City approves nearly $400,000 to be returned to SPS for sinkhole repairs

Published 7:17 pm Friday, October 7, 2022

Suffolk Public Schools will receive the nearly $400,000 it requested from the city to repair sinkholes that have plagued several schools over the past year, but the money didn’t come without scrutiny by some members of City Council, including Mayor Mike Duman.

The item was initially part of council’s consent agenda, but Councilman Tim Johnson asked that it be pulled off of it to allow for further discussion.

Johnson said that while he didn’t take issue with the school division’s need for the money, he wanted a better accountability of how the division is spending money allotted to it.

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He initially motioned that the matter be tabled until the Nov. 16 meeting to have SPS “provide us with an itemized accounting of funds from fiscal year 2021-22 that were encumbered, but not spent as of June 30, 2022 and identify any encumbered funds by contract that are encumbrance contracts authorized by School Board resolution number 21/22-21.”

“This is in no way a criticism of the schools,” Johnson said after he read his motion. “Mr. Gordon, we respect everything you do. But I think it’s a way for us to disclose to the public what’s going forward and hopefully all of us work together in the future to make sure that our money is being spent appropriately and that we consider every dollar that we spend. Every dollar is important to the people of this city.”

Instead, a substitution motion from Councilman Donald Goldberg to give the money to the school division was adopted 7-1, with only Duman voting against it.

SPS ended the previous fiscal year with $397,484.75 in unspent money. Any local money the school division doesn’t spend that is not lawfully obligated or encumbered lapses at the end of the fiscal year and has to be returned to the city.

The school division asked the city to reappropriate that money to the current fiscal year’s school operating fund to help with sinkhole repairs at school facilities. The current fiscal year began July 1.

In a Sept. 1 memo to City Manager Al Moor, division Superintendent Dr. John B. Gordon III formally asked that the money be returned to the school division to help it pay for more than $2.8 million in emergency sinkhole repairs that he noted “were unplanned and thus unbudgeted.”

Gordon, in the memo, said the Virginia Department of Education released final payment and reductions to basic aid due to higher sales tax June 22, which is after the division’s and council deadlines for June meetings.

“The final payment caused Suffolk Public Schools to receive funding in the amount of $248,736.13 above the appropriated funding in our operating funds,” Gordon wrote. “By law, the school division cannot spend money that has not been appropriated.”

He also noted its 2020-2021 carry-forward obligations on contracts, in the form of encumbrances, included musical instruments and vehicles needed by the school division. However, because of “extreme” supply chain issues, neither vendor could get the items to the school division, meaning an extra $141,748.62 that was not spent.

Johnson said the city has a fiscal responsibility to residents and has many upcoming school-related expenses.

“I just would like to explore the possibility that rather than just put this money back in the school’s general fund that we actually use it to accomplish some of our goals for the next year,” Johnson said. “With that being said, we need to have transparency to our people and the people of our city … and one of the ways we can do this is by making all of the monies that we have sitting around and hasn’t been spent in the past year apparent to the people, and what we’re going to do with it and where it’s going to go.”

Gordon and the division’s chief financial officer, Wendy Forsman, also addressed the board. He noted that the division has already spent $1.8 million on sinkholes in the past year, and that a new sinkhole was found at King’s Fork High School last week.

Goldberg noted that the money had been appropriated to the school division earlier, and that council had given money back to the division before.

“They have an issue here of sinkholes that are out there that need to be fixed,” Goldberg said. “You’re knowing where this money is going. They’re saying it to us, so that’s my only comment. I see where the money is going.”

Johnson said at one point that the money had been appropriated to fix the sinkholes. At that point, Gordon, Forsman and Stenette Byrd, chief of schools, all shook their heads no.

Councilman Roger Fawcett said the sinkhole issue is one that has come before council before and that he had no issue with providing the school division with the money, but rather “it gives us an opportunity to see what’s going on with the funding that we can’t see because I’m seeing this sinkhole thing come up too many times.”

