CHARLESTON – The West Virginia Senate Finance Committee on Tuesday approved an $8 million appropriation to prevent the financial collapse of Hancock County Schools, but members signaled the funds are contingent on repayment and expressed concern about setting a precedent for future bailouts of financially distressed school systems.
The bill, HB 4575, received a strike-and-insert amendment before being recommended to the full Senate. The appropriation is intended to cover a $3.1 million shortfall that threatened to halt payroll at the end of the fiscal year, following the state Board of Education’s intervention in the county’s finances.
State Superintendent of Schools Michele Blatt testified before the committee, explaining that the district’s financial woes stemmed from decisions made by the previous superintendent and Hancock County Board of Education. According to the Department of Education, the district failed to reduce staffing levels despite a decline in funding, instead using temporary federal dollars to cover positions and then transferring those costs to the general fund without a sustainable funding source. The district also funded an athletic facility upgrade, including a turf field, exacerbating the deficit.
Blatt stated the district bypassed standard accounting procedures, opting for manual spreadsheets that obscured the true extent of its financial problems. “Past decisions … were made between the superintendent and the Hancock County Board of Education, which set them in a financial deficit,” she said. “They got into the situation where they could not make payroll in February. And so, we have had to front state aid funding formula for them.”
Finance Committee Vice Chairman Ben Queen, R-Harrison, voiced frustration with the situation and apprehension about establishing a precedent for future bailouts. “I’m kind of frustrated,” Queen said. “We seek to pay bills for our staff to be paid. But I’m nervous that we’re going to set some bad precedent here. And God forbid you all at the state board come and notify us again that another public education system is facing this dilemma.”
Blatt cited a similar, though less recent, situation in Boone County Schools as the only comparable bailout in recent memory, attributing it to economic hardship following a downturn in the coal industry. She assured the committee the $8 million would serve as a temporary bridge until the start of the next fiscal year on July 1, allowing the newly appointed county school leadership to implement reductions in force and streamline expenses.
State Sen. Robbie Morris, R-Randolph, pressed Blatt for assurances that employees would not miss paychecks, stating he had been told the situation was “imminent.” Blatt confirmed that no employees had missed a paycheck and that funding was sufficient through June.
The companion bill, HB 4574, which establishes the “Temporary Shortfall Supplement Fund for County Boards of Education” to provide loans to financially distressed school systems, remains in the Senate Education Committee. These loans would be limited to personnel obligations and essential operating expenses.
Senate Finance Committee Chairman Jason Barrett, R-Berkeley, emphasized his expectation that the $8 million would be treated as a loan. “Just from my perspective and from this chair … is that I envision this … as a loan and would like some type of payment plan and some type of repayment done from Hancock County,” Barrett said. The bill stipulates that any loan amount must be repaid with interest capped at 3% by December 31 of the following calendar year, with repaid funds returning to the state general revenue fund.
The legislation also includes provisions to prevent similar situations in the future. Any employee responsible for financial decisions in a school district receiving a loan would be prohibited from holding a financial position in any county school system for two years and would be immediately removed from their current role. The bill also allows for the removal of county board members for official misconduct, neglect of duty, or incompetence, citing existing state code.
Queen expressed disappointment that no members of the Hancock County Board of Education attended the committee meeting to advocate for the funding or address questions about the district’s financial mismanagement. “I’m disappointed that no one here from Hancock County Schools, whether they have power or not, are sitting here asking for money,” he said. “I’m disappointed that we have raised the red flag here and there’s no one here to figure out exactly what went wrong. If we’re recklessly spending things, we demand to hold people’s feet to the fire.”
