Posted on Tuesday, May 19th, 2015 at 3:41 pm.
The Lexington-Richland District Five School Board Monday gave first reading to a $167,772,453 proposed budget for 2016. The question now is, how will the board make up for the projected $4.9 million shortfall in revenue as compared to the projected expenses.
Board members discussed at length its options for increasing tax millage, dipping into reserve, and instituting cost saving measures, but no decision was reached. Budget figures are tentative, and depend largely on action of the General Assembly. The budget will be up for final reading on June 8.
The board could call for a 6.4 mill increase, the district’s millage cap for the coming year. That would bring in an estimated $1,516,329. The Board might also elect to capture unused millage from three previous budget cycles, 9.3 mills, which would bring in an estimated $2,203,416.
They could elect to take both the millage increase allowed for 2016 plus the unused increase allowed for previous cycles, for a 15.7 mill tax increase. Even that highest millage allowed, which would generate $3.7 million, would leave the district with a $1,209,571 shortfall.
The district still would need to find or cut about $1.2 million to balance the budget. A reserve fund balance, currently some $32 million, could be tapped. The district used about $1 million from the fund balance last year. Board policy is to retain 15 to 18 percent of the budget in reserve funds.
After much discussion, the Board asked administrators to determine how raising millage will affect instruction and to bring data and recommendations back for final reading on June 8.
Chief Finance Officer Len Richardson said a combination of ever-increasing expenses and state revenue not meeting costs has resulted in the shortfall . Act 338, the property tax reform bill passed in 2006, which swapped a penny sales tax for homeowner’s property tax for school purposes was cited as a major contributor to the shortfall in District 5 and in other districts.
Richardson said he has heard from officials in other districts that are increasing class sizes to keep up with the budget constraints. District 5 Superintendent Dr. Steve Heflin said primary goals of District 5 are not to increase class sizes, to assure that all of the district’s current employees keep their jobs, and that their salaries not be reduced.
The impact on taxpayers varies and could be seen as an additional $7.68 on vehicles and $38.40 on businesses and personal property at 6.4 mills or an additional $18.84 on vehicles and $94.20 on businesses and personal property at the full 15.7 mills.
Board member Jondi Loveless cautioned against putting too much strain on businesses. “We need to be careful what we ask from our small businesses,” she said.
Board member Ed White urged the board not to get into the habit of using the reserve for recurring costs like state-mandated step increases, but instead suggested giving the administration the ability to keep programs and instruction at a high level using the “max millage.” He said when you have recurring expenses you need recurring revenue, and he said not taking advantage of available tax increases would result in compounding shortfalls year after year.
“We have to find every source of recurring revenue we can …. In the long term, if people are not moving here, we aren’t helping (the small businesses),” he said.
Included in the budget are 11 new employees for Chapin Intermediate School and Chapin Middle School and two new employees at Spring Hill High School. No raises are included aside from the state-mandated step increases.
Former Board Member Kim Murphy, in public comment, noted that the district currently has 44 fewer students that it had in 2008, when the budget was $30,833,060 less than is now being considered.
White’s response to that was that ever-increasing costs and state mandates account for the rising expenditures.