Fiscal emergency declared in Sumter School District by state education superintendent

State Superintendent of Education Molly Spearman declared a fiscal emergency in Sumter School District on Wednesday because of the district’s failure to comply with its own financial recovery plan and the possibility of more fiscal problems.

In a news release, Spearman called out Sumter’s nine-member school board for its recent vote to reopen Mayewood Middle School, which was not part of the district’s previously submitted plan from May 2018 that established benchmarks for increasing its fund balance. After overspending its budget by $6.2 million in fiscal 2016, the district’s general fund balance had fallen to $106,449.

One month before that financial recovery plan was submitted, on April 10, 2018, the full board at the time — albeit consisting of five different trustees that changed over in the November midterm election — voted to close Mayewood and F.J. DeLaine Elementary School at the end of last school year because of what it said was low enrollment and in an effort to save money.

This year, Mayewood has consolidated into R.E. Davis Elementary School, which is less than two miles away. The school currently is called the R.E. Davis K-8 College Preparatory Academy, operating with a magnet school curriculum.

F.J. DeLaine was consolidated into Cherryvale Elementary School.

“The Sumter school board made a conscientious effort last year to fix the financial crossroads that it found itself in, but recent decision making by the board has undermined that effort,” Spearman said. “I am committed and bound to intervene through a fiscal emergency to ensure the best interests of the students, parents and Sumter community are being served.”

Three days after the Feb. 11 6-3 vote by the revamped board to reopen Mayewood, the state education department requested the district submit an updated financial plan that included the cost and impact of reopening the school and also addressing an outstanding Individuals with Disabilities Education Act maintenance of effort finding of $770,000, which the district may have to pay back to the state.

District administration submitted that updated plan response to the state department last week. It included multiple scenarios — given state and local budget “unknowns” right now — for the district to reach one month’s operating expenditures in its fund balance by June 30, 2020, as required by state law. That total is about $12 million for the district.

The district’s chief financial officer, Jennifer Miller, said earlier this week those plan scenarios involved “significant budget cuts.”

After the overspending, the balance fell to $106,449 as of June 30, 2016. By June 30, 2018, it had climbed back to $8.6 million and was projected to reach more than $10 million by the end of fiscal 2019.

In declaring the fiscal emergency, the state department has essentially said the updated plan isn’t sustainable to replenish the minimum fund balance goal, according to spokesman Ryan Brown.

“The plan that district administration submitted very clearly showed the district wasn’t going to be able to get back to the $12 million requirement for its fund balance,” Brown said.

It was the district’s determination and the outstanding maintenance of effort finding that led the state department to its declaration, he said.

The school board may appeal to the State Board of Education within 10 days. Then, the state board must hold a hearing on the appeal within 30 days from when it was filed.

“During the fiscal emergency, the department will provide technical assistance in implementing proposals and make recommendations concerning the board's recovery plan, which must be submitted to the department within 60 days. The department is also required to visit and inspect districts under fiscal emergency,” Spearman wrote in the release.

Spearman may recommend to the State Board of Education that the state take over the district’s financial operations for the remainder of the fiscal year and maintain control over those operations until the district is “released from fiscal emergency.” The district may only be released if the department determines that corrective actions have been or are being successfully implemented, and this cannot occur within the fiscal year in which the declaration was made.

The Rev. Ralph Canty, Sumter school board chairman, said it’s unfortunate the board and the state department have come to this point of dispute and tension.

He said it is clear it has taken money, and will take more, to make the consolidated R.E. Davis campus work adequately as a K-8 school, and he said he thinks the majority of the board’s logic was that the same amount of money could be used to reopen the Mayewood campus.

“I think it is the opinion of the majority of the board that they were in their right to make the decision that they made,” Canty said.

At the Feb. 11 board meeting when the vote was taken, district administration presented estimated first-year costs to reopen Mayewood between $963,000 and $1.2 million and recurring annual costs in the range of $360,000 to $471,000.

Several board members, who later in the night voted to reopen Mayewood, said they disagreed with those cost estimates. Canty said the board’s discussion that night did clearly center on one-time costs as opposed to recurring costs.

On Wednesday afternoon, he told The Sumter Item he was amending Thursday’s board meeting agenda to include a conversation among trustees on a potential strategy to respond to Spearman. He said he doesn’t know what that response will be at this time.

Thursday’s agenda previously only included an executive session behind closed doors for the purpose of interviewing one of the three finalists for the district’s superintendent position, Cynthia Ambrose, at 6:30 p.m. Now, Canty has added a special called meeting at 5 p.m., also at Central Carolina Technical College’s Advanced Manufacturing Technology Training Center, 853 Broad St.

Ambrose and two other job applicants were named on Monday as finalists for the position. Each finalist will be visiting Sumter, the school district and community members and leaders Thursday, Friday and Monday, with one each day. Ambrose is visiting Thursday.

Interim Superintendent Debbie Hamm is in her second and final year with the district.

Hamm’s predecessor, Frank Baker, mutually agreed to retire from his role as superintendent in July 2017 as a result of the fallout from the 2016 financial crisis. He was one of two at-large board members elected in November to represent the entire district.

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An earlier version of this article written by a different reporter has been replaced with this updated version, as we had said we would do.