced.

“We spent money they’re not giving us credit for,” Maerz told board members. “We have to pay back every penny they expected us to spend.”

Maerz added that state education officials told him not to sweat the discrepancy. “They told us I shouldn’t worry about it. The county supervisors have to pay for it. That’s a bunch of malarkey,” he said.

The day after the hearing, County Administrator Jerri Botkin announced the matter will be presented to the Board of Supervisors by Maers and School Board Chairman Jason Wilfong during an April 16th work session.

Botkin added that if the county must make the repayment, those funds would come from the current FY2025 budget. It would have no effect on the proposed FY2026 budget, which currently poses a $1 million deficit for county supervisors to address.

School officials originally were notified in November by the Virginia Department of Education’s Office of Budget that state law requires the local match to be paid within the fiscal year the grant is awarded. The local match shortfall was found to be $1,007,416 and payment to the State Treasury is due by June 30.

The school system’s operating budget in FY24 was $5.7 million with Highland Schools receiving $885,898 in federal funds. Of that total, $598,898 were from federal Covid grants. The fiscal year ended with a $285,000 surplus.

The matching shortfall stems in part from the 2023 installation of an HVAC system for the school at a cost of more than $479,000 and paid by three covid grants. Those grants were requested in FY23 as a reimbursement for the county, which had covered the cost of the HVAC system work in FY23. The grant funds were not paid out until after July 1, pushing the payment for the FY23 work into FY24.

Other factors affected the expenditure shortfall, Maerz says.

He argues the school system in 2023-2024 saw an increase in student enrollment that involved an additional fund allocation and the required local match. And, he adds, the school system had 8 long-term vacancies, or 12 percent of its staff, during the school year in FY24. Because salaries and benefits account for a majority of the school budget, the vacancies resulted in a budget surplus.

When Maerz was notified of the matching shortfall, he kept School Board members updated while he tried to work with state officials to resolve the problem. In February, he says, he informed County Administrator Botkin of the situation.

Virginia legislators Sen. Mark Obenshain and Del. Mark Runion backed a proposed amendment to waive the requirement for Highland County to repay the State Treasury in FY25. The amendment, however, was passed over and never made it to the floor for a vote, Maerz said.

Once that happened, Maerz and School Board Chair Wilfong decided it was time to consult with county supervisors to develop an action plan that, among other things, could involve repayment.

 

This is Mike Folks for Allegheny Mountain Radio News.