Dear Dr. Martirano and Members of the Board of Education (BOE):

On November 7, the BOE approved a “budget augmentation” that would increase the total FY2020 appropriation to the BOE by transferring its entire unassigned fund balance of $15,168,948, as reflected in its FY2019 CAFR, to the Howard County Public School System (HCPSS) Health and Dental Fund (“Health Fund”) to pay down its pre-existing deficit. Subsequently, HCPSS has contacted my office seeking emergency legislation to effectuate the budget augmentation.

As defined in Article II, § 209(d) of the Howard County Charter, an emergency bill may be passed only to “meet an immediate emergency affected the public health, safety or welfare” of the County. The Health Fund deficit has been in existence for the last five years. While it is commendable that HCPSS is taking actions towards reducing its Health Fund deficit, more information is needed to process this request. Please provide a response to the items listed below by December 4, 2019:

• Emergency Legislation Justification

Please provide a justification explaining why the budget augmentation referenced above meets the County Charter threshold for an emergency bill. In your response, please indicate how the emergency bill will change the outcome of the FY2019 and FY2020 CAFR opinions regarding the Health Fund.

• Use/Transfer of 100% Unassigned Fund Balance

Please provide a justification explaining why the entirety of the $15.2 million unassigned fund balance in the HCPSS General Fund should be transferred to pay down the Health Fund deficit. If the purpose is to eliminate adverse opinions in HCPSS CAFR in FY 2020, please describe your plan to come up with other savings needed to eliminate the interfund loan ($20.7 million in FY 2019 CAFR) in FY 2020. This fact was quoted by the HCPSS auditor as one of the primary reasons (together with a lack of a school management multi-year plan to close its Health Fund deficit) for issuing adverse opinions for HCPSS FY 2019 CAFR.

• Impact on HCPSS General Fund Budget in FY 2020 and FY 2021

If the proposed budget augmentation were approved, bringing down the unassigned fund balance in the HCPSS General Fund to $0, please indicate how other potential unforeseen emergency expenditures in the HCPSS General Fund in FY 2020 will be managed.