Guam DOE To Request Full Release Of Reserve Funds

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Projected expenses expected to exceed current allocations

By Louella Losinio

HAGÅTÑA, Guam (Marianas Variety Guam, April 24, 2013) – The Guam Department of Education (GDOE) is requesting a full release of its 15 percent reserve account to address projected shortfalls in its budget for salaries, benefits, and utilities as part of a corrective action plan submitted to the Education Financial Supervisory Commission (EFSC).

During last night’s Guam Education Board meeting, GDOE Superintendent Jon Fernandez presented a resolution, which the board later approved, stating their plan to request for the release of the reserve funds.

The law authorizes the EFSC to develop financial performance indicators that produce a monthly financial designation status for GDOE. On April 4, the commission issued a Code C-watch for several education budget categories such as salaries, overtime pay, benefits, power, water, and telephone.

A Code C-watch, as outlined in the law, is one step closer to a Code Red emergency status.

According to the law, this category requires GDOE to submit a Corrective Financial Recovery Plan to eliminate watch conditions within 20 working days after issuance by ESFC.

The education board, per law, shall review, modify and approve by resolution the recovery plan and submit it to the EFSC.

The period covered October 2012 to February 2013.

In a letter submitted to GEB, Fernandez outlined the projected expenditures for each budget category, with salaries expected to exceed the current allotment of $105 million by $16 million. Benefits, on the other hand, require an additional $7 million to meet its project expenditures of $45 million.

For utilities, projected expenses for power will exceed current budget allotment of $11 million by at least $3 million.

In the report, Fernandez said the shortfalls for the salaries and benefits will be remedied by requesting and receiving a release of the 15 percent reserve.

For power, Fernandez stated, "the issue will continue to mount because of the increase in the fuel recovery charge which resulted in a 6 percent net increase in GDOE’s monthly power bill.

He also noted that even with the release of the reserves, GDOE still faces a shortfall of $2.9 million in power expenses. As GDOE superintendent, Fernandez said he may need to exercise budget transfer authority to augment funding for power, considering the looming second round of power rate increases.

Cost-cutting

To cut costs, Fernandez said the department has eliminated 262 phone lines, which can be equated to a savings of more than $84,000 per year. However, without a full release of the reserve, Fernandez said GDOE will face an approximate shortfall of $55,000.

Fernandez also mentioned several measures undertaken by the department to generate savings and improve efficiency. For instance, GDOE has eliminated color printing and required the transmission of electronic documents instead of printed copies.

In addition, to reduce power consumption, roof coating projects are currently in progress at the schools while all new air-conditioning units purchased and installed in GDOE facilities will help reduce energy consumption.

GDOE is also working with the Guam Power Authority on alternative energy options and with the Army Corps of Engineers, who recently performed energy audits in 35 GDOE schools.

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