Manchester City Schools Board of Education, in a 4-1 vote, approved a lease agreement Thursday at its monthly meeting and the go ahead for the system to relocate into an office building at 121 N. Irwin St. on the downtown square.
The 7,000-square-foot building currently houses attorney Mark Williams’ law practice and the offices of District Attorney Child Support Division. According to public records, the building is owned by Mark Williams, who also serves as the board’s attorney.
“The plans are that we would lease [the current administrative building]. That would be one revenue source,” Director of Schools Dr. Keith Brewer told the board.
“We’re not displacing any employees or affecting any programs we have, with the remaining money,” he said.
The move will consolidate the school system’s special education offices that are currently located in offices leased from Ed Henley, located next to Henley Propane near the Manchester Square. The school system pays a $700 per month lease for that space.
“We would also cancel or not renew the lease agreement that expires June 30 [with Henley]. That’s another revenue source. We would use existing revenue sources within our budget that have no impact on instruction or any other areas of our budget [to pay for the lease],” Brewer said.
One concern Brewer spoke of is the lack of space available in the new building for board meetings.
“If we have a very controversial issue [on a meeting agenda], we don’t have enough space,” Brewer told the board.
Brewer said he and Williams discussed the possibility of remodeling the offices to make a suitable boardroom.
“We don’t have to buy the building to do that. He is going to permit us to do that.”
The preliminary plan calls for removing several dividers from the District Attorney Child Support Division office, which is also in the building, to make room for a potential boardroom.
Brewer added that the current administration building is inadequate for the needs of the system.
“We have two, three people in small offices. It’s cramped and there is no privacy.”
The new office will offer more privacy and efficiency, he said.
“It’s never good to have two levels. The CEO of any entity needs to see all their people. That keeps everybody accountable,” Brewer said.
Board member Mike Lewis, who cast the lone dissenting vote, raised fiscal and ethical concerns about forming a lease agreement with the system’s attorney.
The lease will cost the system just under $150,000 over the next three years. Under the board-approved agreement, rent will be $4,000 for June 1, 2014 through June 30, 2015, then will increase by $150 each subsequent year.
Lewis said during the meeting, “It doesn’t look like a good time to spend extra money.”
Lewis perceived a $2 million drop in the school’s reserve over the course of this school year.
He added, “I think it’s a conflict of interest to rent from someone we contract with.”
In the discussion that followed, Brewer and Lewis reached an impasse over lease.
Brewer repeatedly cautioned that the budget is a “fluid projection.”
“If you take out budgeted [building program to match what the city would match], and you get the numbers once they’re finalized, I think you’re going to see that we’re going to have $2.4 million in reserve.”
Brewer clarified that the lease funding would come from a budget line item and not from the reserves.
Lewis responded that it “looks to me that we are continually dipping into our reserve in a pretty significant amount.
“Whenever we’re going through money that fast, it doesn’t seem wise to go out and spend money on something that we don’t have to spend.”
Lewis added that he is concerned that the system is operating beyond its resources.
“We’ve dipped in to our fund balance,” he said.
Brewer said that the dips into the fund balance reserves were, in part, from board approved teacher’s salary increases.
“When you gave salary increases, you didn’t get that from the city. Some of that comes from the state, but not all. Those are reoccurring.”
Brewer said that some of the expenses to the fund balance are nonrecurring expenses like the new roof on Westwood Elementary School.
“I understand that,” Lewis said, “[but] when you reduce income, you reduce expenses to stay operational. It appears to me that we’ve increased and not decreased our spending.
“I think we should operate out of the money that we have and not out of our fund balance.”
Brewer said that looking over past budgets, he sees a decrease in spending.
Lewis said, “There is no way that we can relocate all these offices up town with no expense.
“No,” Brewer said, “but that expense is inside the budget. You’re not taking it from the fund balance.”
Board chair Lisa Gregory said that the board had discussed the finances of entering into the lease during a work session.
She also raised questions about the possible conflict of interest.
“I asked that when we first looked at the building. Williams assured us that it wasn’t,” she said.
The board’s approval of the lease agreement was passed contingent upon Williams producing a letter from an outside source that opined that there was no conflict of interest.
Brewer said that Williams could provide a letter from the board of ethics that would remove any questions about conflict of interests.
Brewer said that central office will start relocating in June, the Special Education Department by the June 30 lease termination and that his and board secretary Carolyn Davison would be the last to move.
He noted that the building’s new phone system would stay in the current Administrative Building but the fiber optic computer infrastructure will be pulled and moved to the new location.
Brewer said that Williams has notified the District Attorney’s offices that he would not renew their lease.
District Attorney General Mickey Layne confirmed to the Times that the child support division is looking for more office space.
“Kathy Walker at the child support office came to me and told me we would need to find another office [because of this],” Layne explained.