Gordon said he had sent Moor a list of $6.8 million in big ticket encumbered items that the division has, including $1.8 million for turf fields at all three high schools, about $1.5 million for school buses, $500,000 for actual sinkhole repairs and $150,000 for a scope for King’s Fork High School.

He said all of that was before the division found yet another sinkhole in the parking lot at the high school last week. That’s due to supply chain issues, he said.

“This money that we’re asking for is because we know that the sinkholes are going to continue,” Gordon said. “We have not had to replace or repair one sinkhole twice. The issue is the sinkholes are continuing to occur.”

Gordon said with recent rain, he expects the division will find more sinkholes.

“It’s not about us asking for any additional money,” Gordon said. “We have no problem being transparent with the council or with anyone that ever asks us the question. But I do want to make sure that we’re clear in saying that playgrounds at our elementary schools — Mack Benn, Oakland — these are some of the other encumbered funds that we have on the list.

“A delay in this means a delay in us getting these projects completed, and we’ve already had to wait for some of these projects to be completed due to supply chain issues, and I do not want to take this opportunity out of our kids’ hands any longer.”

Duman noted that while encumbered money is not subject to being returned to the city, but “with that being said, and with that being understood, and with that being the norm, and as it has been for years and years, what was the need to pass another ordinance to create something called encumbrance contracting, which I have yet to find a definition of in any financial guidebook of any type?”

He referred to a School Board resolution passed in June authorizing the superintendent “to obligate through encumbrance contracting” any remaining money before the end of fiscal 2022, which ended June 30.

The resolution included spending for buses, fuel tank installation at Florence Bowser Elementary School, professional painting at Creekside Elementary School and King’s Fork Middle School, a sewage pump station at Nansemond Parkway Elementary School, restroom partition replacements at Lakeland and Nansemond River high schools, a new turf field for Nansemond River, fire lane and parking lot line painting at all schools, replacing six-year old copiers, hot water water system valves, sinkholes, non-student furniture, student desks at various schools, replacing playgrounds at Mack Benn Jr. and Oakland elementary schools, a camera scope of the drainage field at King’s Fork High School to determine the scope of remaining repairs, paving various school parking lots and early start playground replacements at several schools.

The resolution, passed 6-1 by the board, stated Gordon was to report to the board “all end of year expenditures made pursuant to this grant of authority.” Duman said in his review of the September board meeting, there was no such report.

Forsman said she did not know why the board used encumbrance contracting in the language of its resolution.

“Our financial system is set up with audit controls,” Forsman said. “We are not allowed to, in the system, to encumber anything after June 30. If we’ve encumbered it, we have to have a vendor, a specific vendor, and a specific amount. If we vary from that at all … we have to give that money back to the city. We are not allowed to change the vendor. We are not allowed to change amounts. We are not allowed to change contracts. Nothing changes if something changes after June 30. We are not allowed — the system will not allow us to do it. We have to void that (purchase order), put the money aside to send back to the city.”

Forsman said she monitors every payment that goes out and provides auditors a full list every year of all the payments for them to monitor it and ensure compliance. In her 12 years, the school division has been in compliance, she said.

She said when the state miscalculated its sales tax in June and didn’t inform school divisions until June 24, it came after the board and council had already met and she couldn’t spend the extra money “because it wasn’t mine to spend.”

That was why, she said, the school division asked council to return the nearly $400,000 to it.

Gordon said he had only heard that some members of council had issues with the money earlier in the day, about five-and-a-half to six hours before the council’s regular meeting began at 6 p.m.

Forsman said the sinkholes have all been emergency repairs being found under parking lots, under fields, including one the size of a school bus, and the money is not in the budget and not part of any division plans to fix anything, “and we have to do them and we have to take money from someplace else if we don’t use it for this.”

“We didn’t ask for this in our budget because obviously, this is an emergency and we didn’t know these were going to happen,” Forsman said.

Bennett said this money “is for the safety of our children. That’s the key to it all.”