Fairfax City owes Fairfax County $667,722 more than what was put aside in the city's approved 2011 budget.
Fairfax County blames the outstanding total on increased operating costs and an error made early on in calculating the city's bill.
Even though Fiscal Year 2011 saw cost reductions in county schools and a decrease in transfer from the Fairfax County Board of Supervisors, "it was also a year of unanticipated changes in revenue, including losing an increase in state funding, availability of federal stimulus funds, a large opening balance and funds carried over from previous year," said city schools Superintendent Ann Monday.
The final bill actually came in about $900,000 more than the total accounted for in Fairfax City's approved budget. City schools staff, however, had set aside enough flexible funds in the approved budget to reduce that outstanding total.
"I added $240,000 to the tuition budget because average daily membership growth was so unpredictable and obviously trending up," said Monday. "I'm glad that I did this even though it was not enough to cover the entire amount needed for the bill."
Average daily membership (ADM) is the percentage of students enrolled in city schools compared to those enrolled across all county schools.
The unexpected increase was also a result of a calculation error made early on in the schools budget process.
Instead of following the 30-year tradition of including only general education students in the ADM total, an early ADM estimate included some special education students normally counted within the county's overall operating costs budget.
"It was a specific error made by a new technician who miscounted," said Monday at a school board meeting earlier this week.
When the mistake was later fixed, it appeared as though there had been a sudden change in the number of students when that was not the case.
It wasn't until last spring that the county started noticing a difference in actual service costs than what the city had been billed.
"They were beginning to see operating costs come in higher than they had anticipated, and therefore, rather than give us what they considered bad information, they did not provide a spring estimate," said Monday. "This is something that should not have happened and will not happen again. The information about our bill may not have been easier to hear in April than it was in August, but we would have had more time to make the adjustments needed."
Kristen Michael, director of the Office of Budget Services for the county, told city school board members that efforts will be made to make sure miscalculations won't happen again.
County officials plan to include a breakdown of special education numbers on the bill instead of just including an enrollment total. They intend to create safeguards to flag anything that looks unusual throughout bill estimations. Fairfax City will also receive an update on the final bill after the county's third-quarter budget review is approved by the FCPS school board. This springtime update will help notify the city of any discrepancies between estimates and the actual cost to run city schools.
Michael suggested the city school board set up reserve funds to account for variances in the estimated bill and final bill.
"FCPS has what they call a school board flexibility reserve in which they set aside money that helps if they have any revenue or expenditure variation," she said.
Yet Mayor Rob Lederer argued against such a reserve Tuesday night, when School Board Chair Janice Miller asked the council's advice in preparing for such discrepancies in the future
"This is taxpayer money," Lederer said. "To put it aside just arbitrarily, then take it from the citizens as part of a tax rate and then put it in a fund balance... to me it's just not good government. None of us like to get a surprise but we deal with that."
FCPS Superintendent Jack Dale has agreed to work with the city on a payment schedule for the remainder of the FY2011 bill.
In seven out of the last 10 years, the county estimated more than the actual cost of operating city schools. In those years, the city received money back from the county after the final bill was calculated.